An Act respecting banks and bankingBank ActBank199112
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B-1.01461991PreambleWhereas a strong and efficient banking sector is essential to economic growth and prosperity;Whereas a legislative framework that enables banks to compete effectively and be resilient in a rapidly evolving marketplace, taking into account the rights and interests of depositors and other consumers of banking services, contributes to stability and public confidence in the financial system and is important to the strength and security of the national economy;And whereas it is desirable and is in the national interest to provide for clear, comprehensive, exclusive, national standards applicable to banking products and banking services offered by banks;Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:2012, c. 19, s. 525Short Title
Short titleThis Act may be cited as the Bank Act.
Interpretation and ApplicationDefinitions
DefinitionsIn this Act,affairs, with respect to a bank, an authorized foreign bank or a bank holding company, means the relationships among the bank, authorized foreign bank or bank holding company and its affiliates and the shareholders, members, directors and officers of the bank, authorized foreign bank or bank holding company and its affiliates, but does not include the business of the bank, authorized foreign bank or bank holding company or any of its affiliates; (affaires internes)affiliate means an entity that is affiliated with another entity within the meaning of section 6; (groupe)Agency means the Financial Consumer Agency of Canada established under section 3 of the Financial Consumer Agency of Canada Act; (Agence)annual return means a return prepared in accordance with section 601; (état annuel)annual statement, in relation to a bank, means the annual financial statement of the bank within the meaning of paragraph 308(1)(a) and, in relation to a bank holding company, means the annual financial statement of the bank holding company within the meaning of paragraph 840(1)(a); (rapport annuel)authorized foreign bank means a foreign bank that is the subject of an order under subsection 524(1); (banque étrangère autorisée)bank means a bank listed in Schedule I or II; (banque)bank holding company means a body corporate that is incorporated or formed under Part XV; (société de portefeuille bancaire)bearer, in relation to a security, means the person in possession of a security payable to bearer or endorsed in blank; (porteur)bearer form, in respect of a security, means a security in bearer form as determined in accordance with subsection 83(2); (titre au porteur)beneficial ownership includes ownership through one or more trustees, legal representatives, agents or other intermediaries; (véritable propriétaire et propriété effective)body corporate means an incorporated body wherever or however incorporated; (personne morale)branchin respect of a bank, means an agency, the head office or any other office of the bank, andin respect of an authorized foreign bank, means an agency, the principal office or any other office of the authorized foreign bank in Canada at which is carried on the business in Canada of the authorized foreign bank; (succursale)Canadian entity means an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province, or otherwise formed in Canada, and that carries on business in Canada; (entité canadienne)Canadian financial institution means a financial institution that is incorporated or formed by or under an Act of Parliament or of the legislature of a province; (institution financière canadienne)central cooperative credit society means a body corporate organized on cooperative principles by or under an Act of the legislature of a province, one of whose principal purposes is to receive deposits from and provide liquidity support to local cooperative credit societies, andwhose membership consists solely or primarily of local cooperative credit societies, orwhose directors are wholly or primarily persons elected or appointed by local cooperative credit societies; (société coopérative de crédit centrale)central securities register or securities register, in relation to a bank, means the register referred to in section 248 and, in relation to a bank holding company, means the register referred to in section 825; (registre central des valeurs mobilières ou registre des valeurs mobilières)Commissioner means the Commissioner of the Financial Consumer Agency of Canada appointed under section 4 of the Financial Consumer Agency of Canada Act; (commissaire)common-law partner, in relation to an individual, means a person who is cohabiting with the individual in a conjugal relationship, having so cohabited for a period of at least one year; (conjoint de fait)complainant, in relation to a bank or any matter concerning a bank, meansa registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a bank or any of its affiliates,a director or an officer, or a former director or officer, of a bank or any of its affiliates,any other person who, in the discretion of a court, is a proper person to make an application under section 334, 338 or 989, ora member or a former member of a federal credit union; (plaignant)consumer provision means a provision referred to in paragraph (a) or (a.1) of the definition consumer provision in section 2 of the Financial Consumer Agency of Canada Act; (disposition visant les consommateurs)court meansin the Province of Ontario, the Superior Court of Justice,in the Province of Quebec, the Superior Court of the Province,in the Provinces of Nova Scotia, British Columbia and Prince Edward Island, the Supreme Court of the Province,in the Provinces of New Brunswick, Manitoba, Saskatchewan and Alberta, the Court of Queen’s Bench for the Province,in the Province of Newfoundland and Labrador, the Trial Division of the Supreme Court of the Province, andthe Supreme Court of Yukon, the Supreme Court of the Northwest Territories and the Nunavut Court of Justice; (tribunal)court of appeal means the court to which an appeal lies from a decision or order of a court; (cour d’appel)debt obligation means a bond, debenture, note or other evidence of indebtedness of an entity, whether secured or unsecured; (titre de créance)delegate means a natural person appointed or elected to represent a member of a federal credit union at a meeting of members; (délégué)director means a natural person occupying the position of director, by whatever name called, of a body corporate, and board of directors or directors refers to the directors of a body corporate as a body; (administrateur, conseil d’administration ou conseil)domestic systemically important bank means a bank that is designated as a domestic systemically important bank under section 484.1; (banque d’importance systémique nationale)entity means a body corporate, trust, partnership, fund, an unincorporated association or organization, Her Majesty in right of Canada or of a province, an agency of Her Majesty in either of such rights and the government of a foreign country or any political subdivision thereof and any agency thereof; (entité)equity, in respect of a bank or a bank holding company, means its equity as determined in accordance with the regulations; (capitaux propres)external complaints body means the body corporate designated under subsection 627.48(1); (organisme externe de traitement des plaintes)federal credit union means a bank that, within the meaning of section 12.1, is organized and carries on business on a cooperative basis; (coopérative de crédit fédérale)federal financial institution meansa bank,a body corporate to which the Trust and Loan Companies Act applies,an association to which the Cooperative Credit Associations Act applies, oran insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act; (institution financière fédérale)federation of cooperative credit societies means an association under the Cooperative Credit Associations Act or a federation, league or corporation incorporated or organized by or under an Act of the legislature of a province, the membership or the shareholders of which include two or more central cooperative credit societies; (fédération de sociétés coopératives de crédit)fiduciary means any person acting in a fiduciary capacity and includes a personal representative of a deceased person; (représentant)financial institution meansa bank or an authorized foreign bank,a body corporate to which the Trust and Loan Companies Act applies,an association to which the Cooperative Credit Associations Act applies,an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act,a trust, loan or insurance corporation incorporated by or under an Act of the legislature of a province,a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province,an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province and that is primarily engaged in dealing in securities, including portfolio management and investment counselling, anda foreign institution; (institution financière)foreign bank, subject to section 12, means an entity incorporated or formed by or under the laws of a country other than Canada thatis a bank according to the laws of any foreign country where it carries on business,carries on a business in any foreign country that, if carried on in Canada, would be, wholly or to a significant extent, the business of banking,engages, directly or indirectly, in the business of providing financial services and employs, to identify or describe its business, a name that includes the word “bank”, “banque”, “banking” or “bancaire”, either alone or in combination with other words, or any word or words in any language other than English or French corresponding generally thereto,engages in the business of lending money and accepting deposit liabilities transferable by cheque or other instrument,engages, directly or indirectly, in the business of providing financial services and is affiliated with another foreign bank,controls another foreign bank, oris a foreign institution, other than a foreign bank within the meaning of any of paragraphs (a) to (f), that controls a bank incorporated or formed under this Act,but does not include a subsidiary of a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, unless the Minister has specified that subsection 378(1) no longer applies to the bank; (banque étrangère)foreign bank subsidiary[Repealed, 2001, c. 9, s. 35]foreign institution means an entity that isengaged in the business of banking, the trust, loan or insurance business, the business of a cooperative credit society or the business of dealing in securities or is otherwise engaged primarily in the business of providing financial services, andincorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province; (institution étrangère)form of proxy means a written or printed form that, when completed and executed by or on behalf of a shareholder, constitutes a proxy; (formulaire de procuration)going-private transaction means a going-private transaction as defined in the regulations; (transaction de fermeture)guarantee includes a letter of credit; (garantie)head office, in relation to a bank, means the office required to be maintained under section 237 and, in relation to a bank holding company, means the office required to be maintained under section 814; (siège)holder meansin respect of a security certificate, the person in possession of the certificate issued or endorsed to that person or to bearer or in blank,in respect of the ownership of a share, the shareholder of the share within the meaning of section 7, andin respect of the ownership of a membership share, the member who holds the membership share within the meaning of section 7.1; (détenteur)holding body corporate means a holding body corporate within the meaning of section 4; (société mère)incorporated, when used with reference to a body corporate that is incorporated by or under an Act of Parliament or of the legislature of a province, also refers to a body corporate that is continued by or under any such Act; (constitué en personne morale)incorporating instrument means the special Act, letters patent, instrument of continuance or other constating instrument by which a body corporate was incorporated or continued and includes any amendment to or restatement of the constating instrument; (acte constitutif)incorporator, in relation to a bank or a bank holding company, means a person who applied for letters patent to incorporate the bank or bank holding company, as the case may be; (fondateur)insurance holding company means a body corporate that is incorporated or formed under Part XVII of the Insurance Companies Act; (société de portefeuille d’assurances)issuer, in respect of a security, means the entity that issues or issued the security; (émetteur)letters patent, in respect of an instrument authorized to be issued under this Act, means letters patent in a form approved by the Superintendent; (lettres patentes)local cooperative credit society means a body corporate organized on cooperative principles incorporated by or under an Act of the legislature of a provincewhose members or shareholders consist substantially of natural persons, andwhose principal purpose is to receive deposits from and make loans to its members and shareholders; (société coopérative de crédit locale)member, in relation to a federal credit union, means a person who is one of the members of the federal credit union in accordance with subsection 47.04(2); (membre)membership share, in relation to a federal credit union, means an ownership interest in the federal credit union that confers the rights referred to in subsection 79.1(1); (parts sociales)members register, in relation to a federal credit union, means the register referred to in section 254.1; (registre des membres)Minister means the Minister of Finance; (ministre)minor has the same meaning as in the applicable provincial law and in the absence of any such law has the same meaning as the word child in the United Nations Convention on the Rights of the Child adopted in the United Nations General Assembly on November 20, 1989; (mineur)NAFTA country resident[Repealed, 1999, c. 28, s. 1]non-WTO Member foreign bank means a foreign bank that is not controlled by a WTO Member resident; (banque étrangère d’un non-membre de l’OMC)officer meansin relation to a body corporate, a chief executive officer, president, vice-president, secretary, controller, treasurer and any other natural person designated as an officer of the body corporate by by-law or by resolution of the directors of the body corporate, andin relation to any other entity, any natural person designated as an officer of the entity by by-law, by resolution of the members thereof or otherwise; (dirigeant)order form, in respect of a security, means a security in order form as determined in accordance with subsection 83(3); (titre à ordre)ordinary resolution means a resolution passed by a majority of the votes cast in respect of that resolution; (résolution ordinaire)patronage allocation means an amount that a federal credit union allocates among its members based on the business done by them with or through the federal credit union; (ristourne)person means a natural person, an entity or a personal representative; (personne)personal representative means a person who stands in place of and represents another person and, without limiting the generality of the foregoing, includes, as the circumstances require, a trustee, an executor, an administrator, a committee, a guardian, a tutor, a curator, an assignee, a receiver, an agent or an attorney of any person, but does not include a delegate; (représentant personnel)prescribed means prescribed by regulation; (Version anglaise seulement)principal office means, in relation to an authorized foreign bank, the office required to be maintained under section 535; (bureau principal)principal officer in relation to an authorized foreign bank means the person appointed under section 536; (dirigeant principal)proxy means a completed and executed form of proxy by means of which a shareholder appoints a proxyholder to attend and act on the shareholder’s behalf at a meeting of shareholders; (procuration)proxyholder means the person appointed by proxy to attend and act on behalf of a shareholder at a meeting of shareholders; (fondé de pouvoir)real property includes a leasehold interest in real property; (biens immeubles)recorded address meansin relation to a person who is a shareholder of a bank or a bank holding company, the latest postal address of the person according to its central securities register,in relation to a person who is a member of a federal credit union, the latest postal address of the person according to the members register, andin relation to a person in any other respect in relation to a bank, the latest postal address of the person according to the records of the branch concerned; (adresse enregistrée)registered form, in respect of a security, means a security in registered form as determined in accordance with subsection 83(4); (titre nominatif)regulated foreign entity means an entity that isincorporated or formed otherwise in a country or territory, other than Canada, in which a trade agreement listed in Schedule IV is applicable, andsubject to financial services regulation in that country or territory; (entité étrangère réglementée)regulatory capital, in respect of a bank or a bank holding company, has the meaning given that expression by the regulations; (capital réglementaire)resident Canadian means a natural person who isa Canadian citizen ordinarily resident in Canada,a Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons, ora permanent resident within the meaning of subsection 2(1) of the Immigration and Refugee Protection Act and ordinarily resident in Canada, except a permanent resident who has been ordinarily resident in Canada for more than one year after the time at which the individual first became eligible to apply for Canadian citizenship; (résident canadien)residential property means real property consisting of buildings that are used, or are to be used, to the extent of at least one half of the floor space thereof, as one or more private dwellings; (immeuble résidentiel)securities underwriter means a person who, as principal, agrees to purchase securities with a view to the distribution of the securities or who, as agent for a body corporate or other person, offers for sale or sells securities in connection with a distribution of the securities, and includes a person who participates, directly or indirectly, in a distribution of securities, other than a person whose interest in the distribution of securities is limited to receiving a distributor’s or seller’s commission payable by a securities underwriter; (souscripteur à forfait)security meansin relation to a body corporate, a share of any class of shares of the body corporate or a debt obligation of the body corporate, and includes a warrant of the body corporate, but does not include a deposit with a financial institution or any instrument evidencing such a deposit or, for greater certainty, a membership share, andin relation to any other entity, any ownership interest in or debt obligation of the entity; (titre ou valeur mobilière)security interest means an interest in or charge on property by way of mortgage, lien, pledge or otherwise taken by a creditor or guarantor to secure the payment or performance of an obligation; (sûreté)send includes deliver; (envoyer)series, in respect of shares, means a division of a class of shares; (série)share does not include a membership share; (Version anglaise seulement)significant interest means a significant interest determined in accordance with section 8; (intérêt substantiel)special resolution means a resolution passed by a majority of not less than two thirds of the votes cast in respect of that resolution or signed by all the persons who are entitled to vote on that resolution; (résolution extraordinaire)squeeze-out transaction means a transaction by a bank that is not a distributing bank, or a bank holding company that is not a distributing bank holding company, that requires an amendment to a by-law referred to in subsection 217(1) and that would directly or indirectly result in the interest of a holder of shares of a class of shares being terminated without their consent and without substituting an interest of equivalent value in shares that are issued by the following persons and have rights and privileges equal to or greater than those of the shares of the affected class:in the case of a bank, the bank, andin the case of a bank holding company, the bank holding company; (transaction d’éviction)subordinated indebtedness means an instrument evidencing an indebtedness of a bank that by its terms provides that the indebtedness will, in the event of the insolvency or winding-up of the bank, be subordinate in right of payment to all deposit liabilities of the bank and all other liabilities of the bank except those that, by their terms, rank equally with or are subordinate to such indebtedness; (titre secondaire)subsidiary means an entity that is a subsidiary of another entity as defined in section 5; (filiale)substantial investment means a substantial investment determined in accordance with section 10; (intérêt de groupe financier)Superintendent means the Superintendent of Financial Institutions appointed pursuant to the Office of the Superintendent of Financial Institutions Act; (surintendant)trade, in respect of securities, means any sale or disposition of securities for valuable consideration; (opération)transfer, in respect of securities, includes a transmission by operation of law; (transfert)voting share means a share of any class of shares of a body corporate carrying voting rights under all circumstances or by reason of an event that has occurred and is continuing or by reason of a condition that has been fulfilled; (action avec droit de vote)WTO Member resident means a WTO Member resident within the meaning of section 11.1. (résident d’un membre de l’OMC)1991, c. 46, ss. 2, 572, c. 47, s. 756, c. 48, s. 494; 1992, c. 51, s. 29; 1993, c. 34, s. 5(F), c. 44, s. 22; 1998, c. 30, ss. 13(F), 15(E); 1999, c. 3, s. 14, c. 28, s. 1; 2000, c. 12, s. 3; 2001, c. 9, s. 35, c. 27, s. 206; 2002, c. 7, s. 81(E); 2005, c. 54, s. 1; 2007, c. 6, s. 1; 2010, c. 12, s. 1894, c. 25, s. 146; 2012, c. 5, ss. 2, 223; 2014, c. 39, s. 269; 2015, c. 3, s. 5; 2016, c. 7, s. 1562018, c. 27, s. 3152020, c. 1, s. 1582023, c. 26, s. 128
Interpretation
References to “authorized foreign bank”References in this Act to the carrying on of business in Canada by an authorized foreign bank and to the business in Canada of an authorized foreign bank are deemed, respectively, to be references to the carrying on of business in Canada, or to business in Canada, under Part XII.1.1999, c. 28, s. 2
Major shareholderFor the purposes of this Act, a person is a major shareholder of a body corporate ifthe aggregate of the shares of any class of voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 20 per cent of the outstanding shares of that class of voting shares of the body corporate; orthe aggregate of the shares of any class of non-voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 30 per cent of the outstanding shares of that class of non-voting shares of the body corporate.2001, c. 9, s. 36
Widely heldFor the purposes of this Act, an entity is widely held if it isa body corporate that has no major shareholder;a federal credit union;an insurance company incorporated or formed under a mutual plan;an association to which the Cooperative Credit Associations Act applies; ora cooperative credit society incorporated or formed, and regulated, by or under an Act of the legislature of a province.2001, c. 9, s. 36; 2010, c. 12, s. 1895
Regulations — distributing bank or bank holding companyThe Governor in Council may make regulations respecting the determination of what constitutes a distributing bank or distributing bank holding company for the purposes of this Act.Exemption — bank or bank holding companyOn the application of a bank or bank holding company, the Superintendent may determine that it is not or was not a distributing bank or distributing bank holding company, as the case may be, if the Superintendent is satisfied that the determination would not prejudice any security holder of that bank or bank holding company or any holder of a membership share of that bank.Exemption — class of banks or bank holding companiesThe Superintendent may determine that members of a class of banks or bank holding companies are not or were not distributing banks or distributing bank holding companies, as the case may be, if the Superintendent is satisfied that the determination would not prejudice any security holder of a member of the class or any holder of a membership share of a bank that is a member of the class.2005, c. 54, s. 2; 2010, c. 12, s. 1896
ControlFor the purposes of this Act,a person controls a body corporate if securities of the body corporate to which are attached more than 50 per cent of the votes that may be cast to elect directors of the body corporate 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 body corporate;a person controls a federal credit union if the person and all of the entities controlled by the person have the right to exercise more than 50 per cent of the votes that may be cast at an annual meeting or to elect the majority of the directors of the federal credit union;a person controls an unincorporated entity, other than a limited partnership, if more than 50 per cent of the ownership interests, however designated, into which the entity is divided are beneficially owned by that person and the person is able to direct the business and affairs of the entity;the general partner of a limited partnership controls the limited partnership; anda 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.Deemed controlA person who controls an entity is deemed to control any entity that is controlled, or deemed to be controlled, by the entity.Deemed controlA person is deemed to control, within the meaning of paragraph (1)(a) or (b), an entity if the aggregate ofany securities of the entity that are beneficially owned by that person, andany securities of the entity that are beneficially owned by any entity controlled by that personis such that, if that person and all of the entities referred to in paragraph (b) that beneficially own securities of the entity were one person, that person would control the entity.GuidelinesThe Minister may, for any purpose of any provision of this Act that refers to control within the meaning of paragraph (1)(d), make guidelines respecting what constitutes such control, including guidelines describing the policy objectives that the guidelines and the relevant provisions of the Act are intended to achieve and, if any such guidelines are made, the reference to paragraph (1)(d) in that provision shall be interpreted in accordance with the guidelines.Guidelines — federal credit unionThe Minister may, for any purpose of any provision of this Act that refers to control within the meaning of paragraph (1)(d), make guidelines respecting what constitutes such control of a federal credit union, including guidelines describing the policy objectives that the guidelines and the relevant provisions of the Act are intended to achieve and, if any such guidelines are made, the reference to paragraph (1)(d) in that provision is to be interpreted in accordance with the guidelines.1991, c. 46, s. 3; 2001, c. 9, s. 37; 2010, c. 12, s. 1897
Holding body corporateA body corporate is the holding body corporate of any entity that is its subsidiary.1991, c. 46, s. 4; 2001, c. 9, s. 38
SubsidiaryAn entity is a subsidiary of another entity if it is controlled by the other entity.1991, c. 46, s. 5; 2001, c. 9, s. 38
Affiliated entitiesOne entity is affiliated with another entity if one of them is controlled by the other or both are controlled by the same person.Affiliated entitiesDespite subsection (1), for the purposes of subsections 265(1) and 283(1), one entity is affiliated with another entity if one of them is controlled, determined without regard to paragraph 3(1)(d), by the other or both are controlled, determined without regard to paragraph 3(1)(d), by the same person.1991, c. 46, s. 6; 2001, c. 9, s. 39
ShareholderFor the purposes of this Act, a person is a shareholder of a body corporate when, according to the securities register of the body corporate, the person is the owner of one or more shares of the body corporate or is entitled to be entered in the securities register or like record of the body corporate as the owner of the share or shares.Holder of a shareA reference in this Act to the holding of a share by or in the name of any person is a reference to the fact that the person is registered or is entitled to be registered in the securities register or like record of the body corporate as the holder of that share.
Holder of membership shareFor the purposes of this Act, a person is a holder of a membership share of a federal credit union if the person is the owner of one or more membership shares according to the federal credit union’s members register or is entitled to be entered in that register, or like record of the federal credit union, as the owner of one or more membership shares.References to holding membership shareA reference in this Act to the holding of a membership share by or in the name of any person is a reference to the fact that the person is registered or is entitled to be registered in a federal credit union’s members register, or like record of the federal credit union, as the holder of that membership share.2010, c. 12, s. 1898
Significant interestA person has a significant interest in a class of shares of a bank or a bank holding company if the aggregate ofany shares of that class beneficially owned by the person, andany shares of that class beneficially owned by entities controlled by the personexceeds 10 per cent of all of the outstanding shares of that class of shares of the bank or bank holding company.Significant interest — membership sharesA person has a significant interest in the membership shares of a federal credit union if the aggregate of membership shares beneficially owned by the person and membership shares beneficially owned by entities controlled by the person exceeds 10 per cent of all of the outstanding membership shares.Increasing significant interestA person who has a significant interest in a class of shares of a bank or bank holding company increases that significant interest in the class of shares if the person or any entity controlled by the personacquires beneficial ownership of additional shares of that class, oracquires control of any entity that beneficially owns shares of that class,in such number as to increase the percentage of shares of that class that are beneficially owned by the person and by any entities controlled by the person.Increasing significant interest — membership sharesA person who has a significant interest in the membership shares of a federal credit union increases that significant interest in the membership shares if the person or any entity controlled by the person acquires beneficial ownership of additional membership shares, or acquires control of any entity that beneficially owns membership shares, of the federal credit union in such number as to increase the percentage of membership shares that are beneficially owned by the person and by any entities controlled by the person.1991, c. 46, s. 8; 2001, c. 9, s. 40; 2010, c. 12, s. 1899
Acting in concertFor the purposes of Part VII and Division 7 of Part XV, if two or more persons have agreed, under any agreement, commitment or understanding, whether formal or informal, verbal or written, to act jointly or in concert in respect ofshares of a bank or of a bank holding company that they beneficially own,shares or ownership interests that they beneficially own of any entity that beneficially owns shares of a bank or of a bank holding company, orshares or ownership interests that they beneficially own of any entity that controls any entity that beneficially owns shares of a bank or bank holding company,those persons are deemed to be a single person who is acquiring beneficial ownership of the aggregate number of shares of the bank or bank holding company or shares or ownership interests of the entity that are beneficially owned by them.Acting in concertWithout limiting the generality of subsection (1), any agreement, commitment or understanding by or between two or more persons who beneficially own shares of a bank or bank holding company or shares or ownership interests of any entity referred to in paragraph (1)(b) or (c),whereby any of them or their nominees may veto any proposal put before the board of directors of the bank or bank holding company, orunder which no proposal put before the board of directors of the bank or bank holding company may be approved except with the consent of any of them or their nominees,is deemed to be an agreement, commitment or understanding referred to in subsection (1).ExceptionsFor the purposes of this section, persons shall be presumed not to have agreed to act jointly or in concert solely by reason of the fact thatone is the proxyholder of one or more of the others in respect of shares or ownership interests referred to in subsection (1); orthey vote the voting rights attached to shares or ownership interests referred to in subsection (1) in the same manner.DesignationWhere in the opinion of the Superintendent it is reasonable to conclude that an agreement, commitment or understanding referred to in subsections (1) and (2) exists by or among two or more persons, the Superintendent may designate those persons as persons who have agreed to act jointly or in concert.ContraventionA person contravenes a provision of Part VII or Division 7 of Part XV if the person agrees to act jointly or in concert with one or more other persons in such a manner that a deemed single person contravenes the provision.1991, c. 46, s. 9; 2001, c. 9, s. 41; 2007, c. 6, s. 2
Acting in concert — members’ rights to voteFor the purposes of Part VII, if two or more members have agreed, under any agreement, commitment or understanding, whether formal or informal, verbal or written, to act jointly or in concert in respect of the exercise of any right to vote at a meeting of members, those members are deemed to be a single member.ExceptionsFor the purposes of this section, members are presumed not to have agreed to act jointly or in concert solely by reason of the fact thattheir membership voting rights are vested in the same delegate or delegates; orthey exercise their membership voting rights in the same manner.DesignationIf in the opinion of the Superintendent it is reasonable to conclude that an agreement, commitment or understanding referred to in subsection (1) exists by or among two or more members, the Superintendent may designate those members as members who have agreed to act jointly or in concert.ContraventionA member contravenes a provision of Part VII if the member agrees to act jointly or in concert with one or more other members in such a manner that a deemed single member contravenes that provision.2010, c. 12, s. 1900
Acting in concert — shareholders and members’ right to voteFor the purposes of Part VII, if one or more members of a federal credit union and one or more shareholders of the federal credit union have agreed, under any agreement, commitment or understanding, whether formal or informal, verbal or written, to act jointly or in concert in respect of the exercise of their respective rights to vote, those persons are deemed to be a single person.ExceptionsFor the purposes of this section, persons are presumed not to have agreed to act jointly or in concert solely by reason of the fact thatone or more of the members is the proxyholder of one or more of the shareholders;one or more of the shareholders is a delegate of one or more of the members; orthey exercise their respective voting rights in the same manner.DesignationIf in the opinion of the Superintendent it is reasonable to conclude that an agreement, commitment or understanding referred to in subsection (1) exists by or among one or more members and one or more shareholders, the Superintendent may designate those members and shareholders as persons who have agreed to act jointly or in concert.ContraventionA shareholder or a member contravenes a provision of Part VII if the shareholder or member agrees to act jointly or in concert with one or more other shareholders or members in such a manner that a deemed single person contravenes that provision.2010, c. 12, s. 1900
Substantial investment in body corporateA person has a substantial investment in a body corporate wherethe voting rights attached to the aggregate of any voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person exceed 10 per cent of the voting rights attached to all of the outstanding voting shares of the body corporate;the aggregate of any shares of the body corporate beneficially owned by the person and by any entities controlled by the person represents ownership of greater than 25 per cent of the shareholders’ equity of the body corporate; orin the case of a body corporate that is a federal credit union,the voting rights of the person and of entities controlled by the person exceed 10 per cent of the aggregate of the voting rights that may be exercised by members and shareholders, orthe aggregate of any shares and membership shares of the federal credit union beneficially owned by the person and by any entities controlled by the person represents ownership of greater than 25 per cent of the members’ and shareholders’ equity of the federal credit union.Increasing substantial investment in body corporateA person who has a substantial investment in a body corporate pursuant to paragraph (1)(a) increases that substantial investment when the person or any entity controlled by the personacquires beneficial ownership of additional voting shares of the body corporate in such number as to increase the percentage of voting rights attached to the aggregate of the voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person; oracquires control of any entity that beneficially owns any voting shares of the body corporate in such number as to increase the percentage of voting rights attached to the aggregate of the voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person.IdemA person who has a substantial investment in a body corporate pursuant to paragraph (1)(b) increases that substantial investment when the person or any entity controlled by the personacquires beneficial ownership of additional shares of the body corporate in such number as to increase the percentage of the shareholders’ equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person; oracquires control of any entity that beneficially owns any shares of the body corporate in such number as to increase the percentage of the shareholders’ equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person.Increasing substantial investment in federal credit unionsA person who has a substantial investment in a federal credit union under subparagraph (1)(c)(i) increases that substantial investment when the percentage of the voting rights of the person and of entities controlled by the person in relation to the aggregate of the voting rights that may be exercised by members and shareholders is increased for any reason.Increasing substantial investment in federal credit unionsA person who has a substantial investment in a federal credit union under subparagraph (1)(c)(ii) increases that substantial investment whenthe person or any entity controlled by the person acquires beneficial ownership of additional shares or membership shares of the federal credit union in such number as to increase the percentage of the members’ and shareholders’ equity of the federal credit union represented by the aggregate of the shares and membership shares beneficially owned by the person and by entities controlled by the person; orthe person or any entity controlled by the person acquires control of any entity that beneficially owns shares or membership shares of the federal credit union in such number as to increase the percentage of the members’ and shareholders’ equity of the federal credit union represented by the aggregate of the shares and membership shares beneficially owned by the person and by entities controlled by the person.New substantial investmentFor greater certainty,where a person has a substantial investment in a body corporate pursuant to paragraph (1)(a) and the person, or any entity controlled by the person,purchases or otherwise acquires beneficial ownership of shares of the body corporate, oracquires control of any entity that beneficially owns shares of the body corporate,in such number as to cause the shareholders’ equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person to exceed 25 per cent of the shareholders’ equity of the body corporate, orwhere a person has a substantial investment in a body corporate pursuant to paragraph (1)(b) and the person or any entity controlled by the personpurchases or otherwise acquires beneficial ownership of voting shares of the body corporate, oracquires control of any entity that beneficially owns voting shares of the body corporate,in such number as to cause the voting rights attached to the aggregate of the voting shares beneficially owned by the person and by any entities controlled by the person to exceed 10 per cent of the voting rights attached to all of the outstanding voting shares of the body corporate,the acquisition is deemed to cause the person to increase a substantial investment in the body corporate.New substantial investment — federal credit unionFor greater certainty,if a person has a substantial investment in a federal credit union under subparagraph (1)(c)(i) and the person, or any entity controlled by the person, purchases or otherwise acquires beneficial ownership of shares or membership shares of the federal credit union or acquires control of any entity that beneficially owns shares or membership shares of the federal credit union, the acquisition is deemed to cause the person to increase a substantial investment in the federal credit union if the percentage of the members’ and shareholders’ equity of the federal credit union represented by the aggregate of the shares and membership shares of the federal credit union beneficially owned by the person and by any entities controlled by the person exceeds 25 per cent of the members’ and shareholders’ equity of the federal credit union; orif a person has a substantial investment in a federal credit union under subparagraph (1)(c)(ii) and the person or any entity controlled by the person acquires voting rights in the federal credit union — or acquires control of any entity that has voting rights in the federal credit union — in such number that the percentage of the voting rights of the person and entities controlled by the person exceeds 10 per cent of the aggregate of the voting rights of the members and shareholders of the federal credit union, the acquisition is deemed to cause the person to increase a substantial investment in the federal credit union.Substantial investment in unincorporated entityA person has a substantial investment in an unincorporated entity where the aggregate of any ownership interests, however designated, into which the entity is divided, beneficially owned by the person and by any entities controlled by the person exceeds 25 per cent of all of the ownership interests into which the entity is divided.Increasing substantial investment in unincorporated entitiesA person who has a substantial investment in an unincorporated entity increases that substantial investment when the person or any entity controlled by the personacquires beneficial ownership of additional ownership interests in the unincorporated entity in such number as to increase the percentage of ownership interests in the unincorporated entity beneficially owned by the person and by any entities controlled by the person; oracquires control of any entity that beneficially owns ownership interests in the unincorporated entity in such number as to increase the percentage of ownership interests beneficially owned by the person and by any entities controlled by the person.1991, c. 46, s. 10; 2010, c. 12, s. 1901
[Repealed, 2005, c. 54, s. 3]
WTO Member residentFor the purposes of this Act, a WTO Member resident isa natural person who is ordinarily resident in a country or territory that is a WTO Member, as defined in subsection 2(1) of the World Trade Organization Agreement Implementation Act, other than Canada;a body corporate, association, partnership or other organization that is incorporated, formed or otherwise organized in a country or territory that is a WTO Member, as defined in subsection 2(1) of the World Trade Organization Agreement Implementation Act, other than Canada, and that is controlleddirectly or indirectly, by one or more persons referred to in paragraph (a), orby a government of a WTO Member, whether federal, state or local, or an agency of one of those governments;a trust established by one or more persons referred to in paragraph (a) or (b) or a trust in which one or more of those persons have more than 50 per cent of the beneficial interest; ora body corporate, association, partnership or other organization that is controlled, directly or indirectly, by a trust referred to in paragraph (c).InterpretationFor the purposes of subsection (1),a body corporate is controlled by one or more persons ifsecurities of the body corporate to which are attached more than 50 per cent of the votes that may be cast to elect directors of the body corporate are beneficially owned by the person or persons, andthe votes attached to those securities are sufficient to elect a majority of the directors of the body corporate;an association, partnership or other organization is controlled by one or more persons ifmore than 50 per cent of the ownership interests, however designated, into which the association, partnership or other organization is divided are beneficially owned by the person or persons, andthe person or persons are able to direct the business and affairs of the association, partnership or other organization;a body corporate, association, partnership or other organization is controlled by one or more persons if the person or persons have, directly or indirectly, control in fact of the body corporate, association, partnership or other organization; anda body corporate, association, partnership or other organization that controls another body corporate, association, partnership or other organization is deemed to control any body corporate, association, partnership or other organization that is controlled or deemed to be controlled by the other body corporate, association, partnership or other organization.1993, c. 44, s. 23; 1999, c. 28, s. 3
Exemption from foreign bank statusThe Minister may, by order, and subject to such terms and conditions as the Minister considers appropriate, exempt for the purposes of any provision of this Act any entity from being a foreign bank that, but for that order, would be a foreign bank.Revocation of orderThe Minister may, by further order, revoke or vary any order made under subsection (1), and any such revocation or variation shall come into force three months after the date the further order is made, unless the Minister and the entity to which the order relates agree that the revocation or variation should come into force at some other time agreed by them.NoticeBefore filing an application for an order referred to in subsection (1), an applicant shall publish a notice of intention to make the application in the Canada Gazette.1991, c. 46, s. 12; 2001, c. 9, s. 42.1
Cooperative basisFor the purposes of this Act, a federal credit union is organized and carries on business on a cooperative basis ifa majority of its members are natural persons;it provides financial services primarily to its members;membership in the federal credit union is wholly or primarily open, in a non-discriminatory manner, to persons who can use the services of the federal credit union and who are willing and able to accept the responsibilities of membership;each member has only one vote;a delegate has only one vote even though the delegate is a member or represents more than one member;dividends on any membership share are limited to the maximum percentage fixed in the federal credit union’s letters patent or by-laws; andsurplus funds arising from the federal credit union’s operations are usedto provide for the financial stability of the federal credit union,to develop its business,to provide or improve common services to members,to provide for reserves or dividends on membership shares and shares,for community welfare or the propagation of cooperative enterprises, oras a distribution to its members as a patronage allocation.RestrictionsParagraph (1)(c) is subject to any restrictions in the by-laws of the federal credit union on the classes of persons to which membership may be available, as long as the restrictions are consistent with applicable laws with respect to human rights.2010, c. 12, s. 1902
Member who is shareholderFor greater certainty, a member of a federal credit union who is also a shareholder of the federal credit union may exercise the rights given to a shareholder by this Act for all shares held by the member.2010, c. 12, s. 1902
Application
Application of ActThis Act is the charter of and applies to each bank.1991, c. 46, s. 13; 1999, c. 28, s. 4; 2001, c. 9, s. 43
Schedule I and Schedule II banksSubject to this Act,there shall be set out in Schedule Ithe name of every bank named in Schedules I and II as those Schedules read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force that was not a subsidiary of a foreign bank,the name of every bank incorporated or formed under this Act that is not a subsidiary of a foreign bank, andthe province in which the head office of the bank is situated; andthere shall be set out in Schedule IIthe name of every bank named in Schedule II as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force that was a subsidiary of a foreign bank,the name of every bank incorporated or formed under this Act that is a subsidiary of a foreign bank, andthe province in which the head office of the bank is situated.Amending the schedulesWherea bank is incorporated,a body corporate is continued as a bank,one or more bodies corporate are amalgamated as a bank,the name of a bank is changed,the head office of a bank is changed,a bank becomes, or ceases to be, a subsidiary of a foreign bank,a bank is dissolved, ora bank is continued, or amalgamated and continued, as a body corporate to which another Act of Parliament applies,Schedules I and II shall be amended accordingly.Notice of amendmentsIf in any year either Schedule I or II is amended, the Superintendent shall, within sixty days after the end of the year, cause a notice to be published in the Canada Gazette showing Schedule I or II in its complete amended form as at the end of the year.1991, c. 46, s. 14; 2001, c. 9, s. 43; 2005, c. 54, s. 4; 2007, c. 6, s. 3
Schedule III authorized foreign banksThere shall be set out in Schedule IIIthe name of every authorized foreign bank and, where applicable, any other name under which it is permitted to carry on business in Canada;the province in which the principal office of the authorized foreign bank is situated; andwhether the authorized foreign bank is subject to the restrictions and requirements referred to in subsection 524(2).Amending Schedule IIISchedule III shall be amended accordingly wherean order made under subsection 524(1) is revoked;any of the information referred to in paragraph (1)(a) or (b) changes; orthe restrictions and requirements referred to in subsection 524(2) to which an authorized foreign bank is subject are added or removed.Notice of amendmentsWhere in any year Schedule III is amended, the Superintendent shall, within sixty days after the end of the year, cause a notice to be published in the Canada Gazette showing Schedule III in its complete amended form as at the end of the year.1999, c. 28, s. 5; 2005, c. 54, s. 5
Schedule IVFor the purpose of implementing Canada’s international trade obligations, the Governor in Council may, by order, amend Schedule IV by adding or deleting the name of a trade agreement.2020, c. 1, s. 159
Exemption of foreign banksThe Governor in Council may make regulations exempting any class of foreign banks from the application of any provision of this Act.2001, c. 9, s. 43.1
Status and Powers
Corporate powersA bank has the capacity of a natural person and, subject to this Act, the rights, powers and privileges of a natural person.Powers restrictedA bank shall not carry on any business or exercise any power that it is restricted by this Act from carrying on or exercising, or exercise any of its powers in a manner contrary to this Act.Business in CanadaA bank may carry on business throughout Canada.Powers outside CanadaSubject to this Act, a bank has the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Canada to the extent and in the manner that the laws of that jurisdiction permit.
Policies and procedures — integrity or securityA bank shall establish and adhere to policies and procedures to protect itself against threats to its integrity or security, including foreign interference.2023, c. 26, s. 539
No invalidityNo act of a bank or authorized foreign bank, including any transfer of property to or by a bank or authorized foreign bank, is invalid by reason only that the act or transfer is contrary toin the case of a bank, the bank’s incorporating instrument or this Act; orin the case of an authorized foreign bank, this Act.1991, c. 46, s. 16; 1999, c. 28, s. 6
By-law not necessaryIt is not necessary for a bank to pass a by-law in order to confer any particular power on the bank or its directors.
No personal liabilityThe shareholders of a bank are not, as shareholders, liable for any liability, act or default of the bank except as otherwise provided by this Act.No personal liability — federal credit unionsThe members of a federal credit union are not, as members, liable for any liability, act or default of the federal credit union except as otherwise provided by this Act.1991, c. 46, s. 18; 2010, c. 12, s. 1903
No constructive noticeNo person is affected by or is deemed to have notice or knowledge of the contents of a document concerning a bank or authorized foreign bank by reason only that the document has been filed with the Superintendent or the Minister or is available for inspection at a branch of the bank or authorized foreign bank.1991, c. 46, s. 19; 1993, c. 34, s. 6(F); 1999, c. 28, s. 7
Authority of directors and officersNo bank and no guarantor of an obligation of a bank may assert against a person dealing with the bank or against a person who has acquired rights from the bank thatthe bank’s incorporating instrument or any by-laws of the bank have not been complied with;the persons named as directors of the bank in the most recent return sent to the Superintendent under section 632 are not the directors of the bank;the place named in the incorporating instrument or by-laws of the bank is not the place where the head office of the bank is situated;a person held out by the bank as a director, officer or representative of the bank has not been duly appointed or has no authority to exercise the powers and perform the duties that are customary in the business of the bank or usual for a director, officer or representative; ora document issued by any director, officer or representative of the bank with actual or usual authority to issue the document is not valid or not genuine.Exception — knowledgeSubsection (1) does not apply in respect of a person who has or ought to have knowledge of a situation described in that subsection by virtue of their relationship to the bank.1991, c. 46, s. 20; 1999, c. 28, s. 8; 2005, c. 54, s. 6
Sunset provisionSubject to subsections (2) and (4), banks shall not carry on business, and authorized foreign banks shall not carry on business in Canada, after June 30, 2026.ExtensionThe Governor in Council may, by order, extend by up to six months the time during which banks may continue to carry on business and authorized foreign banks may continue to carry on business in Canada. No more than one order may be made under this subsection.Order not a regulationThe order is not a regulation for the purposes of the Statutory Instruments Act. However, it shall be published in Part II of the Canada Gazette.Exception — dissolutionIf Parliament dissolves on the day set out in subsection (1) or on any day within the six-month period before that day or on any day within an extension ordered under subsection (2), banks may continue to carry on business, and authorized foreign banks may continue to carry on business in Canada, until the end of the 180th day after the first day of the first session of the next Parliament.1991, c. 46, s. 21; 1997, c. 15, s. 2; 1999, c. 28, s. 9; 2001, c. 9, s. 44; 2006, c. 4, s. 199; 2007, c. 6, s. 4; 2012, c. 5, s. 3; 2016, c. 7, s. 118; 2018, c. 12, s. 3552021, c. 23, s. 1542024, c. 17, s. 404
Incorporation and ContinuanceFormalities of Incorporation
Incorporation of bankOn the application of one or more persons made in accordance with this Act, the Minister may, subject to this Part, issue letters patent incorporating a bank, other than a federal credit union.Incorporation of federal credit unionOn the application of five or more persons, a majority of whom are natural persons, made in accordance with this Act, the Minister may, subject to this Part, issue letters patent incorporating a federal credit union.1991, c. 46, s. 22; 2010, c. 12, s. 1904
Restrictions on incorporationLetters patent incorporating a bank may not be issued if the application therefor is made by or on behalf ofHer Majesty in right of Canada or in right of a province, an agency of Her Majesty in either of those rights, or an entity controlled by Her Majesty in either of those rights;the government of a foreign country or any political subdivision thereof;an agency of the government of a foreign country or any political subdivision thereof; oran entity that is controlled by the government of a foreign country or any political subdivision thereof, other than an entity that is a foreign bank, a foreign institution or a subsidiary of a foreign bank or foreign institution.1991, c. 46, s. 23; 2001, c. 9, s. 45
Subsidiary of foreign bankIf a proposed bank would be a subsidiary of a foreign bank, within the meaning of paragraphs (a) to (f) of the definition foreign bank in section 2, and the application for letters patent to incorporate the bank is made by a non-WTO Member foreign bank, letters patent to incorporate the bank may not be issued unless the Minister is satisfied that treatment as favourable for banks to which this Act applies exists or will be provided in the jurisdiction in which the foreign bank principally carries on business, either directly or through a subsidiary.1991, c. 46, s. 24; 1999, c. 28, s. 10; 2001, c. 9, s. 46
Application for incorporationAn application for letters patent to incorporate a bank setting out the names of the first directors of the bank shall be filed with the Superintendent, together with such other information, material and evidence as the Superintendent may require.Publishing notice of intentBefore filing an application referred to in subsection (1), the applicant or one of the applicants, as the case may be, shall, at least once a week for a period of four consecutive weeks, publish, in a form satisfactory to the Superintendent, a notice of intention to make the application in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the bank is to be situated.
Objections to incorporationAny person who objects to the proposed incorporation of a bank may, within thirty days after the date of the last publication under subsection 25(2) in respect of the proposed bank, submit the objection in writing to the Superintendent.Minister to be informedOn receipt of an objection under subsection (1), the Superintendent shall inform the Minister of the objection.Inquiry into objection and reportOn receipt of an objection under subsection (1), and if the application for the issuance of the letters patent to which the objection relates has been received, the Superintendent shall, if satisfied that it is necessary and in the public interest to do so, hold or cause to be held a public inquiry into the objection as it relates to the application and, on completion of the inquiry, the Superintendent shall report the findings of the inquiry to the Minister.Report to be made availableWithin thirty days after receiving a report under subsection (3), the Minister shall make the report available to the public.Rules governing proceedingsSubject to the approval of the Governor in Council, the Superintendent may make rules governing the proceedings at public inquiries held under this section.
Matters for considerationBefore issuing letters patent to incorporate a bank, the Minister shall take into account all matters that the Minister considers relevant to the application, includingthe nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the bank;the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the bank;the business record and experience of the applicant or applicants;the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;whether the bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;the impact of any integration of the businesses and operations of the applicant or applicants with those of the bank on the conduct of those businesses and operations;the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the applicant or applicants and their affiliates may affect the supervision and regulation of the bank, having regard tothe nature and extent of the proposed financial services activities to be carried out by the bank and its affiliates, andthe nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the bank;if the bank will be a federal credit union, that it will be organized and carry on business on a cooperative basis in accordance with section 12.1; andthe best interests of the financial system in Canada including, if the bank will be a federal credit union, the best interests of the cooperative financial system in Canada.1991, c. 46, s. 27; 2001, c. 9, s. 47; 2010, c. 12, s. 1905
Contents of letters patentThere shall be set out in the letters patent incorporating a bankthe name of the bank;in the case of a bank that is to be a federal credit union, a statement that it is a federal credit union;the province in which the head office of the bank is to be situated; andthe date that the bank came, or is to come, into existence.Provisions in letters patentThe Minister may set out in the letters patent incorporating a bank any provision not contrary to this Act that the Minister considers advisable in order to take into account the particular circumstances of the proposed bank.Terms and conditionsThe Minister may impose such terms and conditions in respect of the issuance of letters patent incorporating a bank as the Minister considers necessary or appropriate.1991, c. 46, s. 28; 2005, c. 54, s. 7; 2010, c. 12, s. 1906
Letters patent of incorporation on application of certain companiesIf the Minister issues letters patent, under section 22, incorporating a bank on the application of a company to which the Trust and Loan Companies Act or the Insurance Companies Act applies and the paid-in capital of the bank immediately following its incorporation will be not less than five million dollars or any greater amount that the Minister may specify under subsection 46(1), there may, on the request of the company and with the approval of the Minister, be included in the letters patent a provision deeming shares of the bank to be issued, on a share for share basis, to all shareholders of the company in exchange for all the issued and outstanding shares of the company.Effect of provisionShares of a bank deemed to be issued pursuant to subsection (1) are subject to the same designation, rights, privileges and restrictions or conditions and, subject to any agreement to the contrary, to the same charges, encumbrances and other restrictions as the shares of the company for which they are exchanged and the shares of the company, on the issuance of the letters patent, become the property of the bank free and clear of any charge, encumbrance or other restriction.IdemAn exchange of shares of a company referred to in subsection (1) pursuant to a provision included in the letters patent incorporating a bank does not deprive a person who was a holder of shares of the company immediately prior to the exchange of any right or privilege with respect to the shares or relieve the person of any liability in respect thereof, but any such right or privilege shall be exercised in accordance with this Act.Transfer and voting of bank sharesNotwithstanding subsection (3), no share of a bank that is deemed to be issued pursuant to a provision included in the letters patent incorporating a bank may subsequently be transferred or voted contrary to this Act, but any shareholder of a bank who acquired shares of the bank by means of an exchange of shares of a company referred to in subsection (1) pursuant to that provision may, for a period of ten years from the date of issuance of the letters patent, exercise the voting rights attached to the shares without regard to any provisions of this Act, other than subsection (7), that would otherwise prohibit the shareholder from voting the shares.Shareholder approvalNo provision described in subsection (1) may be included in letters patent issued pursuant to section 22 unless the application therefor is accompanied by evidence that the request for such a provision was approved by a vote of at least two thirds of those shareholders of the applicant company entitled to vote thereon, present or represented by proxy and voting at a shareholders’ meeting called to consider the application.Exchange of share certificatesWhere, pursuant to a provision included in the letters patent incorporating a bank, a share exchange is deemed to have taken place, the bank shall, within ninety days after the issuance of the letters patent, make provision for the issue of share certificates representing shares of the bank and for the exchange of those certificates for share certificates representing the shares of the company that were outstanding on the day the letters patent were issued.Shares of bank may continue to be heldNotwithstanding any other provision of this Act, where letters patent incorporating a bank include a provision described in subsection (1) and, on the date of issuance of the letters patent, another bank and any entities controlled by that other bank held, in the aggregate, more than ten per cent of any class of shares of the applicant company, that other bank may have a significant interest in any class of shares of the bank deemed to be issued pursuant to subsection (1) in exchange for the shares of the company for a period of two years from the date of issuance of the letters patent.Extension of periodOn application of a bank authorized by subsection (7) to hold, directly or through a subsidiary, shares of another bank, the Minister may, by order, extend the period referred to in subsection (7), but the aggregate of such extensions from time to time granted to a bank and of the period referred to in subsection (7) may not, in any case, exceed ten years.[Repealed, 2001, c. 9, s. 48]1991, c. 46, ss. 29, 573, c. 47, s. 756; 2001, c. 9, s. 48
Notice of issue of letters patentThe Superintendent shall cause to be published in the Canada Gazette a notice of the issuance of letters patent incorporating a bank.
First directorsThe first directors of a bank are the directors named in the application for letters patent to incorporate the bank.
First members of federal credit unionThe incorporators of a federal credit union are deemed to be its first members.2010, c. 12, s. 1907
Effect of letters patentA bank comes into existence on the date provided therefor in its letters patent.
Continuance
Federal corporationsA body corporate incorporated under the Canada Business Corporations Act or any other Act of Parliament, including a bank holding company, may apply to the Minister for letters patent continuing the body corporate as a bank under this Act.Other corporationsA body corporate incorporated otherwise than by or under an Act of Parliament may, if so authorized by the laws of the jurisdiction where it is incorporated, apply to the Minister for letters patent continuing the body corporate as a bank under this Act.Continuance for purpose of amalgamationA local cooperative credit society may, if so authorized by the laws of the jurisdiction in which it is incorporated, apply to the Minister for letters patent continuing it as a federal credit union if it proposes to be continued under this Act for the purpose of immediately amalgamating with another federal credit union in accordance with this Act.Continuance for purpose of amalgamationTwo or more local cooperative credit societies may, if so authorized by the laws of the jurisdiction in which they are incorporated, apply to the Minister for letters patent continuing each of them as a federal credit union if they propose to be continued under this Act for the purpose of immediately amalgamating with each other in accordance with this Act.Application for amalgamation requiredAn application referred to in subsection (3) or (4) must be made at the same time as an application referred to in subsection 223(1.2) or (1.3) in respect of the amalgamation.1991, c. 46, s. 33; 1994, c. 24, s. 34(F); 2001, c. 9, s. 49; 2010, c. 12, s. 1908; 2014, c. 39, s. 270
Application for continuanceIf a body corporate applies for letters patent under section 33, sections 23 to 27 apply in respect of the application, with any modifications that the circumstances require.Joint notice of continuance and amalgamationIn the case of an application made under subsection 33(3) or (4), the applicants referred to in subsection 223(1.2) or (1.3) may, in accordance with subsection 25(2) and paragraph 228(2)(a), jointly publish the notices referred to in those provisions in the form of a single notice.Special resolution approvalIf a body corporate applies for letters patent under section 33, the application must be duly authorized by a special resolution.Copy of special resolutionA copy of the special resolution referred to in subsection (2) shall be filed with the application.Continuance and amalgamation — special resolutionsIn the case of an application made under subsection 33(3) or (4), the vote on the special resolution must be held at the same time as the vote on the special resolutions referred to in subsection 226(4).1991, c. 46, s. 34; 2010, c. 12, s. 1909; 2014, c. 39, s. 271
Power to issue letters patentOn the application of a body corporate under section 33, the Minister may, subject to this Part, issue letters patent continuing the body corporate as a bank under this Act.Issue of letters patentWhere letters patent are issued to a body corporate under subsection (1), section 28 applies in respect of the issue of letters patent, with such modifications as the circumstances require.1991, c. 46, s. 35; 2010, c. 12, s. 1910(E)
Power to issue letters patentOn the application of a local cooperative credit society under subsection 33(2), the Minister may, subject to this Part, issue letters patent continuing the local cooperative credit society as a federal credit union only if the Minister is of the opinion that the local cooperative credit society has complied with the regulations respecting notice and disclosure requirements.Power to issue letters patentOn the application of a local cooperative credit society under subsection 33(3) or (4), the Minister may, subject to this Part, issue letters patent continuing the local cooperative credit society as a federal credit union only ifthe Minister is of the opinion that the local cooperative credit society has complied with the regulations respecting notice and disclosure requirements;the Minister is of the opinion that the federal credit union that results from the amalgamation will satisfy the requirements for incorporation as a federal credit union; andthe Minister will, immediately after issuing letters patent for the continuance, issue letters patent for the amalgamation under subsection 229(1).RegulationsThe Governor in Council may make regulations respecting notice and disclosure requirements for the purpose of subsections (1) and (2).ExemptionFor the purpose of facilitating the continuance as a federal credit union of a local cooperative credit society, the Minister may, on application and by order, subject to any terms and conditions that he or she considers appropriate, exempt the local cooperative credit society from any requirement of this Part or of the regulations made under this Part, if he or she is of the opinion that it has acted in a manner that substantially complies with the requirement.2010, c. 12, s. 1911; 2014, c. 39, s. 272; 2016, c. 7, s. 123
Effect of letters patentOn the day set out in the letters patent continuing a body corporate as a bank,the body corporate becomes a bank as if it had been incorporated under this Act; andthe letters patent are deemed to be the incorporating instrument of the continued bank.1991, c. 46, s. 36; 2010, c. 12, s. 1912(E)
Copy of letters patentWhere a body corporate is continued as a bank under this Part, the Superintendent shall forthwith send a copy of the letters patent to the appropriate official or public body in the jurisdiction in which the body corporate was authorized to apply to be continued under this Act.Notice of issuance of letters patentThe Superintendent shall cause to be published in the Canada Gazette a notice of the issuance of letters patent continuing a body corporate as a bank under this Act.Notice of continuance and amalgamationIn the case of a continuance that results from an application made under subsection 33(3) or (4), the Superintendent may publish, in the form of a single notice, the notice referred to subsection (2), the notice required under subsection 229(3) in respect of the amalgamation and any notice required under subsection (2) in respect of other applicants for the amalgamation.1991, c. 46, s. 37; 2014, c. 39, s. 273
Effects of continuanceWhere a body corporate is continued as a bank under this Part,the property of the body corporate continues to be the property of the bank;the bank continues to be liable for the obligations of the body corporate;an existing cause of action or claim by or against the body corporate or any liability of the body corporate to prosecution is unaffected;a civil, criminal or administrative action or proceeding pending by or against the body corporate may continue to be prosecuted by or against the bank;a conviction against, or any ruling, order or judgment in favour of or against the body corporate may be enforced by or against the bank;a person who, on the day the body corporate becomes a bank, was the holder of a security issued by the body corporate is not deprived of any right or privilege available to the person at that time in respect of the security or relieved of any liability in respect thereof, but any such right or privilege may be exercised only in accordance with this Act; andthe by-laws of the body corporate, except those that are in conflict with this Act, continue as the by-laws of the bank.Membership sharesIn addition, if the body corporate is continued as a federal credit union,in the case of a body corporate with common shares,its common shares are deemed to be membership shares to which are attached the rights, privileges and restrictions set out in this Act,the holders of those common shares are deemed to be the members of the federal credit union, andany agreement made before continuance under which the holders of any common shares of the body corporate have agreed to vote those shares in a manner provided in the agreement is of no effect; andin the case of a body corporate that has members,the membership shares, however designated, of the body corporate are deemed to be membership shares of the federal credit union to which are attached the rights, privileges and restrictions set out in this Act,the members of the body corporate are deemed to be the members of the federal credit union, andany agreement made before continuance under which the members of the body corporate have agreed to vote in a manner provided in the agreement is of no effect.1991, c. 46, s. 38; 2010, c. 12, s. 1913
TransitionalNotwithstanding any other provision of this Act or the regulations, the Minister may, on the recommendation of the Superintendent, by order, grant to a bank in respect of which letters patent were issued under subsection 35(1) permission toengage in a business activity specified in the order that a bank is not otherwise permitted by this Act to engage in and that the body corporate continued as the bank was engaging in at the time the application for the letters patent was made;continue to have issued and outstanding debt obligations the issue of which is not authorized by this Act if the debt obligations were outstanding at the time the application for the letters patent was made;[Repealed, 1994, c. 47, s. 14]hold assets that a bank is not otherwise permitted by this Act to hold if the assets were held by the body corporate continued as the bank at the time the application for the letters patent was made;acquire and hold assets that a bank is not otherwise permitted by this Act to acquire or hold if the body corporate continued as the bank was obliged, at the time the application for the letters patent was made, to acquire those assets; andmaintain outside Canada any records or registers required by this Act to be maintained in Canada.DurationThe permission granted under subsection (1) shall be expressed to be granted for a period specified in the order not exceedingwith respect to any activity described in paragraph (1)(a), 30 days after the date of issue of the letters patent orif the activity is conducted under an agreement existing on the date of issue of the letters patent, the expiry of the agreement, orif the bank is a federal credit union and an undertaking to cease engaging in the activity has been given under subsection 973.02(1), the cessation date set out in the undertaking in respect of the activity;with respect to any matter described in paragraph (1)(b), ten years; andwith respect to any matter described in any of paragraphs (1)(d) to (f), two years.RenewalSubject to subsection (4), the Minister may, on the recommendation of the Superintendent, by order, renew a permission granted by order under subsection (1) with respect to any matter described in paragraphs (1)(b) to (e) for such further period or periods as the Minister considers necessary.LimitationThe Minister shall not grant to a bank any permissionwith respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the date of the approval for the bank to commence and carry on business, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the bank that the bank will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; andwith respect to matters described in paragraphs (1)(d) and (e), that purports to be effective more than ten years after the date of the approval for the bank to commence and carry on business.1991, c. 46, s. 39; 1994, c. 47, s. 14; 1997, c. 15, s. 3; 2007, c. 6, s. 5; 2010, c. 12, s. 1914
Transitional — federal credit unionsWhen the Minister issues letters patent continuing a local cooperative credit society as a federal credit union under subsection 35(1), he or she may, on application and by order, subject to any terms and conditions that he or she considers appropriate, exempt the federal credit union resulting from the continuance from any requirement of Part VI — or of the regulations made under this Act — relating to voting, if he or she is of the opinion that the federal credit union will act in a manner that substantially complies with the requirement.DurationThe order shall specify the period of the exemption, which may not extend beyond the third anniversary of the effective date of the letters patent.2016, c. 7, s. 124
Transitional — loan guaranteeFor the purpose of supporting a federal credit union during the period that begins on the effective date of the federal credit union’s letters patent issued under subsection 35(1) and ends on the third anniversary of that date, the Minister may, subject to any terms and conditions that he or she considers appropriate and for the period that he or she considers appropriate, guarantee the repayment of a loan that a federal financial institution makes to the federal credit union.2016, c. 7, s. 124
Discontinuance
Transferring to other federal Acts — banksA bank that is not a federal credit union mayapply, with the approval in writing of the Minister, under the Canada Business Corporations Act for a certificate of continuance as a corporation under that Act;apply, with the approval in writing of the Minister, under the Canada Cooperatives Act for a certificate of continuance, or a certificate of continuance and a certificate of amalgamation, as a cooperative under that Act;apply, under the Cooperative Credit Associations Act, for letters patent continuing the bank as an association under that Act, or amalgamating and continuing the bank as an association under that Act;apply, under the Insurance Companies Act, for letters patent continuing the bank as a company (other than a mutual company) or an insurance holding company under that Act, or amalgamating and continuing the bank as a company (other than a mutual company) or an insurance holding company under that Act; orapply, under the Trust and Loan Companies Act, for letters patent continuing the bank as a company under that Act, or amalgamating and continuing the bank as a company under that Act.Conditions for approvalThe approval referred to in paragraph (1)(a) or (b) may be given only if the Minister is satisfied thatthe bank has published, once a week for four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the bank is situated, a notice of its intention to apply for the approval;the application has been authorized by a special resolution; andthe bank does not hold deposits, other than deposits that are made by a person who controls the bank or by a person who has a significant interest in a class of shares of the bank and that are not insured by the Canada Deposit Insurance Corporation.Withdrawing applicationIf a special resolution authorizing the application for the certificate or letters patent so states, the directors of the bank may, without further approval of the shareholders, withdraw the application before it is acted on.Restriction on other transfersA bank may not apply to be continued, or to be amalgamated and continued, as the case may be, as a body corporate other than one referred to in subsection (1).1991, c. 46, s. 574; 1997, c. 15, s. 4; 1999, c. 28, s. 11; 2001, c. 9, s. 50; 2007, c. 6, s. 6; 2010, c. 12, s. 1915
Transferring to other federal Acts — federal credit unionA federal credit union mayapply, with the approval in writing of the Minister, under the Canada Cooperatives Act for a certificate of continuance, or a certificate of continuance and a certificate of amalgamation, as a cooperative under that Act; orapply under the Cooperative Credit Associations Act for letters patent continuing the federal credit union as an association under that Act or amalgamating and continuing the federal credit union as an association under that Act.Conditions for approvalThe approval referred to in paragraph (1)(a) may be given only if the Minister is satisfied thatthe federal credit union has published, once a week for four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where its head office is situated, a notice of its intention to apply for the approval;the application has been authorized by a special resolution of the members and, if the federal credit union has issued shares, by a separate special resolution of the shareholders of each class of shares; andthe federal credit union does not hold deposits.All shares have right to voteFor the purpose of paragraph (2)(b), each share carries the right to vote in respect of the special resolution, whether or not it otherwise carries the right to vote in respect of any other matter.Restriction on other transfersA federal credit union may not apply to be continued, or to be amalgamated and continued, as the case may be, as a body corporate other than one referred to in subsection (1).1997, c. 15, s. 4; 2001, c. 9, s. 50; 2007, c. 6, s. 6; 2010, c. 12, s. 1916
Act ceases to applyIf a bank applies for a certificate or letters patent referred to in section 39.1 or 39.2 in accordance with that section and the certificate is given or the letters patent are issued, this Act ceases to apply to the bank as of the day on which the certificate or the letters patent take effect.2010, c. 12, s. 1916
Corporate Name
Prohibited namesA bank may not be incorporated under this Act with a namethat is prohibited by an Act of Parliament;that is, in the opinion of the Superintendent, deceptively misdescriptive;that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, any existingtrademark or trade name, orcorporate name of a body corporate,except where the trademark or trade name is being changed or the body corporate is being dissolved or is changing its corporate name and consent to the use of the trademark, trade name or corporate name is signified to the Superintendent in such manner as the Superintendent may require;that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, the known name under or by which any entity carries on business or is identified;that is reserved under section 43 for another bank or an authorized foreign bank or a proposed bank or a proposed authorized foreign bank or under section 697 for a bank holding company or a proposed bank holding company;that includes the phrase “credit union” or “coopérative de crédit”, or any abbreviation, combination or derivative of those phrases, unless it is to be a federal credit union and its name also includes the word “bank”, “banque”, “federal” or “fédérale” in conjunction with those phrases; orthat includes the words “cooperative” or “coopérative”, or any abbreviation, combination or derivative of those words, unless it is to be a federal credit union and its name also includes the word “bank”, “banque”, “federal” or “fédérale” in conjunction with those words.1991, c. 46, s. 40; 1996, c. 6, s. 1; 1997, c. 15, s. 5; 1999, c. 28, s. 12; 2001, c. 9, s. 51; 2010, c. 12, s. 19172014, c. 20, s. 366(E)
Name of federal credit unionDespite any other Act, but subject to paragraphs 40(f) and (g), a bank may be incorporated or formed under this Act with the words “credit union” “coopérative de crédit”, “cooperative” or “coopérative”, or any abbreviation, combination or derivative of those words, in its name, but only if it will be a federal credit union.2010, c. 12, s. 1918
Affiliated bankDespite section 40, a bank that is affiliated with another entity may, with the consent of that entity, be incorporated with, or change its name to, substantially the same name as that of the affiliated entity.1991, c. 46, s. 41; 1996, c. 6, s. 1; 2001, c. 9, s. 52; 2007, c. 6, s. 7
French or English form of nameThe name of a bank may be set out in its letters patent in an English form, a French form, an English form and a French form or in a combined English and French form, and the bank may use and be legally designated by any such form.Alternate nameA bank may identify itself outside Canada by its name in any language and the bank may use and be legally designated by any such form of its name outside Canada.Other nameSubject to subsection (4) and section 255, a bank may carry on business under or identify itself by a name other than its corporate name.DirectionsIf a bank is carrying on business under or identifying itself by a name other than its corporate name, the Superintendent may, by order, direct the bank not to use that other name if the Superintendent is of the opinion that that other name is a name referred to in any of paragraphs 40(a) to (g).1991, c. 46, s. 42; 1996, c. 6, s. 2; 2010, c. 12, s. 1919
Reserved nameThe Superintendent may, on request, reserve for ninety days a name for a proposed bank or proposed authorized foreign bank or for a bank or authorized foreign bank that intends to change its name.1991, c. 46, s. 43; 1999, c. 28, s. 13
Directing change of nameIf through inadvertence or otherwise a bankcomes into existence or is continued with a name, oron an application to change its name, is granted a namethat is prohibited by section 40, the Superintendent may, by order, direct the bank to change its name and the bank shall comply with that direction.Revoking nameIf a bank has been directed under subsection (1) to change its name and has not, within sixty days after the service of the direction, changed its name to a name that is not prohibited by this Act, the Superintendent may revoke the name of the bank and assign to it a name and, until changed in accordance with section 215 or 217, the name of the bank is thereafter the name so assigned.1991, c. 46, s. 44; 1996, c. 6, s. 3; 2001, c. 9, s. 53
Organization and CommencementOrganization MeetingsBanks Other Than Federal Credit Unions
First directors’ meetingAfter letters patent incorporating a bank that is not a federal credit union are issued, a meeting of the directors of the bank must be held at which the directors may, subject to this Part,make by-laws;adopt forms of share certificates and corporate records;authorize the issue of shares of the bank;appoint officers;appoint, pursuant to subsection 314(1), an auditor or auditors to hold office until the first meeting of shareholders;make banking arrangements; anddeal with any other matters necessary to organize the bank.Calling directors’ meetingAn incorporator or a director named in the application for letters patent may call the meeting referred to in subsection (1) by giving, subject to subsection 181(2), no fewer than five days notice of the purpose, time and place of the meeting to each director of the bank.1991, c. 46, s. 45; 2010, c. 12, s. 1921
Calling shareholders’ meetingIf at least five million dollars, or any greater amount that the Minister may specify, has been received by a bank in respect of which letters patent were issued under subsection 22(1) from the issue of its shares, the directors of the bank must without delay call a meeting of the shareholders of the bank.Meeting of shareholdersThe shareholders of a bank shall, by resolution at the meeting of shareholders called pursuant to subsection (1),approve, amend or reject any by-law made by the directors of the bank;subject to section 168, elect directors to hold office for a term expiring not later than the close of the third annual meeting of shareholders following the election; andappoint an auditor or auditors to hold office until the close of the first annual meeting of shareholders.1991, c. 46, s. 46; 2001, c. 9, s. 54; 2010, c. 12, s. 1922
Term of first directorsA director named in the application for letters patent to incorporate a bank holds office until the election of directors at the meeting of shareholders called pursuant to subsection 46(1).1991, c. 46, s. 47; 2010, c. 12, s. 1923(F)
Federal Credit UnionsMeeting of First Directors
Organizational meetingAfter letters patent incorporating a federal credit union are issued, a meeting of its first directors must be held at which the first directors may, subject to this Part,adopt forms of certificates for membership shares, forms of share certificates and forms of corporate records;admit persons to membership in the federal credit union and issue or authorize the issuance of membership shares;authorize the issue of shares of the federal credit union;appoint officers;appoint, under subsection 314(1), an auditor or auditors to hold office until the first meeting of members;make banking arrangements; anddeal with any other matters necessary to organize the federal credit union.Calling directors’ meetingA first director may call the meeting referred to in subsection (1) by giving, subject to subsection 181(2), the other directors notice of the time and place of the meeting no fewer than five days before the meeting.2010, c. 12, s. 1924
First Meeting of Members
Calling members’ meetingIf at least five million dollars, or any greater amount that the Minister may specify, has been received by a federal credit union in respect of which letters patent were issued under subsection 22(2) from the issue of its membership shares and shares, the directors of the federal credit union must, without delay, call a meeting of the members of the federal credit union.Meeting of membersAt the meeting, the members mustmake by-laws;elect directors in accordance with this Act and the federal credit union’s by-laws; andappoint an auditor or auditors to hold office until the close of the first annual meeting of the federal credit union.Term of office of first directorsThe term of office of the first directors ends at the close of the meeting referred to in subsection (1).2010, c. 12, s. 1924
Membership in a Federal Credit UnionConditions of Membership
Membership governed by by-lawsSubject to the provisions of this Act, membership in a federal credit union is governed by its by-laws.Minimum membership shares requiredTo be a member of a federal credit union, a person must acquire and hold the minimum number of membership shares required under the federal credit union’s by-laws.Member who ceases to hold the minimumSubject to any limitations in the federal credit union’s by-laws, including limitations on the rights members may exercise, a member of a federal credit union who ceases to hold enough membership shares to be a member continues to be a member of the federal credit union for the purposes of this Act.Ground for expulsionFor greater certainty, subsection (3) does not prevent holding fewer than the minimum number of membership shares from being set out in the federal credit union’s by-laws as a ground for expulsion under subsection 47.06(1) or section 47.09.2010, c. 12, s. 1924
Subscription deemed applicationA subscription for the number of membership shares in a federal credit union required by the federal credit union’s by-laws for membership constitutes an application for membership and the issue of a membership share to the applicant constitutes admission to membership.Approval requiredSubject to subsection (1), a person becomes a member of a federal credit union when the person’s application for membership is approved by the directors or an employee authorized by the federal credit union and the applicant has complied fully with the federal credit union’s by-laws governing admission of members.2010, c. 12, s. 1924
Withdrawal and Termination
Withdrawal of membershipA member of a federal credit union may withdraw from the federal credit union at any time by giving notice in accordance with the by-laws.Deemed noticeA deceased member is deemed to have given notice to the federal credit union of their intention to withdraw on the day of their death.Rights of withdrawing memberThe by-laws of a federal credit union must set out the rights of a withdrawing member.2010, c. 12, s. 1924
ExpulsionA member of a federal credit union may be expelled from membership, in accordance with the by-laws, by a resolution of the directors on the grounds set out in the by-laws.Member’s rights relating to expulsionThe by-laws of a federal credit union must set out the rights of members who are expelled under subsection (1), and those rights must includethe right of a member to receive advance notice of any meeting of the directors at which the board will consider a resolution to expel the member;the right of a member not to be expelled without being given an opportunity to make representations on the matter at the meeting of the directors;the right of an expelled member to appeal the decision of the directors at the next meeting of the members; andthe right of the expelled member to be reinstated as a member of the federal credit union if, at the next meeting of the members, the members, by ordinary resolution, set aside the directors’ resolution.Procedures to be set out in by-lawsThe by-laws of a federal credit union must set outthe procedures to be followed by the directors to provide the advance notice referred to in paragraph (2)(a); andthe procedures to be followed relating to the appeal referred to in paragraph (2)(c).Notice of decisionIf the directors pass a resolution expelling a member under subsection (1), the federal credit union must, within five days after the passing of the resolution, notify the member of the directors’ decision by registered letter addressed to the member at the member’s recorded address.2010, c. 12, s. 1924
InactivityNo by-law may provide for the expulsion of a member by reason only of inactivity of the member in relation to the business or affairs of the federal credit union.2010, c. 12, s. 1924
RedemptionNo by-law governing the withdrawal of a member from membership or the termination of the membership of a member may authorize a redemption of membership shares in contravention of section 485.2010, c. 12, s. 1924
Termination by membersUnless the by-laws provide otherwise, the membership of a member may be terminated by a special resolution of the members. Section 47.06 applies, with any modifications that the circumstances require, to a termination by the members.2010, c. 12, s. 1924
Winding-up proceedings in respect of memberDespite subsection 47.06(1), a federal credit union may, by written notice to a member, terminate the membership if the member is a body corporate and winding-up proceedings have commenced with respect to it.2010, c. 12, s. 1924
General Provisions — Federal Credit Unions
ProhibitionAn entity must not become a member of a federal credit union if, as a result of becoming a member, the majority of the members of the federal credit union would not be natural persons.2010, c. 12, s. 1924
Provision of servicesA federal credit union must provide its services primarily to its members.2010, c. 12, s. 1924
Right to voteEach member of a federal credit union has only one vote on all matters to be decided by the members.2010, c. 12, s. 1924
Members under 18Subject to the by-laws, a person less than 18 years of age may be admitted to membership in a federal credit union and may vote at meetings of the federal credit union.2010, c. 12, s. 1924
Membership not transferableNo transfer of a membership is valid for any purpose.2010, c. 12, s. 1924
Reinstatement — section 47.06A person whose membership has been terminated under section 47.06 may be reinstated as a member of the federal credit union only by ordinary resolution of the members.Reinstatement — section 47.09A person whose membership has been terminated under section 47.09 may be reinstated as a member of the federal credit union only by special resolution of the members.2010, c. 12, s. 1924
Transfer of membership sharesNo transfer of membership shares in a federal credit union is valid unless the transfer is approved by resolution of the directors.2010, c. 12, s. 1924
Obligation to have at least five membersA federal credit union must ensure that at all times it has at least five members.Membership too lowIf the membership of a federal credit union is reduced to fewer than five members, the federal credit union must, without delay, take the steps that are necessary tomake an application referred to in subsection 39.2(1) or section 216.08; orliquidate and dissolve the federal credit union under Part VI.2010, c. 12, s. 1924
ExemptionThe Minister may, subject to any terms and conditions that the Minister considers appropriate, exempt any entity or federal credit union from the application of sections 47.11, 47.12 and 47.18.2010, c. 12, s. 1924
Commencement and Carrying on of Business
Order to commence and carry on businessA bank shall not carry on any business until the Superintendent has, by order, approved the commencement and carrying on of business by the bank.DeemingIf, on the day this subsection comes into force, an order approving the commencement and carrying on of business by a bank named in Schedule I or II as those Schedules read immediately before that day, has not been made, such an order is deemed to have been made in respect of the bank on that day.Continued bankExcept in respect of a body corporate that is continued as a bank under this Act for the purposes of forthwith amalgamating with one or more bodies corporate and continuing as a bank under this Act, where letters patent continuing a body corporate as a bank under this Act are issued, the Superintendent shall make an order approving the commencement and carrying on of business by the bank.Amalgamated bankWhere letters patent amalgamating and continuing two or more bodies corporate as a bank under this Act are issued, the Superintendent shall make an order approving the commencement and carrying on of business by the bank.Subsection 49(2) and section 52 do not applyFor greater certainty, subsection 49(2) and section 52 do not apply in respect of a bank referred to in subsections (3) and (4).1991, c. 46, s. 48; 2001, c. 9, s. 55
Authority to make orderOn application by a bank, the Superintendent may make an order approving the commencement and carrying on of business by the bank.Statement of paymentsAn application by a bank for an order under subsection (1) must contain a statement setting out the amounts paid or to be paid by the bank in connection with its incorporation and organization.
No payments before orderUntil an order approving the commencement and carrying on of business is made for a bank, the bank must not make any payment on account of incorporation or organization expenses out of moneys received from the issue of the shares or the membership shares of the bank and interest on those moneys, except reasonable sumsfor the remuneration of not more than two officers;for the payment of costs related to the issue of shares, or membership shares, of the bank; andfor the payment of clerical assistance, legal services, accounting services, office accommodation at one location, office expenses, advertising, stationery, postage and travel expenses.1991, c. 46, s. 50; 2010, c. 12, s. 1925
Deposits and investments before orderWhere a bank comes into existence but no order approving the commencement and carrying on of business is made for the bank, the bank may onlydeposit, in Canada, paid-in capital of the bank in another deposit-taking Canadian financial institution; orinvest paid-in capital of the bank in unencumbered securities of the Government of Canada or the government of any province.
Conditions for orderThe Superintendent shall not make an order approving the commencement and carrying on of business by a bank until it has been shown to the satisfaction of the Superintendent thatthe meeting of shareholders of the bank referred to in subsection 46(1), or, in the case of a federal credit union, the meeting of members referred to in subsection 47.02(1), has been duly held;the bank has paid-in capital of at least five million dollars or any greater amount that is specified by the Minister under subsection 46(1) or 47.02(1);the expenses of incorporation and organization to be borne by the bank are reasonable; andall other relevant requirements of this Act have been complied with.Time limitThe Superintendent shall not make an order approving the commencement and carrying on of business by a bank more than one year after the day on which the bank comes into existence.1991, c. 46, s. 52; 2001, c. 9, s. 56; 2010, c. 12, s. 1926
Conditions of orderAn order approving the commencement and carrying on of business by a bank may contain such conditions or limitations that are consistent with this Act and relate to the business of the bank as the Superintendent deems expedient and necessary.Deemed conditionAn order approving the commencement and carrying on of business by a federal credit union is deemed to contain a condition that the federal credit union must, on an ongoing basis, be organized and carry on business on a cooperative basis in accordance with section 12.1.1991, c. 46, s. 53; 2010, c. 12, s. 1927
VariationsIn respect of the order approving the commencement and carrying on of business by a bank, the Superintendent may at any time, by further order,make the order subject to such conditions or limitations that are consistent with this Act and that relate to the business of the bank as the Superintendent deems expedient and necessary, oramend or revoke any authorization contained in the order or any condition or limitation to which the order is subject, other than the condition deemed to be in the order by subsection 53(2),but before making any such further order the Superintendent shall provide the bank with an opportunity to make representations regarding that further order.[Repealed, 1996, c. 6, s. 4]1991, c. 46, s. 54; 1996, c. 6, s. 4; 2010, c. 12, s. 1928
Limit on assetsThe Minister may, by order, require a bank not to have average total assets in any three month period ending on the last day of a month subsequent to the month specified in the order exceeding the bank’s average total assets in the three month period ending on the last day of the month immediately before the month specified in the order if the Minister is of the opinion that it is in the best interests of the financial system in Canada to do so, after having considered the Superintendent’s opinion onthe nature and extent of the financial services activities carried out by entities affiliated with the bank; andthe impact that the nature and degree of supervision and regulation of those financial services activities have on the supervision and regulation of the bank.Revocation of orderIf the Minister is of the opinion that the circumstances giving rise to the order have ceased to exist or have changed substantially, the Minister may, by further order, revoke the order.Average total assetsFor the purposes of subsection (1), the average total assets of a bank in a three month period shall be computed by adding the total assets of the bank as calculated for the month end of each of the three months in the period and by dividing the sum by three.Definition of total assetsFor the purposes of subsections (1) and (3), total assets, in respect of a bank, has the meaning given that expression by the regulations.2001, c. 9, s. 57
Permission to subsidiary of foreign bankOn the recommendation of the Superintendent, the Minister may, at the same time that an order is made approving the commencement and carrying on of business by a bank that is the subsidiary of a foreign bank, by further order, grant the subsidiary permission tohold assets that banks are not otherwise permitted by this Act to hold if those assets consist of shares of a body corporate incorporated by or under an Act of Parliament or of the legislature of a province that, at the time application for letters patent incorporating the subsidiary was made, were held by the eligible foreign institution, as defined in subsection 370(1), that is the holding body corporate of the subsidiary or any affiliate of that eligible foreign institution; andhold assets that banks are not otherwise permitted by this Act to hold if, at the time application for letters patent incorporating the subsidiary was made, the assets were held by an affiliate of the eligible foreign institution, as defined in subsection 370(1), that is the holding body corporate of the subsidiary.Despite any other provision of this Act or the regulations, the subsidiary may act in accordance with that permission.Extension of permissionPermission granted to a bank by order of the Minister under subsection (1) is only for the period specified in the order. That period may not be more than two years, except that the Minister may extend the period by further order on application by the bank. The total of the period and any extensions of it may not, in any case, exceed ten years.1991, c. 46, s. 55; 1997, c. 15, s. 6; 1999, c. 31, s. 9; 2001, c. 9, s. 58
Public noticeOn the making of an order approving the commencement and carrying on of business by a bank, the bank shall publish a notice of the making of the order in a newspaper in general circulation at or near the place where the head office of the bank is located.Notice in Canada GazetteThe Superintendent shall cause to be published in the Canada Gazette a notice of the making of an order approving the commencement and carrying on of business by a bank.Non-application to existing bankFor greater certainty, this section does not apply to a bank referred to in subsection 48(2).
Cessation of existenceExcept for the sole purpose of winding up the bank’s affairs, a bank ceases to exist one year after the day on which its incorporating instrument became effective if it does not obtain an order approving the commencement and carrying on of business within that year.
Allowed disbursementsWhere an order approving the commencement and carrying on of business is not made for a bank, no part of the moneys of the bank shall be used for the payment of incorporation and organization expenses, other than remuneration and costs referred to in section 50, unless the payment has been approved by a special resolution.Application to court to settle disbursementsIf the amount allowed by a special resolution for the payment of any incorporation and organization expenses referred to in subsection (1) is considered insufficient by the directors or if no special resolution for the payment of such expenses is passed, the directors may apply to any court having jurisdiction in the place where the head office of the bank is situated to settle and determine the amounts to be paid out of any moneys of the bank before distribution of the balance toif the bank is not a federal credit union, the shareholders or, if there are no shareholders, to the incorporators; orif the bank is a federal credit union, its members.Notice of application to courtThe directors must, at least 21 days before the date fixed for the hearing of the application referred to in subsection (2), send to the shareholders, incorporators or members, as the case may be, a notice of the application, containing a statement of the amounts that are proposed to be settled and determined by the court.Ratio payableIn order that the amounts paid and payable under this section may be equitably borne by the shareholders, incorporators or members, as the case may be, the directors must, after the amounts of the payments have been approved by special resolution or settled and determined by a court, fix the proportionate part of the amounts chargeable to each shareholder, incorporator or member as the ratio of the amount paid in by that person to the aggregate of all the amounts paid in by the shareholders, incorporators or members.Return of excessAfter the amounts referred to in this section have been paid, the directors shall pay, with any interest earned, to the shareholders, incorporators or members, the respective balances of the moneys paid in by them, less the amount chargeable to each under subsection (4).1991, c. 46, s. 58; 2010, c. 12, s. 1929
Capital StructureShare Capital
Power to issue sharesSubject to this Act and the by-laws of the bank, shares of a bank may be issued at such times and to such persons and for such consideration as the directors of the bank may determine.SharesShares of a bank shall be in registered form and shall be without nominal or par value.Shares of existing bankShares with nominal or par value of a bank that was in existence immediately prior to the day this Part comes into force are deemed to be shares without nominal or par value.Shares of continued bankWhere a body corporate is continued as a bank under this Act, shares with nominal or par value issued by the body corporate before it was so continued are deemed to be shares without nominal or par value.Deemed share conditionsIf a right, other than a voting right, of a holder of a share with nominal or par value of a bank referred to in subsection (3) or a body corporate continued as a bank under this Act was stated or expressed in terms of the nominal or par value of the share immediately before the coming into force of this subsection or the continuance under this Act, as the case may be, that right is deemed, after the coming into force of this Part or the continuance, as the case may be, to be the same right stated or expressed without reference to the nominal or par value of the share.1991, c. 46, s. 59; 2001, c. 9, s. 59
Common sharesA bank that is not a federal credit union must have one class of shares, to be designated as “common shares”, which are non-redeemable and in which the rights of the holders of those common shares are equal in all respects, and those rights includethe right to vote at all meetings of shareholders except where only holders of a specified class of shares are entitled to vote;the right to receive dividends declared on those shares; andthe right to receive the remaining property of the bank on dissolution.Designations of sharesNo bank shall designate more than one class of its shares as “common shares” or any variation of that term.[Repealed, 2012, c. 5, s. 4]Continued bankA body corporate continued as a bank under this Act that is not in compliance with subsection (2) on the date letters patent continuing it as a bank are issued shall, within twelve months after that date, redesignate its shares to comply with that subsection.1991, c. 46, s. 60; 2010, c. 12, s. 1930; 2012, c. 5, s. 4
Shares of federal credit unionA federal credit union may issue shares only if its by-laws set out the following:whether the shares may be issued to persons who are not members;the maximum number, if any, of shares of any class that the federal credit union is authorized to issue;the number of classes of shares; andthe rights, privileges, restrictions and conditions attaching to the shares of each class.No automatic rightsSubject to this Act, a federal credit union must not issue any share that confers on the holder of the share the rightto vote at meetings of the federal credit union otherwise than in accordance with this Act; orto receive any of the remaining property of the federal credit union on dissolution.ExceptionA federal credit union’s by-laws may provide thata share confers on its holder the right to vote at an election of directors by reason of an event that has occurred and is continuing or by reason of a condition that has been fulfilled; orthe shareholders, any class of shareholders or the holders of a series of shares, may elect a fixed number or a percentage of the directors.Limit on shareholders’ directorsDespite subsections (2) and (3), the shareholders do not have the right to elect more than 20 per cent of the directors.One share, one voteIf shareholders are entitled to vote in accordance with subsection (3) or otherwise in accordance with this Act, each share entitles the holder to one vote.2010, c. 12, s. 1931
Designation of sharesA federal credit union must not designate a class of its shares as “membership shares” or any variation of those words.2010, c. 12, s. 1931
Classes of sharesThe by-laws of a bank that is not a federal credit union may provide for more than one class of shares and, if they so provide, they must set outthe rights, privileges, restrictions and conditions attaching to the shares of each class; andthe maximum number, if any, of shares of any class that the bank is authorized to issue.Shareholder approvalWhere a by-law referred to in subsection (1) is made, the directors of the bank shall submit the by-law to the shareholders at the next meeting of shareholders.Effective dateA by-law referred to in subsection (1) is not effective until it is confirmed or confirmed with amendments by special resolution of the shareholders at the meeting referred to in subsection (2).1991, c. 46, s. 61; 2001, c. 9, s. 60; 2010, c. 12, s. 1932
Shares issued in seriesThe by-laws of a bank may, subject to any limitations set out in them, authorize the issue of any class of shares in one or more series and mayfix the maximum number of shares in each series and determine the designation, rights, privileges, restrictions and conditions attaching to them; andauthorize the directors to do anything referred to in paragraph (a).Effective dateIn the case of a federal credit union, a by-law referred to in subsection (1) must be made by special resolution of the members. If the federal credit union has issued shares, the by-law is not effective until it is confirmed by a separate special resolution of the shareholders, the class of shareholders or the holders of the series of shares that is affected by the by-law.Series participationIf any cumulative dividend or amounts payable on return of capital in respect of a series of shares are not paid in full, the shares of all series of the same class participate rateably in respect of accumulated dividends and return of capital.Voting rightsWhere voting rights are attached to any series of a class of shares, the shares of every other series of that class shall have the same voting rights.Restriction on seriesNo rights, privileges, restrictions or conditions attached to a series of shares authorized under this section confer on the series a priority in respect of dividends or return of capital over any other series of shares of the same class that are then outstanding.Material to SuperintendentIf the directors exercise their authority under paragraph (1)(b), the directors shall, before the issue of shares of the series, send to the Superintendent particulars of the series of shares and a copy of the by-law that granted the authority to the directors.1991, c. 46, s. 62; 2005, c. 54, s. 8; 2007, c. 6, s. 8(E); 2010, c. 12, s. 1933
One share, one voteWhere voting rights are attached to a share of a bank, the voting rights may confer only one vote in respect of that share.
Shares non-assessableShares issued by a bank after the coming into force of this section are non-assessable and the shareholders are not liable to the bank or to its creditors in respect thereof.
Consideration for shareNo share of any class of shares of a bank shall be issued until it is fully paid for in money or, with the approval of the Superintendent, in property.Other currenciesWhen issuing shares, a bank may provide that any aspect of the shares relating to money or involving the payment of or the liability to pay money be in a currency other than the currency of Canada.
Stated capital accountA bank shall maintain a separate stated capital account for each class and series of shares it issues.Stated capital account — membership sharesA federal credit union must also maintain a stated capital account for the membership shares it issues.Addition to stated capital accountA bank must record in the appropriate stated capital account the full amount of any consideration it receives for any shares or membership shares it issues.ExceptionDespite subsection (2), a bank may, subject to subsection (4), record in the stated capital account maintained for the shares of a class or series any part of the consideration it receives in an exchange if it issues sharesin exchange forproperty of a person who immediately before the exchange did not deal with the bank at arm’s length within the meaning of that expression in the Income Tax Act,shares of or another interest in a body corporate that immediately before the exchange or because of it did not deal with the bank at arm’s length within the meaning of that expression in the Income Tax Act, orproperty of a person who immediately before the exchange dealt with the bank at arm’s length within the meaning of that expression in the Income Tax Act if the person, the bank and all of the holders of shares in the class or series of shares so issued consent to the exchange;under an agreement referred to in subsection 224(1); orto shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated bank.ExceptionDespite subsection (2), a federal credit union may, subject to subsection (4), record in the stated capital account maintained for its membership shares any part of the consideration it receives in an exchange if it issues membership sharesin exchange forproperty of a person who immediately before the exchange did not deal with the federal credit union at arm’s length within the meaning of that expression in the Income Tax Act,shares of or another interest in a body corporate that immediately before the exchange or because of it did not deal with the federal credit union at arm’s length within the meaning of that expression in the Income Tax Act, orproperty of a person who immediately before the exchange dealt with the federal credit union at arm’s length within the meaning of that expression in the Income Tax Act if the person, the federal credit union and all of the holders of the membership shares so issued consent to the exchange;under an agreement referred to in subsection 224(1); orto shareholders of an amalgamating body corporate who receive the membership shares in addition to or instead of securities of the amalgamated bank.Limit on addition to a stated capital accountOn the issuance of a share or membership share, a bank must not add to the appropriate stated capital account an amount greater than the amount of the consideration it receives for the share or membership share.Constraint on addition to a stated capital accountWhere a bank that has issued any outstanding shares of more than one class or series proposes to add to a stated capital account that it maintains in respect of a class or series of shares an amount that was not received by the bank as consideration for the issue of shares, the addition must be approved by special resolution unless all the issued and outstanding shares are of not more than two classes of convertible shares referred to in subsection 77(4).Constraint — federal credit unionIf the bank referred to in subsection (5) is a federal credit union, the addition must be approved by special resolution of the members and by a separate special resolution of the shareholders, the class of shareholders or the holders of the series of shares that is affected by the special resolution, unless all the issued and outstanding shares are of not more than two classes of convertible shares referred to in subsection 77(4).1991, c. 46, s. 66; 1997, c. 15, s. 7; 2005, c. 54, s. 9; 2010, c. 12, s. 1934
Stated capital of continued bankIf a body corporate is continued as a bank under this Act, the bank must record in the stated capital account maintained for each class and series of shares, or for other ownership interests, however designated, then outstanding an amount that is equal to the aggregate ofthe aggregate amount paid up on the shares of each class and series of shares, or on the other ownership interests, immediately before the body corporate was so continued, andthe amount of the contributed surplus of the bank that is attributable to those shares or other ownership interests.Contributed surplus entryThe amount of any contributed surplus recorded in the stated capital account pursuant to paragraph (1)(b) shall be deducted from the contributed surplus account of the bank.Shares issued before continuanceAny amount unpaid in respect of a share or other ownership interest, however designated, in the body corporate, that was issued by a body corporate before it was continued as a bank under this Act and paid after it was so continued must be recorded in the stated capital account maintained by the bank for the shares of that class or series or for membership shares.1991, c. 46, s. 67; 2010, c. 12, s. 1935
Pre-emptive rightWhere the by-laws of a bank so provide, no shares of any class shall be issued unless the shares have first been offered to the shareholders holding shares of that class, and those shareholders have a pre-emptive right to acquire the offered shares in proportion to their holdings of the shares of that class, at such price and on such terms as those shares are to be offered to others.ExceptionNotwithstanding the existence of a pre-emptive right, a shareholder of a bank has no pre-emptive right in respect of shares of a class to be issuedfor a consideration other than money;as a share dividend; orpursuant to the exercise of conversion privileges, options or rights previously granted by the bank.IdemNotwithstanding the existence of a pre-emptive right, a shareholder of a bank has no pre-emptive right in respect of shares to be issuedwhere the issue of shares to the shareholder is prohibited by this Act; orwhere, to the knowledge of the directors of the bank, the offer of shares to a shareholder whose recorded address is in a country other than Canada ought not to be made unless the appropriate authority in that country is provided with information in addition to that submitted to the shareholders at the last annual meeting.
Conversion privilegesA bank may issue conversion privileges, options or rights to acquire securities of the bank, and shall set out the conditions thereofin the documents that evidence the conversion privileges, options or rights; orin the securities to which the conversion privileges, options or rights are attached.Transferable rightsConversion privileges, options and rights to acquire securities of a bank may be made transferable or non-transferable, and options and rights to acquire such securities may be made separable or inseparable from any securities to which they are attached.Reserved sharesWhere a bank has granted privileges to convert any securities issued by the bank into shares, or into shares of another class or series, or has issued or granted options or rights to acquire shares, if the by-laws limit the number of authorized shares, the bank shall reserve and continue to reserve sufficient authorized shares to meet the exercise of such conversion privileges, options and rights.
Holding of own sharesExcept as provided in sections 71 to 74, or unless permitted by the regulations, a bank shall nothold shares of the bank or of any body corporate that controls the bank;hold any ownership interests of any unincorporated entity that controls the bank;permit any of its subsidiaries to hold any shares of the bank or of any body corporate that controls the bank;if the bank is a federal credit union, permit any of its subsidiaries to hold any membership shares of the federal credit union, other than the minimum number of membership shares required by the by-laws of the federal credit union to qualify for membership in it, if any; orpermit any of its subsidiaries to hold any ownership interests of any unincorporated entity that controls the bank.1991, c. 46, s. 70; 2010, c. 12, s. 1936
Purchase and redemption of shares and membership sharesSubject to subsection (2) and to its by-laws, a bank may, with the consent of the Superintendent, purchase, for the purpose of cancellation, any shares or membership shares issued by it, or redeem any redeemable shares or membership shares issued by it at prices not exceeding the redemption price for the shares or membership shares calculated according to a formula stated in its by-laws or the conditions attaching to the shares or membership shares.Restrictions on purchase and redemptionA bank must not make any payment to purchase or redeem any shares or membership shares issued by it if there are reasonable grounds for believing that the bank is, or the payment would cause the bank to be, in contravention of any regulation referred to in subsection 485(1) or (2) or any direction made under subsection 485(3).Donated shares and membership sharesA bank may accept from any shareholder or member a share or membership share, as the case may be, of the bank surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share or membership share except in accordance with section 75.1991, c. 46, s. 71; 2010, c. 12, s. 1937
Holding as personal representativeA bank may, and may permit its subsidiaries to, hold, in the capacity of a personal representative, shares of the bank — or, if the bank is a federal credit union, membership shares of the federal credit union — or of any body corporate that controls the bank or ownership interests in any unincorporated entity that controls the bank, but only if the bank or the subsidiary does not have a beneficial interest in the shares, membership shares or ownership interests.Security interestA bank may, and may permit its subsidiaries to, by way of a security interesthold shares of the bank or of any body corporate that controls the bank, orhold any ownership interests of any entity that controls the bank,where the security interest is nominal or immaterial when measured by criteria established by the bank that have been approved in writing by the Superintendent.SavingNothing in subsection (2) precludes a bank that was in existence immediately prior to the day this Part comes into force, or any of its subsidiaries, from holding any security interest held immediately prior to the coming into force of this Part.1991, c. 46, s. 72; 2005, c. 54, s. 10(F); 2010, c. 12, s. 1938
Exception — conditions before acquisitionA bank may permit any of its subsidiaries to acquire shares of the bank through the issuance of those shares by the bank to the subsidiary if the conditions prescribed for the purposes of this subsection are met before the subsidiary acquires the shares.Conditions after acquisitionAfter a subsidiary has acquired shares under the purported authority of subsection (1), the conditions prescribed for the purposes of this subsection must be met.Non-compliance with conditionsIf a bank permits any of its subsidiaries to acquire shares of the bank under the purported authority of subsection (1) and one or more of the conditions prescribed for the purposes of subsections (1) and (2) were not met, are not met or cease to be met, as the case may be, then, despite section 16 and subsection 66(2), the bank must comply with the prescribed requirements.2007, c. 6, s. 9
Cancellation of shares and membership sharesSubject to subsection (2), if a bank purchases shares of the bank or fractions of shares, or membership shares of the bank, or redeems or otherwise acquires shares or membership shares of the bank, the bank must cancel those shares or membership shares.Requirement to sellWhere a bank or any of its subsidiaries, through the realization of security, acquires any shares of the bank or of any body corporate that controls the bank or any ownership interests in an unincorporated entity that controls the bank, the bank shall, or shall cause its subsidiaries to, as the case may be, within six months after the day of the realization, sell or otherwise dispose of the shares or ownership interests.1991, c. 46, s. 73; 2010, c. 12, s. 1939
Subsidiary holding sharesSubject to the regulations, a bank that was in existence immediately prior to the day this Part comes into force shall cause any subsidiary of the bank that holds shares of the bank, or of any body corporate that controls the bank, or any ownership interests of any unincorporated entity that controls the bank to sell or otherwise dispose of those shares or ownership interests within six months after the day this section comes into force.
Reduction of capitalThe stated capital of a bank that is not a federal credit union may be reduced by special resolution.Reduction of capital — federal credit unionsThe stated capital of a federal credit union may be reduced by special resolution of its members and, if it has issued shares, by a separate special resolution of the shareholders, the class of shareholders or the holders of the series of shares that is affected by the special resolution.LimitationA bank shall not reduce its stated capital by special resolution if there are reasonable grounds for believing that the bank is, or the reduction would cause the bank to be, in contravention of any regulation referred to in subsection 485(1) or (2) or any direction made pursuant to subsection 485(3).Contents of special resolutionA special resolution to reduce the stated capital of a bank shall specify the stated capital account or accounts from which the reduction of stated capital effected by the special resolution will be deducted.Approval by SuperintendentA special resolution to reduce the stated capital of a bank has no effect until it is approved in writing by the Superintendent.ExceptionSubsection (4) does not apply ifthe reduction in the stated capital is made solely as a result of changes made to the accounting principles referred to in subsection 308(4); andthere is to be no return of capital to shareholders or members, as the case may be, as a result of the reduction.Conditions for approvalNo approval to reduce the stated capital of a bank may be given by the Superintendent unless application therefor is made within three months after the time of the passing of the special resolution and a copy of the special resolution, together with a notice of intention to apply for approval, has been published in the Canada Gazette.Statements to be submittedIn addition to evidence of the passing of a special resolution to reduce the stated capital of a bank and of the publication thereof, statements showingthe number of the bank’s shares or membership shares, as the case may be, issued and outstanding,the results of the voting,the bank’s assets and liabilities, andthe reason why the bank seeks the reduction of capitalshall be submitted to the Superintendent at the time of the application for approval of the special resolution.1991, c. 46, s. 75; 2007, c. 6, s. 10; 2010, c. 12, s. 1940
Recovery by actionIf any money or property was paid or distributed to a shareholder, member or other person as a consequence of a reduction of capital made contrary to section 75, a creditor of the bank may apply to a court for an order compelling the shareholder, member or other person to pay the money or deliver the property to the bank.Shares and membership shares held by personal representativeNo person holding shares or membership shares in the capacity of a personal representative and registered on the records of the bank as a shareholder or member and described in those records as the personal representative of a named person is personally liable under subsection (1), but the named person is subject to all the liabilities imposed by that subsection.LimitationAn action to enforce a liability imposed by subsection (1) may not be commenced more than two years after the date of the act complained of.Remedy preservedThis section does not affect any liability that arises under section 207.1991, c. 46, s. 76; 2010, c. 12, s. 1941
Adjustment of stated capital accountOn a purchase, redemption or other acquisition by a bank of shares or fractions of shares, or of membership shares, issued by it, other than shares or membership shares acquired under section 72 or acquired through the realization of security and sold under subsection 73(2), the bank must deduct from the stated capital account maintained for the class or series of shares, or for the membership shares, as the case may be, so purchased, redeemed or otherwise acquired an amount equal to the result obtained by multiplying the stated capital in respect of the shares of that class or series, or in respect of the membership shares, as the case may be, by the number of shares of that class or series, or the number of membership shares, as the case may be, so purchased, redeemed or otherwise acquired and dividing by the number of shares of that class or series, or the number of membership shares, as the case may be, outstanding immediately before the purchase, redemption or other acquisition.IdemA bank shall adjust its stated capital account or accounts in accordance with any special resolution referred to in section 75.Shares converted to another classOn a conversion of outstanding shares of a bank into shares of another class or series, or on a change of outstanding shares of the bank into shares of another class or series, the bank shalldeduct from the stated capital account maintained for the class or series of shares converted or changed an amount equal to the result obtained by multiplying the stated capital of the shares of that class or series by the number of shares of that class or series converted or changed, and dividing by the number of outstanding shares of that class or series immediately before the conversion or change; andrecord the result obtained under paragraph (a) and any additional consideration received pursuant to the conversion or change in the stated capital account maintained or to be maintained for the class or series of shares into which the shares have been converted or changed.Stated capital of convertible sharesFor the purposes of subsection (3) and subject to the bank’s by-laws, where a bank issues two classes of shares and there is attached to each class a right to convert a share of one class into a share of the other class and a share is so converted, the amount of stated capital attributable to a share in either class is the aggregate of the stated capital of both classes divided by the number of outstanding shares of both classes immediately before the conversion.Conversion or change of sharesShares issued by a bank and converted into shares of another class or series, or changed under subsection 192.03(1) or 217(1) into shares of another class or series, become issued shares of the class or series of shares into which the shares have been converted or changed.1991, c. 46, s. 77; 2010, c. 12, s. 1942
Addition to stated capital accountOn a conversion of any debt obligation of a bank into shares of a class or series of shares, or into membership shares, the bank mustdeduct from the liabilities of the bank the nominal value of the debt obligation being converted; andrecord the result obtained under paragraph (a) and any additional consideration received for the conversion in the stated capital account maintained or to be maintained for the class or series of shares, or for the membership shares, as the case may be, into which the debt obligation has been converted.1991, c. 46, s. 78; 2010, c. 12, s. 1943
Declaration of dividend or patronage allocationThe directors of a bank may declare and a bank may pay a dividend or patronage allocation by issuing fully paid shares or, subject to subsection 79.2(1), membership shares of the bank or options or rights to acquire fully paid shares or membership shares of the bank and, subject to subsection (4), the directors of a bank may declare and a bank may pay a dividend or patronage allocation in money or property, and if a dividend or patronage allocation is to be paid in money, the dividend may be paid in a currency other than the currency of Canada.Notice to SuperintendentThe directors of a bank shall notify the Superintendent of the declaration of a dividend at least 15 days before the day fixed for its payment.Stated capital accountIf shares or membership shares of a bank are issued in payment of a dividend or patronage allocation, the bank must record in the stated capital account maintained or to be maintained for the shares of the class or series, or for the membership shares, issued in payment of the dividend or patronage allocation the declared amount of the dividend or patronage allocation stated as an amount of money.When dividend or patronage allocation not to be declaredThe directors of a bank must not declare and a bank must not pay a dividend or patronage allocation if there are reasonable grounds for believing that the bank is, or the payment would cause the bank to be, in contravention of any regulation referred to in subsection 485(1) or (2) or any direction made under subsection 485(3).[Repealed, 2007, c. 6, s. 11]1991, c. 46, s. 79; 2001, c. 9, s. 61; 2007, c. 6, s. 11; 2010, c. 12, s. 1944
Membership Capital
Membership sharesA federal credit union may have only one class of membership shares in which the rights of their holders are equal in all respects, and those rights include the right to receivedividends declared on those membership shares; andthe remaining property of the federal credit union on dissolution.Consideration for membership shareNo membership share of a federal credit union is to be issued until it is fully paid for in money or, with the approval of the Superintendent, in property.Other currenciesWhen issuing membership shares, a federal credit union may provide that any aspect of the membership shares relating to money or involving the payment of or the liability to pay money be in a currency other than the currency of Canada.2010, c. 12, s. 1945
Membership sharesMembership shares may be held only by members.No right to voteThe right to vote attaches to membership and not to a membership share.Preferences, rights, etc.A federal credit union’s letters patent or by-laws may not include any preference, right, condition, restriction, limitation or prohibition on membership shares, except as provided for by this Act.2010, c. 12, s. 1945
Issue of certificatesThe by-laws of a federal credit union may provide that no membership share certificates need be issued and, if they so provide, the federal credit union must, on the request of a member, issue a statement of the number of membership shares held by the member.CertificatesThe face of each certificate that the federal credit union issues in respect of membership shares must containthe name of the federal credit union;a statement that the federal credit union is subject to this Act;the name of the person to whom it is issued;a statement that the certificate represents membership shares in the federal credit union, and the number of the membership shares represented by the certificate;a statement that the certificate is transferable only in accordance with this Act; anda statement that there is a charge on the membership shares represented by the certificate in favour of the federal credit union for any indebtedness of the member to the federal credit union.2010, c. 12, s. 1945
Authorized capitalThe membership shares of a federal credit union must be issued with no par value, and its by-laws must specify any limit on the number of membership shares and set out the formula to be used to determine the value of the membership shares.2010, c. 12, s. 1945
Membership shares non-assessableMembership shares issued by a federal credit union are non-assessable, and their holders are not liable to the federal credit union or to its creditors in respect of those membership shares.2010, c. 12, s. 1945
Continued body corporateA body corporate that is continued as a federal credit union under this Act and that is not in compliance with section 79.1 on the date letters patent continuing it as a federal credit union are issued must, within 12 months after that date, redesignate a class of its shares to comply with that section.2010, c. 12, s. 1945
Subordinated Indebtedness
Restriction on subordinated indebtednessA bank shall not issue subordinated indebtedness unless the subordinated indebtedness is fully paid for in money or, with the approval of the Superintendent, in property.References to subordinated indebtednessA person shall not in any prospectus, advertisement, correspondence or literature relating to any subordinated indebtedness issued or to be issued by a bank refer to the subordinated indebtedness otherwise than as subordinated indebtedness.Deemed not to be a depositSubordinated indebtedness issued by a bank is deemed not to be a deposit.Other currenciesWhen issuing subordinated indebtedness, a bank may provide that any aspect of the subordinated indebtedness relating to money or involving the payment of or the liability to pay money in relation thereto be in a currency other than that of Canada including, without restricting the generality of the foregoing, the payment of any interest thereon.
Security Certificates and Transfers
DefinitionsIn this section and sections 82 to 135,adverse claim includes a claim that a transfer was or would be wrongful or that a particular adverse person is the owner of or has an interest in a security; (opposition)bona fide purchaser means a purchaser for value in good faith and without notice of any adverse claim who takes delivery of a security in bearer form or order form or of a security in registered form issued to the purchaser or endorsed to the purchaser or endorsed in blank; (acheteur de bonne foi)clearing agency means a person designated as a recognized clearing agency by the Superintendent; (agence de compensation et de dépôt)delivery means voluntary transfer of possession; (livraison ou remise)fungible, in respect of securities, means securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit; (fongibles)genuine means free of forgery or counterfeit; (authentique)good faith means honesty in fact in the conduct of the transaction concerned; (bonne foi)over-issue means the issue of securities in excess of any maximum number of securities that the issuer is authorized to issue; (émission excédentaire)purchaser means a person who takes an interest in a security by sale, mortgage, pledge, issue, reissue, gift or any other voluntary transaction; (acquéreur)security or security certificate means an instrument issued by a bank that isin bearer, order or registered form,of a type commonly dealt in on securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment,one of a class or series or by its terms divisible into a class or series of instruments, andevidence of a share, participation or other interest in or obligation of a bank,but does not include an instrument evidencing a deposit or, in the case of a federal credit union, a membership share; (valeur mobilière ou certificat de valeur mobilière)securities broker means a person who is engaged for all or part of the person’s time in the business of buying and selling securities and who, in the transaction concerned, acts for, or buys a security from, or sells a security to, a customer; (courtier)trust indenture has the meaning given that expression by section 294; (acte de fiducie)unauthorized, in relation to a signature or an endorsement, means a signature or an endorsement made without actual, implied or apparent authority, and includes a forgery; (non autorisé)uncertificated security means a security, not evidenced by a security certificate, the issue and any transfer of which is registered or recorded in records maintained for that purpose by or on behalf of a bank; (valeur mobilière sans certificat)valid means issued in accordance with the applicable law or validated under section 97. (valide)1991, c. 46, s. 81; 2010, c. 12, s. 1946
Provisions governing transfers of securitiesThe transfer of a security is governed by sections 83 to 135.
Security a negotiable instrumentA security is a negotiable instrument but, in the case of any inconsistency between the provisions of the Bills of Exchange Act and this Act, this Act prevails to the extent of the inconsistency.Bearer formA security is in bearer form if it is payable to bearer according to its terms and not by reason of any endorsement.Order formA security is in order form where the security is not a share and, by its terms, it is payable to the order or assigns of any person therein specified with reasonable certainty or to the person or the person’s order.Registered formA security is in registered form ifit specifies a person entitled to the security or to the rights it evidences, and its transfer is capable of being recorded in a securities register; orit bears a statement that it is in registered form.
Status of guarantorA guarantor for an issuer of a security is deemed to be an issuer to the extent of the guarantee, whether or not the guarantor’s obligation is noted on the security.
Rights of holderSubject to Part VII, every security holder is entitled at the holder’s option to a security certificate that complies with this Act or to a non-transferable written acknowledgement of the holder’s right to obtain a security certificate that complies with this Act from a bank in respect of the securities of that bank held by the security holder.Fee for security certificateA bank may charge a fee, not exceeding a prescribed amount, for a security certificate issued in respect of a transfer.Joint holdersA bank is not required to issue more than one security certificate in respect of securities held jointly by several persons, and delivery of a security certificate to one of several joint holders is sufficient delivery to all joint holders of the security.1991, c. 46, s. 85; 1999, c. 31, s. 10
SignaturesA security certificate shall be signed by or bear the printed or otherwise mechanically reproduced signature of at least one of the following:a director or officer of the bank;a registrar or transfer agent of the bank or a branch transfer agent or a natural person on their behalf; ora trustee who certifies it in accordance with a trust indenture.Continuation of validity of signatureIf a security certificate contains a person’s printed or mechanically reproduced signature, the bank may issue the security certificate even if the person has ceased to be a director or officer of the bank. The security certificate is as valid as if the person were a director or officer at the date of its issue.1991, c. 46, s. 86; 2005, c. 54, s. 12
Contents of share certificateThere shall be stated on the face of each share certificate issued by a bank after the coming into force of this sectionthe name of the bank;a statement that the bank is subject to the Bank Act;the name of the person to whom the share certificate is issued; andthe number and class of shares and the designation of any series that the certificate represents.
Restrictions and chargesNo charge in favour of a bank and no restriction on transfer other than a constraint under Part VII is effective against a transferee of a security issued by the bank if the transferee has no actual knowledge of the charge or restriction unless it or a reference to it is noted conspicuously on the security certificate.No restrictionIf any of the issued shares of a distributing bank remain outstanding and are held by more than one person, the bank may not restrict the transfer or ownership of its shares except by way of a constraint under Part VII.ContinuanceIf a body corporate that is continued as a bank under this Act has outstanding security certificates and the words “private company” or “private corporation” appear on the certificates, those words are deemed to be a notice of a charge or restriction for the purposes of subsection (1).1991, c. 46, s. 88; 2005, c. 54, s. 13
Particulars of classThere shall be stated legibly on a share certificate issued after the coming into force of this section by a bank that is authorized to issue shares of more than one class or seriesthe rights, privileges, restrictions and conditions attached to the shares of each class and series existing when the share certificate is issued; orthat the class or series of shares that the certificate represents has rights, privileges, restrictions or conditions attached thereto and that the bank will furnish a shareholder, on demand and without charge, with a full copy ofthe text of the rights, privileges, restrictions and conditions attached to each class authorized to be issued and to each series in so far as those rights, privileges, restrictions and conditions have been fixed by the directors, andthe text of the authority of the directors, if the directors are so authorized, to fix the rights, privileges, restrictions and conditions of subsequent series of shares.DutyWhere a share certificate issued by a bank contains the statement mentioned in paragraph (1)(b), the bank shall provide a shareholder, on demand and without charge, with a full copy of the texts referred to in subparagraphs (1)(b)(i) and (ii).
Fractional shareA bank may issue a certificate for a fractional share or may issue in place thereof a scrip certificate in bearer form that entitles the holder to receive a certificate for a full share by exchanging scrip certificates aggregating a full share.
Scrip certificatesThe directors of a bank may attach conditions to any scrip certificate issued by the bank, including conditions thatthe scrip certificate becomes void if not exchanged for a share certificate representing a full share before a specified date; andany shares for which the scrip certificate is exchangeable may, notwithstanding any pre-emptive right, be issued by the bank to any person and the proceeds thereof may be distributed rateably to the holders of all the scrip certificates.
Holders of fractional sharesA holder of a fractional share issued by a bank is not entitled to exercise voting rights or to receive a dividend in respect of the fractional share.Holders of scrip certificatesA holder of a scrip certificate is not entitled to exercise voting rights or to receive a dividend in respect of the scrip certificate.
Dealings with registered ownerA bank or a trustee within the meaning of section 294 may, subject to subsections 137(5) to (7) and sections 138 to 141 and 145, treat the registered owner of a security as the person exclusively entitled to vote, to receive notices, to receive any interest, dividend or other payment in respect of the security and to exercise all of the rights and powers of an owner of the security.Constructive registered holderNotwithstanding subsection (1), a bank may treat a person as a registered security holder entitled to exercise all of the rights of the security holder that the person represents, if that person provides the bank with evidence as described in subsection 127(4) that the person isthe heir or personal representative of a deceased security holder or the personal representative of the heirs of the deceased security holder;the personal representative of a registered security holder who is a minor, an incompetent person or a missing person; ora liquidator of, or a trustee in bankruptcy for, a registered security holder.Permissible registered holderIf a person on whom the ownership of a security of a bank devolves by operation of law, other than a person described in subsection (2), provides proof of that person’s authority to exercise rights or privileges in respect of a security of the bank that is not registered in the person’s name, the bank shall, subject to this Act, treat that person as entitled to exercise those rights or privileges.Immunity of bankA bank is not required to inquire into the existence of, or see to the performance or observance of, any duty owed to a third person by a registered holder of any of its securities or by anyone whom it treats, as permitted or required by this Part, as the owner or registered holder thereof.1991, c. 46, s. 93; 2001, c. 9, s. 62(F); 2005, c. 54, s. 14
MinorsIf a minor exercises any rights of ownership in the securities of a bank, no subsequent repudiation or avoidance is effective against the bank.1991, c. 46, s. 94; 2005, c. 54, s. 15(E)
Joint shareholdersA bank may treat as owners of a security the survivors of persons to whom the security was issued as joint holders, if the bank receives proof satisfactory to it of the death of any of the joint holders.
Transmission of securitiesSubject to the provisions of Part VII and any applicable law relating to the collection of taxes, a person referred to in paragraph 93(2)(a) is entitled to become registered as the owner of a security, or to designate another person to be registered as the owner of a security, if the person referred to in paragraph 93(2)(a) delivers to the bank or its transfer agentthe original grant of probate or of letters of administration, or a copy thereof certified to be a true copy bythe court that granted the probate or letters of administration,a trust company incorporated under the Trust and Loan Companies Act or under the laws of a province, ora lawyer or notary acting on behalf of the person referred to in paragraph 93(2)(a), orin the case of transmission by notarial will in the Province of Quebec, a copy thereof authenticated pursuant to the laws of that Province,together withan affidavit or declaration of transmission made by the person referred to in paragraph 93(2)(a) that states the particulars of the transmission, andthe security certificate that was owned by the deceased holderin the case of a transfer to the person referred to in paragraph 93(2)(a), with or without the endorsement of that person, andin the case of a transfer to any other person, endorsed in accordance with section 111,and accompanied by any assurance the bank may require under section 127.Excepted transmissionsNotwithstanding subsection (1), if the laws of the jurisdiction governing the transmission of a security of a deceased holder do not require a grant of probate or of letters of administration in respect of the transmission, a personal representative of the deceased holder is entitled, subject to Part VII and any applicable law relating to the collection of taxes, to become registered as the owner or to designate a person to be registered as the owner, if the personal representative delivers to the bank or its transfer agent the following documents, namely,the security certificate that was owned by the deceased holder; andreasonable proof of the governing laws, of the deceased holder’s interest in the security and of the right of the personal representative or the designated person to become the registered shareholder.Right of bank to treat as ownerSubject to Part VII, delivery of the documents referred to in this section empowers a bank or its transfer agent to record in a securities register the transmission of a security from the deceased holder to a person referred to in paragraph 93(2)(a) or to such person as the person referred to in that paragraph may designate and, thereafter, to treat the person who becomes so registered as the owner of that security.1991, c. 46, ss. 96, 575
Over-issueThe provisions of this Part that validate a security or compel its issue or reissue do not apply to the extent that a validation, issue or reissue would result in over-issue, butif a valid security similar in all respects to the security involved in the over-issue is reasonably available for purchase, the person entitled to the validation or issue may compel the issuer to purchase and deliver such a security to that person against surrender of the security that the person holds; orif a valid security similar in all respects to the security involved in the over-issue is not reasonably available for purchase, the person entitled to the validation or issue may recover from the issuer an amount equal to the price the last purchaser for value paid for the invalid security.Retroactive validationWhere an issuer is subsequently authorized to issue securities of a number equal to or exceeding the number of securities previously authorized plus the amount of the securities over-issued, the securities so over-issued are valid from the date of their issue.Payment not a purchase or redemptionA purchase or payment by an issuer under subsection (1) is not a purchase or payment in respect of which section 71 or 77 applies.
Burden of proofIn any action on a security,unless specifically denied in the pleadings, each signature on the security or in a necessary endorsement is admitted;a signature on the security is presumed to be genuine and authorized but, if the effectiveness of the signature is put in issue, the burden of establishing that it is genuine and authorized is on the party claiming under the signature;if a signature is admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defence or a defect going to the validity of the security; andif the defendant establishes that a defence or defect exists, the plaintiff has the burden of establishing that the defence or defect is ineffective against the plaintiff or any person under whom the plaintiff claims.
Securities fungibleUnless otherwise agreed, and subject to any applicable law, regulation or stock exchange rule, a person required to deliver securities may deliver any security of the specified issue in bearer form or registered in the name of the transferee or endorsed to the transferee or in blank.
Notice of defectEven against a purchaser for value and without notice of a defect going to the validity of a security, the terms of the security include those stated on the security and those incorporated therein by reference to another instrument, statute, rule, regulation or order to the extent that the terms so referred to do not conflict with the stated terms, but such a reference is not of itself notice to a purchaser for value of a defect going to the validity of the security, notwithstanding that the security expressly states that a person accepting it admits the notice.Purchaser for valueA security is valid in the hands of a purchaser for value without notice of any defect going to its validity.Lack of genuinenessExcept as provided in section 101, the fact that a security is not genuine is a complete defence even against a purchaser for value and without notice.Ineffective defencesAll defences of an issuer, including non-delivery and conditional delivery of a security but not including lack of genuineness, are ineffective against a purchaser for value without notice of the particular defence.Staleness as defect noticeAfter an event that creates a right to immediate performance of the principal obligation evidenced by a security, or that sets a date on or after which a security is to be presented or surrendered for redemption or exchange, a purchaser is deemed to have notice of any defect in its issue or of any defence of the issuerif the event requires the payment of money or the delivery of securities, or both, on presentation or surrender of the security, and the funds or securities are available on the date set for payment or exchange, and the purchaser takes the security more than one year after that date; orif the purchaser takes the security more than two years after the date set for presentation or surrender or the date on which the performance became due.
Unauthorized signatureAn unauthorized signature on a security before or in the course of issue is ineffective, except that the signature is effective in favour of a purchaser for value and without notice of the lack of authority, if the signing has been done byan authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security, or of similar securities, or their immediate preparation for signing; oran employee of the issuer or of a person referred to in paragraph (a) who, in the ordinary course of the employee’s duties, handles the security.
Completion or alterationWhere a security contains the signatures necessary to its issue or transfer but is incomplete in any other respect,any person may complete it by filling in the blanks in accordance with the person’s authority; andnotwithstanding that the blanks are incorrectly filled in, the security as completed is enforceable by a purchaser who took it for value and without notice of the incorrectness.EnforceabilityA completed security that has been improperly altered, even if fraudulently altered, remains enforceable, but only according to its original terms.
Warranties of agentsA person signing a security, as authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security, warrants to a purchaser for value without notice thatthe security is genuine;the person’s acts in connection with the issue of the security are within the person’s authority; andthe person has reasonable grounds for believing that the security is in the form and within the amount the issuer is authorized to issue.Limitation of liabilityUnless otherwise agreed, a person referred to in subsection (1) does not assume any further liability for the validity of a security.
Title of purchaserSubject to Part VII, on delivery of a security the purchaser acquires the rights in the security that the purchaser’s transferor had or had authority to convey, except that the position of a purchaser who has been a party to any fraud or illegality affecting the security or who as a prior holder had notice of an adverse claim is not improved by taking from a later bona fide purchaser.Title of bona fide purchaserA bona fide purchaser, in addition to acquiring the rights of a purchaser, also acquires the security free from any adverse claim.Limited interest purchaserA purchaser of a limited interest acquires rights only to the extent of the interest purchased.
Deemed notice of adverse claimA purchaser of a security, or any securities broker for a seller or purchaser, is deemed to have notice of an adverse claim ifthe security, whether in bearer form or registered form, has been endorsed “for collection” or “for surrender” or for some other purpose not involving transfer; orthe security is in bearer form and has on it a statement that it is the property of a person other than the transferor, except that the mere writing of a name on a security is not such a statement.
Notice of fiduciary dutyNotwithstanding that a purchaser, or any securities broker for a seller or purchaser, has notice that a security is held for a third person by, or is registered in the name of or endorsed by, a fiduciary, neither the purchaser nor the securities broker has any duty to inquire into the rightfulness of the transfer or any notice of an adverse claim, except that if the purchaser or securities broker for the seller or purchaser knows that the consideration is to be used for, or that the transaction is for, the personal benefit of the fiduciary or is otherwise in breach of the fiduciary’s duty, the purchaser or securities broker is deemed to have notice of an adverse claim.
Staleness as noticeAn event that creates a right to immediate performance of the principal obligation evidenced by a security or that sets a date on or after which the security is to be presented or surrendered for redemption or exchange is not of itself notice of an adverse claim, except in the case of a purchasemade more than one year after any date set for such a presentation or surrender; ormade more than six months after any date set for payment of money against such a presentation or surrender if funds are available for payment on that date.
Warranties to issuerA person who presents a security for registration of transfer or for payment or exchange warrants to the issuer that the person is entitled to the registration, payment or exchange, except that a purchaser for value without notice of an adverse claim who receives a new, reissued or re-registered security on registration of transfer warrants only that the purchaser has no knowledge of any unauthorized signature in a necessary endorsement.Warranties to purchaserA person by transferring a security to a purchaser for value warrants only thatthe transfer is effective and rightful;the security is genuine and has not been materially altered; andthe person knows of nothing that might impair the validity of the security.Warranties of intermediaryWhere a security is delivered by an intermediary known by the purchaser to be entrusted with delivery of the security on behalf of another or with collection of a draft or other claim to be collected against that delivery, the intermediary by that delivery warrants only the intermediary’s own good faith and authority even if the intermediary has purchased or made advances against the draft or other claim to be collected against the delivery.Warranties of pledgeeA pledgee or other holder for purposes of security who redelivers a security received, or after payment and on order of the debtor delivers that security to a third person, gives only the warranties of an intermediary under subsection (3).Warranties of securities brokerA securities broker gives to the broker’s customer, to the issuer and to a purchaser, as the case may be, the warranties provided in subsections (1) to (4) and has the rights and privileges of a purchaser under those subsections, and those warranties of and in favour of the broker acting as an agent are in addition to warranties given by the broker’s customer and warranties given in favour of the broker’s customer.
Right to compel endorsementWhere a security in registered form is delivered to a purchaser without a necessary endorsement, the purchaser may become a bona fide purchaser only as of the time the endorsement is supplied, but against the transferor the transfer is complete on delivery and the purchaser has a specifically enforceable right to have any necessary endorsement supplied.
Definition of appropriate personIn this section, section 111, subsections 118(1), 121(4) and 126(1) and section 130, appropriate person meansthe person specified by the security or by special endorsement to be entitled to the security;if a person described in paragraph (a) is described as a fiduciary but is no longer serving in the described capacity, either that person or that person’s successor;if the security or endorsement mentioned in paragraph (a) specifies more than one person as fiduciaries and one or more of those persons are no longer serving in the described capacity, the remaining fiduciary or fiduciaries, whether or not a successor has been appointed;if a person described in paragraph (a) is a natural person and is without capacity to act by reason of death, incompetence, minority or other reason, the person’s fiduciary;if the security or endorsement mentioned in paragraph (a) specifies more than one person with right of survivorship and by reason of death not all of the persons can sign, the survivor or survivors;a person having power to sign under any applicable law or a power of attorney; orto the extent that a person described in any of paragraphs (a) to (f) may act through an agent, the person’s authorized agent.Determining an “appropriate person”Whether the person signing is an appropriate person is determined as of the time of signing, and an endorsement by such a person does not become unauthorized for the purposes of this Part by reason of any subsequent change of circumstances.
EndorsementAn endorsement of a security in registered form is made when an appropriate person signs, either on the security or on a separate document, an assignment or transfer of the security or a power to assign or transfer it, or when the signature of an appropriate person is written without more on the back of the security.Special or blankAn endorsement may be special or in blank.Blank endorsementAn endorsement in blank includes an endorsement to bearer.Special endorsementA special endorsement specifies the person to whom the security is to be transferred, or who has power to transfer it.Right of holderA holder may convert an endorsement in blank into a special endorsement.
Immunity of endorserUnless otherwise agreed, the endorser by the endorsement assumes no obligation that the security will be honoured by the issuer.
Partial endorsementAn endorsement purporting to be an endorsement of only part of a security representing units intended by the issuer to be separately transferable is effective to the extent of the endorsement.
Effect of failure by fiduciary to complyFailure of a fiduciary to comply with a controlling instrument or with the law of the jurisdiction governing the fiduciary relationship, including any law requiring the fiduciary to obtain court approval of a transfer, does not render the fiduciary’s endorsement unauthorized for the purposes of this Part.
Effect of endorsement without deliveryAn endorsement of a security, whether special or in blank, does not constitute a transfer until delivery of the security on which it appears or, if the endorsement is on a separate document, until delivery of both the security and that document.
Endorsement in bearer formAn endorsement of a security in bearer form may give notice of an adverse claim under section 105 but does not otherwise affect any of the holder’s rights.
Effect of unauthorized endorsementThe owner of a security may assert the ineffectiveness of an endorsement against the issuer or any purchaser, other than a purchaser for value and without notice of an adverse claim, who has in good faith received a new, reissued or re-registered security on registration of transfer, unless the ownerhas ratified an unauthorized endorsement of the security; oris otherwise precluded from impugning the effectiveness of an unauthorized endorsement.Liability of issuerAn issuer who registers the transfer of a security on an unauthorized endorsement is liable for improper registration.
Warranties of guarantor of signatureA person who guarantees the signature of an endorser of a security warrants that, at the time of signing,the signature was genuine;the signer was an appropriate person to endorse; andthe signer had legal capacity to sign.Limitation of liabilityA person who guarantees the signature of an endorser does not otherwise warrant the rightfulness of the transfer to which the signature relates.Warranties of guarantor of endorsementA person who guarantees the endorsement of a security warrants both the signature and the rightfulness, in all respects, of the transfer to which the signature relates, but an issuer may not require a guarantee of endorsement as a condition to registration of transfer.Extent of warrantor’s liabilityThe warranties referred to in subsections (1) to (3) are made to any person who, relying on the guarantee, takes or deals with the security, and the guarantor is liable to such a person for any loss resulting from breach of warranty.
Constructive delivery of a securityDelivery to a purchaser occurs whenthe purchaser or a person designated by the purchaser acquires possession of a security;the purchaser’s securities broker acquires possession of a security specially endorsed to or issued in the name of the purchaser;the purchaser’s securities broker sends the purchaser confirmation of the purchase and the broker in the broker’s records identifies a specific security as belonging to the purchaser; orin respect of an identified security to be delivered while still in the possession of a third person, that person acknowledges that it is held for the purchaser.
Constructive ownership of securityA purchaser is the owner of a security held for the purchaser by a securities broker, but a purchaser is not a holder except in the cases referred to in paragraphs 119(b) and (c).Ownership of part of fungible bulkIf a security is part of a fungible bulk, a purchaser of the security is the owner of the proportionate interest in the fungible bulk.Notice to securities broker of adverse claimNotice of an adverse claim received by a securities broker or by a purchaser after the broker takes delivery as a holder for value is not effective against the broker or the purchaser, except that, as between the broker and the purchaser, the purchaser may demand delivery of an equivalent security in respect of which no notice of an adverse claim has been received.
Delivery of securityUnless otherwise agreed, if a sale of a security is made on a stock exchange or otherwise through securities brokers,the selling customer fulfils the customer’s duty to deliver when the customer delivers the security to the selling securities broker or to a person designated by the selling securities broker or causes an acknowledgement to be made to the selling securities broker that it is held for the selling securities broker; andthe selling securities broker, including a correspondent broker, acting for a selling customer fulfils the securities broker’s duty to deliver by delivering the security or a like security to the buying securities broker or to a person designated by the buying securities broker or by effecting clearance of the sale in accordance with the rules of the exchange on which the transaction took place.Duty to deliverExcept as otherwise provided in this section and unless otherwise agreed, a transferor’s duty to deliver a security under a contract of purchase is not fulfilled until the transferor delivers the security in negotiable form to the purchaser or to a person designated by the purchaser, or causes an acknowledgement to be made to the purchaser that the security is held for the purchaser.Delivery to securities brokerA sale to a securities broker purchasing for the securities broker’s own account is subject to subsection (2) and not subsection (1), unless the sale is made on a stock exchange.Transfer through clearing agencyIf a security shown in the records of a clearing agency is evidenced bya security certificate in the custody of the clearing agency or a custodian, or a nominee of either, subject to the instructions of the clearing agency, and is in bearer form or endorsed in blank by an appropriate person or registered in the name of the clearing agency or a custodian, or of a nominee of either, oran uncertificated security registered or recorded in records maintained by or on behalf of the bank in the name of the clearing agency or a custodian, or of a nominee of either, subject to the instructions of the clearing agency,then, in addition to other methods, a transfer or pledge of the security or any interest therein may be effected by the making of an appropriate entry in the records of the clearing agency.Interest in fungible bulkUnder subsections (4) to (10), entries may be in respect of like securities or interests therein as part of a fungible bulk and may refer merely to a quantity of a particular security without reference to the name of the registered owner, certificate or bond number or the like and, in appropriate cases, may be on a net basis taking into account other transfers or pledges of the same security.Constructive endorsement and deliveryA transfer or pledge under subsections (4) to (10) has the effect of a delivery of a security in bearer form or duly endorsed in blank representing the amount of the obligation or the number of shares or rights transferred or pledged.IdemIf a pledge or the creation of a security interest is intended, the making of entries has the effect of a taking of delivery by the pledgee or a secured party and the pledgee or secured party shall be deemed to have taken possession for all purposes.HolderA person depositing a security certificate or an uncertificated security with a clearing agency, or a transferee or pledgee of a security under subsections (4) to (10), is a holder of the security and shall be deemed to have possession of the security so deposited, transferred or pledged, as the case may be, for all purposes.Not registrationA transfer or pledge under subsections (4) to (10) does not constitute a registration of transfer under sections 126 to 133.Error in recordsThat entries made in the records of the clearing agency as provided in subsection (4) are not appropriate does not affect the validity or effect of the entries nor the liabilities or obligations of the clearing agency to any person adversely affected thereby.
Right to reclaim possessionA person against whom the transfer of a security is wrongful for any reason, including the person’s incapacity, may, against anyone except abona fide purchaser,reclaim possession of the security or obtain possession of any new security evidencing all or part of the same rights; orclaim damages.Recovery where unauthorized endorsementIf the transfer of a security is wrongful by reason of an unauthorized endorsement, the owner may reclaim possession of the security or a new security even from a bona fide purchaser if the ineffectiveness of the purported endorsement is asserted against the purchaser under section 117.RemediesThe right to reclaim possession of a security may be specially enforced, its transfer may be restrained and the security may be impounded pending litigation.
Right to requisites for registrationUnless otherwise agreed, a transferor shall, on demand, supply a purchaser with proof of the transferor’s authority to transfer a security or with any other requisite that is necessary to obtain registration of the transfer of a security, but if the transfer is not for value, it is not necessary for a transferor to prove authority to transfer unless the purchaser pays the reasonable and necessary costs of the proof and transfer.Rescission of transferIf a transferor fails to comply with a demand under subsection (1) within a reasonable time, the purchaser may reject or rescind the transfer.
Seizure of securityNo seizure of a security or other interest evidenced thereby is effective until the person making the seizure obtains possession of the security.
No conversion if good faith deliveryAn agent or bailee who in good faith, including observance of reasonable commercial standards if the agent or bailee is in the business of buying, selling or otherwise dealing with securities of a bank, has received securities and sold, pledged or delivered them according to the instructions of the agent’s or bailee’s principal is not liable for conversion or for participation in breach of fiduciary duty even though the principal has no right to dispose of the securities.
Duty to register transferSubject to Part VII, where a security in registered form is presented for transfer, the issuer shall register the transfer ifthe security is endorsed by an appropriate person;reasonable assurance is given that the endorsement is genuine and effective;the issuer has no duty to inquire into adverse claims or has discharged any such duty;all applicable laws relating to the collection of taxes have been complied with;the transfer is rightful or is to a bona fide purchaser; andthe fee, if any, referred to in subsection 85(2) has been paid.Liability for delayWhere an issuer has a duty to register a transfer of a security, the issuer is liable to the person presenting it for registration for any loss resulting from any unreasonable delay in registration or from the failure or refusal to register the transfer.
Assurance of endorsementsAn issuer may require an assurance that each necessary endorsement on a security is genuine and effective by requiring a guarantee of the signature of the person endorsing the security and by requiringif the endorsement is by an agent, reasonable assurance of authority to sign;if the endorsement is by a fiduciary, evidence of appointment or incumbency;if there is more than one fiduciary, reasonable assurance that all who are required to sign have done so; andin any other case, assurance that corresponds as closely as practicable to the foregoing.Definition of guarantee of the signatureFor the purposes of subsection (1), guarantee of the signature means a guarantee signed by or on behalf of a person whom the issuer believes, on reasonable grounds, to be a responsible person.StandardsAn issuer may adopt reasonable standards to determine responsible persons for the purposes of subsection (2).Definition of evidence of appointment or incumbencyFor the purposes of paragraph (1)(b), evidence of appointment or incumbency meansin the case of a fiduciary appointed by a court and referred to in subsection 96(1), a copy of the certified court order referred to in subsection 96(1) and dated not earlier than sixty days before the day a security is presented for transfer; orin the case of any other fiduciary, a copy of a document showing the appointment or other evidence believed by the issuer to be appropriate.StandardsAn issuer may adopt reasonable standards with respect to evidence referred to in paragraph (4)(b).No notice to issuerAn issuer is deemed not to have notice of the contents of any document referred to in subsection (4) that is obtained by the issuer except to the extent that the contents relate directly to appointment or incumbency.
Notice from additional documentationIf an issuer, in relation to a transfer, demands assurance other than an assurance specified in subsection 127(1) and obtains a copy of a will, trust or partnership agreement or a by-law or similar document, the issuer is deemed to have notice of all matters contained therein affecting the transfer.
Limited duty of inquiryAn issuer to whom a security is presented for registration has a duty to inquire into adverse claims ifthe issuer receives written notice of an adverse claim at a time and in a manner that provides the issuer with a reasonable opportunity to act on it before the issue of a new, reissued or re-registered security and the notice discloses the name and address of the claimant, the registered owner and the issue of which the security is a part; orthe issuer is deemed to have notice of an adverse claim from a document that it obtained under section 128.Discharge of dutyAn issuer may discharge a duty of inquiry by any reasonable means, including notifying an adverse claimant by registered mail sent to the address provided by the adverse claimant or, if no such address has been provided, to the adverse claimant’s residence or regular place of business, that a security has been presented for registration of transfer by a named person and that the transfer will be registered unless, within thirty days after the date of mailing of the notice, eitherthe issuer is served with a restraining order or other order of a court, orthe issuer is provided with an indemnity bond sufficient in the issuer’s judgment to protect the issuer and any registrar, transfer agent or other agent of the issuer from any loss that may be incurred by any of them as a result of complying with the adverse claim.
Inquiry into adverse claimsUnless an issuer is deemed to have notice of an adverse claim from a document that it obtained under section 128 or has received notice of an adverse claim under subsection 129(1), if a security presented for registration is endorsed by the appropriate person, the issuer has no duty to inquire into adverse claims and, in particular,an issuer registering a security in the name of a person who is a fiduciary or who is described as a fiduciary is not bound to inquire into the existence, extent or correct description of the fiduciary relationship and thereafter the issuer may assume without inquiry that the newly registered owner continues to be the fiduciary until the issuer receives written notice that the fiduciary is no longer acting as such with respect to the particular security;an issuer registering a transfer on an endorsement by a fiduciary has no duty to inquire into whether the transfer is made in compliance with the document or with the law of the jurisdiction governing the fiduciary relationship; andan issuer is deemed not to have notice of the contents of any court record or any registered document even if the record or document is in the issuer’s possession and even if the transfer is made on the endorsement of a fiduciary to the fiduciary specifically or to the fiduciary’s nominee.
Duration of notice of adverse claimA written notice of adverse claim received by an issuer is effective for twelve months after the day it was received unless the notice is renewed in writing.
Limitation on issuer’s liabilityExcept as otherwise provided in any applicable law relating to the collection of taxes, an issuer is not liable to the owner or any other person who incurs a loss as a result of the registration of a transfer of a security ifthe necessary endorsements were on or with the security; andthe issuer had no duty to inquire into adverse claims or had discharged any such duty.Duty of issuer on defaultIf an issuer has registered a transfer of a security to a person not entitled to it, the issuer shall on demand deliver a like security to the owner unlessthe issuer is not liable by virtue of subsection (1);the owner is precluded by subsection 133(1) from asserting any claim; orthe delivery would result in over-issue in respect of which section 97 applies.
Lost or stolen securityWhere a security has been lost, apparently destroyed or wrongfully taken, and the owner fails to notify the issuer of that fact by giving the issuer written notice of the owner’s adverse claim within a reasonable time after the owner knows of the loss, destruction or taking, then, if the issuer has registered a transfer of the security before receiving the notice, the owner is precluded from asserting against the issuer any claim to a new security.Duty to issue new securityWhere the owner of a security claims that the security has been lost, destroyed or wrongfully taken, the issuer shall issue a new security in place of the original security if the ownerso requests before the issuer has notice that the security has been acquired by a bona fide purchaser;provides the issuer with a sufficient indemnity bond; andsatisfies any other reasonable requirements imposed by the issuer.Duty to register transferIf, after the issue of a new security under subsection (2), a bona fide purchaser of the original security presents the original security for registration of transfer, the issuer shall register the transfer unless registration would result in over-issue in respect of which section 97 applies.Right of issuer to recoverIn addition to the rights that an issuer has by reason of an indemnity bond, the issuer may recover the new security issued under subsection (2) from the person to whom it was issued or any person taking under that person other than a bona fide purchaser.
Authenticating agent’s dutyAn authenticating trustee, registrar, transfer agent or other agent of an issuer has, in respect of the issue, registration of transfer and cancellation of a security of the issuer,a duty to the issuer to exercise good faith and reasonable diligence; andthe same obligations to the holder or owner of a security and the same rights, privileges and immunities as the issuer.
Notice to agentNotice to an authenticating trustee, registrar, transfer agent or other agent of an issuer is notice to the issuer in respect of the functions performed by the agent.
Corporate GovernanceShareholders and Members
Place of meetingsMeetings of shareholders or members of a bank are to be held at the place within Canada provided for in the by-laws of the bank or, in the absence of any such provision, at the place within Canada that the directors determine.Participation by electronic meansUnless the by-laws provide otherwise, any person who is entitled to attend a meeting of shareholders or members may participate in the meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting if the bank makes one available. A person who is participating in a meeting by one of those means is deemed for the purposes of this Act to be present at the meeting.RegulationsThe Governor in Council may make regulations respecting the manner of and conditions for participating in a meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting.1991, c. 46, s. 136; 2005, c. 54, s. 16; 2010, c. 12, s. 1948
Calling meetingsThe directors of a bankmust, after the meeting called under subsection 46(1) or section 47.02, call the first annual meeting of shareholders or members, as the case may be, of the bank, which meeting must be held not later than six months after the end of the first financial year of the bank, and subsequently call an annual meeting of shareholders or members, as the case may be, which meeting must be held not later than six months after the end of each financial year; andmay at any time call a special meeting of shareholders or members.Order to delay calling annual meetingDespite subsection (1), the bank may apply to the court for an order extending the time for calling an annual meeting.Obligation to notify SuperintendentThe bank shall give notice of the application to the Superintendent before any hearing concerning the application and shall provide the Superintendent with a copy of any order that is issued.Superintendent’s right to appearThe Superintendent is entitled to appear and be heard in person or by counsel at any hearing concerning the application.Authority to fix record dateThe directors may in advance fix a record date, that is within the prescribed period, for the determination of shareholders or members for any purpose, including for a determination of which shareholders or members are entitled toreceive payment of a dividend or a patronage allocation;participate in a liquidation distribution;receive notice of a meeting of shareholders or members; orvote at a meeting of shareholders or members.Determination of record dateIf no record date is fixed,the record date for the determination of shareholders or members who are entitled to receive notice of a meeting isat the close of business on the day immediately preceding the day on which the notice is given, orif no notice is given, the day on which the meeting is held; andthe record date for the determination of shareholders or members for any other purpose, other than to establish a right to vote, is at the close of business on the day on which the directors pass a resolution in respect of that purpose.Notice of record dateIf a record date is fixed and unless notice of the record date is waived in writing by every holder of a share of the class or series affected whose name is set out in the securities register at the close of business on the day on which the directors fix the record date, notice of the record date shall be given within the prescribed period byadvertisement in a newspaper in general circulation in the place where the bank’s head office is situated and in each place in Canada where the bank has a transfer agent or where a transfer of its shares may be recorded; andwritten notice to each stock exchange in Canada on which the bank’s shares are listed for trading.1991, c. 46, s. 137; 2005, c. 54, s. 17; 2010, c. 12, s. 1949
Notice of meetingNotice of the time and place of a meeting of shareholders or members of a bank must be sent within the prescribed period toeach shareholder or member entitled to vote at the meeting;each director;the auditor or auditors of the bank; andthe Superintendent.ExceptionIn the case of a bank that is not a federal credit union and that is not a distributing bank, notice may be sent within any shorter period specified in its by-laws.Number of eligible votesA bank with equity of twelve billion dollars or more that is not a federal credit union must set out in the notice of a meeting the number of eligible votes, as defined under subsection 156.09(1), that may be cast at the meeting as of the record date for determining shareholders entitled to receive the notice of meeting or, if there are to be separate votes of shareholders at the meeting, the number of eligible votes, as defined in that subsection, in respect of each separate vote to be held at the meeting.Publication in newspaperIn addition to the notice required under subsection (1), where any class of shares of a bank is publicly traded on a recognized stock exchange in Canada, notice of the time and place of a meeting of shareholders shall be published once a week for at least four consecutive weeks before the date of the meeting in a newspaper in general circulation in the place where the head office of the bank is situated and in each place in Canada where the bank has a transfer agent or where a transfer of the bank’s shares may be recorded.1991, c. 46, s. 138; 2001, c. 9, s. 63; 2005, c. 54, s. 18; 2007, c. 6, s. 132; 2010, c. 12, s. 1950; 2012, c. 5, ss. 5, 223
Notice not requiredA notice of a meeting is not required to be sent to shareholders or members who are not registered on the records of the bank or the bank’s transfer agent on the record date fixed under paragraph 137(5)(c) or determined under paragraph 137(6)(a).Effect of defaultFailure to receive a notice of a meeting does not deprive a shareholder or member of the right to vote at the meeting.1991, c. 46, s. 139; 2005, c. 54, s. 19; 2010, c. 12, s. 1951
Notice of adjourned meetingIf a meeting is adjourned for less than 30 days, it is not necessary, unless the by-laws otherwise provide, to give notice of the adjourned meeting, other than by announcement at the earliest meeting that is adjourned.Notice if adjournment is longerIf a meeting is adjourned by one or more adjournments for a total of 30 days or more, notice of the continuation of the meeting must be given as for an original meeting but, unless the meeting is adjourned by one or more adjournments for a total of more than 90 days, subsection 156.04(1) does not apply.1991, c. 46, s. 140; 1997, c. 15, s. 8; 2010, c. 12, s. 1952(E)
Special businessAll matters dealt with at a special meeting of shareholders or members and all matters dealt with at an annual meeting, except consideration of the financial statements, report of the auditor or auditors, election of directors, remuneration of directors and reappointment of the incumbent auditor or auditors, are deemed to be special business.Notice of special businessNotice of a meeting of shareholders or members at which special business is to be transacted muststate the nature of the special business in sufficient detail to permit a shareholder or member to form a reasoned judgment in respect of that special business; andcontain the text of any special resolution to be submitted to the meeting.1991, c. 46, s. 141; 2010, c. 12, s. 1953
Nominations for directorsIf shareholders of a federal credit union are entitled to elect one or more directors,a nomination for the election of a director may be made only by one or more registered holders or beneficial owners of shares representing in the aggregate not less than 5 per cent of the shares of the federal credit union or 5 per cent of the shares of a class of its shares entitled to vote at the meeting at which the election is to take place; anda notice of a meeting of shareholders must include any nomination made in accordance with paragraph (a) for the election of a director.ExceptionParagraph (1)(b) does not apply if the nomination is submitted to the federal credit union at least the prescribed number of days before the anniversary date of the previous annual meeting.2010, c. 12, s. 1954
Waiver of noticeA shareholder, a member and any other person entitled to attend a meeting may in any manner waive notice of the meeting.Attendance is a waiverAttendance at a meeting of shareholders or members is a waiver of notice of the meeting, except when a person attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.1991, c. 46, s. 142; 2001, c. 9, s. 64(F); 2010, c. 12, s. 1955
ProposalsSubject to subsections (1.1) and (1.2), a registered holder or beneficial owner of shares of a bank that is not a federal credit union that may be voted at an annual meeting of shareholders maysubmit to the bank notice of any matter that they propose to raise at the meeting (in this section and section 144 referred to as a “proposal”); anddiscuss at the meeting any matter in respect of which they would have been entitled to submit a proposal.Eligibility to submit proposalTo be eligible to submit a proposal a person shallfor at least the prescribed period be the registered holder or beneficial owner of at least the prescribed number of the bank’s outstanding shares; orhave the support of persons who, in the aggregate and including or not including the person who submits the proposal, have for at least the prescribed period been the registered holders or beneficial owners of at least the prescribed number of the bank’s outstanding shares.Information to be providedA proposal is to be accompanied by the following information:the name and address of the person submitting the proposal and the names and addresses of their supporters, if any; andthe number of shares held or owned by the person and their supporters, if any, and the date that the shares were acquired.Information not part of proposalThe information provided under subsection (1.2) does not form part of a proposal or of the supporting statement referred to in subsection (3) and is not to be included for the purpose of the prescribed maximum number of words referred to in subsection (3).Proof may be requiredIf the bank requests within the prescribed period that a person provide proof that they are eligible to submit a proposal, the person shall within the prescribed period provide proof that they meet the requirements of subsection (1.1).Management proxyA bank that solicits proxies shall, in the management proxy circular required by subsection 156.05(1), set out any proposal of a shareholder submitted for consideration at a meeting of shareholders or attach the proposal to the management proxy circular.Supporting statementAt the request of the person who submits a proposal, the bank shall set out in the management proxy circular or attach to it the person’s statement in support of the proposal and their name and address. The statement and proposal together are not to exceed the prescribed maximum number of words.Nomination of directorsA proposal may include nominations for the election of directors if it is signed by one or more registered holders or beneficial owners of shares representing in the aggregate not less than 5% of the shares of the bank or 5% of the shares of a class of its shares entitled to vote at the meeting at which the proposal is to be presented.ExemptionA bank is not required to comply with subsections (2) and (3) ifthe proposal is not submitted to the bank at least the prescribed number of days before the anniversary date of the notice of meeting that was sent to shareholders in respect of the previous annual meeting of shareholders;it clearly appears that the primary purpose of the proposal is to enforce a personal claim or redress a personal griev­ance against the bank or its directors, officers or security holders;it clearly appears that the proposal does not relate in a significant way to the business or affairs of the bank;the person submitting the proposal failed within the prescribed period before the bank receives their proposal to present, in person or by proxy, at a meeting of shareholders a proposal that at their request had been set out in or attached to a management proxy circular;substantially the same proposal was set out in or attached to a management proxy circular or dissident’s proxy circular relating to, and presented to shareholders at, a meeting of shareholders held within the prescribed period before the receipt of the proposal and did not receive the prescribed minimum amount of support at the meeting; orthe rights conferred by subsections (1) to (4) are being abused to secure publicity.Bank may refuse to include proposalIf a person who submits a proposal fails to continue to hold or own shares in accordance with paragraph (1.1)(a) or, as the case may be, does not continue to have the support of persons who are in the aggregate the registered holders or beneficial owners of the prescribed number of shares in accordance with paragraph (1.1)(b) until the end of the meeting, the bank is not required to set out any proposal submitted by that person in or attach it to a management proxy circular for any meeting held within the prescribed period after the day of the meeting.Immunity for proposal and statementNo bank or person acting on behalf of a bank incurs any liability by reason only of circulating a proposal or statement in compliance with subsections (2) and (3).1991, c. 46, s. 143; 1997, c. 15, s. 9; 2005, c. 54, s. 20; 2010, c. 12, s. 1956
Notice of refusalIf a bank refuses to include a proposal in a management proxy circular, it shall in writing notify the person submitting the proposal of its intention to omit the proposal from the management proxy circular and of the reasons for the refusal. It shall notify the person within the prescribed period after either the day on which it receives the proposal or, if it has requested proof under subsection 143(1.4), the day on which it receives the proof.Application to courtOn the application of a person submitting a proposal who claims to be aggrieved by a bank’s refusal under subsection (1), a court may restrain the holding of the meeting at which the proposal is sought to be presented and make any further order that it thinks fit.IdemA bank or any person claiming to be aggrieved by a proposal may apply to a court for an order permitting the bank to omit the proposal from the management proxy circular, and the court, if it is satisfied that subsection 143(5) applies, may make such order as it thinks fit.Notice to SuperintendentAn applicant under subsection (2) or (3) shall give the Superintendent written notice of the application and the Superintendent may appear and be heard at the hearing of the application in person or by counsel.1991, c. 46, s. 144; 2005, c. 54, s. 21
Proposals — members of federal credit unionSubject to subsections (2) and (3), a member of a federal credit union maysubmit to the federal credit union notice of any matter that they propose to raise at an annual meeting (in this section referred to as a “proposal”); anddiscuss at an annual meeting any matter in respect of which they would have been entitled to submit a proposal.Eligibility to submit proposalTo be eligible to submit a proposal a member must have been a member of the federal credit union for at least the prescribed period before making the proposal.Information to be providedA proposal is to be accompanied by a statement setting out the name and address of the member submitting the proposal and the period of time the member has been a member.Information not part of proposalThe information provided under subsection (3) does not form part of a proposal or of the supporting statement referred to in subsection (6) and is not included for the purposes of the prescribed maximum number of words referred to in subsection (6).Proof may be requiredIf the federal credit union requests within the prescribed period that a member provide proof that they are eligible to submit a proposal, the member must within the prescribed period provide proof that they meet the requirement of subsection (2).Proposal and statement to accompany notice of meetingA proposal submitted for consideration at a meeting must be attached to the notice of the meeting, together with, if requested by the member making the proposal, a statement in support of the proposal and the name and address of the member making the proposal. The statement and the proposal must together not exceed the prescribed maximum number of words.Nomination of directorsA proposal may include nominations for the election of directors if it is signed by the lesser of 250 members and 1 per cent of the members who are entitled to vote at the meeting.ExceptionsA federal credit union need not comply with subsection (6) ifthe proposal is not submitted to the federal credit union at least the prescribed number of days before the anniversary date of the notice of meeting that was sent to members in connection with the previous annual meeting;it clearly appears that the primary purpose of the proposal is to enforce a personal claim or redress a personal grievance against the federal credit union or its directors, officers, members or security holders;the person submitting the proposal has failed, within the prescribed period before the federal credit union receives the person’s proposal, to present, at a meeting, a proposal that, at the person’s request, had been attached by the federal credit union to the notice of the meeting;substantially the same proposal was attached to a notice of meeting, and presented at a meeting, of the federal credit union held not more than the prescribed period before the receipt of the proposal and the proposal did not receive the prescribed minimum amount of support at the meeting; orthe rights conferred by subsection (1) are being abused to secure publicity.Federal credit union may refuse to include proposalIf a member who submits a proposal withdraws from membership in accordance with section 47.05 before the meeting, the federal credit union is not required to attach any proposal submitted by that member to the notice of a meeting held within the prescribed period following the date of the meeting.ImmunityNo federal credit union or person acting on behalf of a federal credit union incurs any liability by reason only of circulating a proposal.2010, c. 12, s. 1957
Refusal to include proposalIf a federal credit union refuses to include a proposal in a notice of a meeting referred to in section 138, it must, within the prescribed period after the day on which it receives the proposal or the day on which it receives the proof of eligibility under subsection 144.1(5), as the case may be, notify in writing the person submitting the proposal of its intention to omit the proposal from the notice and of the reasons for the refusal.Restraining order by courtOn the application of a person submitting a proposal who claims to be aggrieved by a federal credit union’s refusal under subsection (1), a court may restrain the holding of the meeting at which the proposal is sought to be presented and make any further order it thinks fit.Order to omit proposal from noticeA federal credit union or any person claiming to be aggrieved by a proposal may apply to a court for an order permitting the federal credit union to omit the proposal from a notice of meeting, and the court, if it is satisfied that subsection 144.1(7) applies, may make any order that it thinks fit.Notice to SuperintendentAn applicant under subsection (2) or (3) must give the Superintendent written notice of the application, and the Superintendent may appear and be heard at the hearing of the application in person or by counsel.2010, c. 12, s. 1957
List of shareholders entitled to noticeA bank shall prepare an alphabet­ical list of shareholders entitled to receive notice of a meeting showing the number of shares held by each shareholderif a record date is fixed under paragraph 137(5)(c), no later than 10 days after that date; andif no record date is fixed, on the record date determined under paragraph 137(6)(a).List of members entitled to noticeA federal credit union must also prepare an alphabetical list of members entitled to receive notice of a meetingif a record date is fixed under paragraph 137(5)(c), no later than 10 days after that date; orif no record date is fixed, on the record date determined under paragraph 137(6)(a).Voting listThe bank shall prepare an alphabetical list of shareholders entitled to vote as of the record date showing the number of shares held by each shareholderif a record date is fixed under paragraph 137(5)(d), no later than 10 days after that date; andif no record date is fixed under paragraph 137(5)(d), no later than 10 days after a record date is fixed under paragraph 137(5)(c) or no later than the record date determined under paragraph 137(6)(a), as the case may be.Voting list — membersA federal credit union must also prepare an alphabetical list of members entitled to vote as of the record dateif a record date is fixed under paragraph 137(5)(d), no later than 10 days after that date; orif no record date is fixed under paragraph 137(5)(d), no later than 10 days after a record date is fixed under paragraph 137(5)(c) or no later than the record date determined under paragraph 137(6)(a), as the case may be.Entitlement to voteSubject to section 156.09, a shareholder whose name appears on a list prepared under subsection (2) is entitled to vote the shares shown opposite their name.Examination of listA shareholder of a bank that is not a federal credit union may examine the list of shareholdersduring usual business hours at the head office of the bank or at the place where its central securities register is maintained; andat the meeting of shareholders for which the list was prepared.Examination of listA person who is entitled to vote at a meeting of a federal credit union may examine a list that relates to the meetingduring usual business hours at the head office of the federal credit union or at the place where its members register or central securities register is maintained; andat the meeting for which the list was prepared.1991, c. 46, s. 145; 2001, c. 9, s. 65; 2005, c. 54, s. 22; 2010, c. 12, s. 1958
QuorumUnless the by-laws otherwise provide, a quorum of shareholders is present at a meeting of shareholders if the holders of a majority of the shares who are entitled to vote at the meeting are present in person or represented by proxyholders.Quorum — membersUnless the by-laws otherwise provide, a quorum of members is present at a meeting of members of a federal credit union if at least 500 members who are entitled to vote at the meeting, or one per cent of the total number of members entitled to vote at the meeting, whichever is the lesser, are present in person or represented by a personal representative or delegate.Quorum at opening of meetingIf a quorum is present at the opening of a meeting of shareholders or members, the shareholders or members present may, unless the by-laws otherwise provide, proceed with the business of the meeting even though a quorum is not present throughout the meeting.Adjournment permittedIf a quorum is not present at the opening of a meeting of shareholders or members, the shareholders or members present may adjourn the meeting to a fixed time and place but may not transact any other business.1991, c. 46, s. 146; 2010, c. 12, s. 1959
One shareholder meetingIf a bank has only one shareholder, or only one holder of any class or series of shares, the shareholder present in person or represented by a proxyholder constitutes a meeting of shareholders or a meeting of shareholders of that class or series.
One share — one voteSubject to section 156.09, if a share of a bank entitles the holder of the share to vote at a meeting of shareholders, that share entitles the shareholder to one vote at the meeting.1991, c. 46, s. 148; 2001, c. 9, s. 66
Representative of shareholder or memberIf an entity is a shareholder or member of a bank, the bank must recognize any natural person authorized by a resolution of the directors or governing body or similar authority of the entity to represent it at meetings of shareholders or members of the bank.PowersA natural person authorized under subsection (1) to represent an entity may exercise on behalf of the entity all the powers the entity could exercise if it were a natural person as well as a shareholder or member.1991, c. 46, s. 149; 2010, c. 12, s. 1960
Joint shareholdersUnless the by-laws otherwise provide, if two or more persons hold shares jointly, one of those holders present at a meeting of shareholders may in the absence of the others vote the shares, but if two or more of those persons who are present in person or represented by proxyholder vote, they shall vote as one on the shares jointly held by them.
Voting by hands or ballotUnless the by-laws otherwise provide, voting at a meeting of shareholders or members is to take place by show of hands except when a ballot is demanded by a person entitled to vote at the meeting.BallotA person entitled to vote at a meeting of shareholders or members may demand a ballot either before or after any vote by show of hands.Electronic votingDespite subsection (1) and unless the by-laws provide otherwise, any vote referred to in that subsection may be held entirely by means of a telephonic, electronic or other communication facility if the bank makes one available.Voting while participating electronicallyUnless the by-laws provide otherwise, any person who is participating in a meeting under subsection 136(2) and entitled to vote at that meeting may vote by means of the telephonic, electronic or other communication facility that the bank has made available for that purpose.VotingThe by-laws of a federal credit union may, subject to the regulations, allow members to vote, prior to the meeting, subject to any conditions set out in the by-laws,by mail;in person, at one of its branches;by telephonic or electronic means; orby any other prescribed means.RegulationsThe Governor in Council may make regulationsrespecting the manner of and conditions for voting at a meeting of members or shareholders by means of a telephonic, electronic or other communication facility; andrespecting the manner and conditions of voting referred to in paragraphs (5)(a) to (d) by members of federal credit unions.1991, c. 46, s. 151; 2005, c. 54, s. 23; 2010, c. 12, s. 19612019, c. 29, s. 87
Resolution in lieu of meetingExcept where a written statement is submitted by a director under section 174 or by an auditor under subsection 321(1),a resolution in writing signed by all the persons entitled to vote on that resolution at a meeting of shareholders or members is as valid as if it had been passed at a meeting of the shareholders or members; anda resolution in writing dealing with all matters required by this Act to be dealt with at a meeting of shareholders or members, and signed by all the persons entitled to vote at that meeting, satisfies all the requirements of this Act relating to meetings of shareholders or members.Filing resolutionA copy of every resolution referred to in subsection (1) must be kept with the minutes of the meetings.EvidenceUnless a ballot is demanded, an entry in the minutes of a meeting that the chairperson declared a resolution to be carried or defeated is in the absence of evidence to the contrary proof of that fact without proof of the number or proportion of votes recorded in favour of or against the resolution.1991, c. 46, s. 152; 2005, c. 54, s. 24; 2010, c. 12, s. 1962
Requisitioned meetingShareholders who together hold not less than 5 per cent of the issued and outstanding shares of a bank that carry the right to vote at a meeting sought to be held may requisition the directors to call a meeting of shareholders for the purposes stated in the requisition.Requisitioned meeting — membersAt least two members entitled to vote at a meeting of a federal credit union that is sought to be held, or one per cent of the total number of members entitled to vote at a meeting of a federal credit union that is sought to be held, whichever is greater, may requisition the directors to call a meeting of members, or of members and shareholders, for the purposes stated in the requisition.FormThe requisitionmust state the business to be transacted at the meeting and must be sent to each director and to the head office of the bank; andmay consist of several documents of like form, each signed by one or more shareholders or members, as the case may be.Directors calling meetingOn receipt of the requisition, the directors must call a meeting of shareholders or members, as the case may be, to transact the business stated in the requisition, unlessa record date has been fixed under paragraph 137(5)(c) and notice of it has been given under subsection 137(7);the directors have called a meeting of shareholders or members, as the case may be, and have given the notice required by section 138; orthe business of the meeting as stated in the requisition includes matters described in paragraphs 143(5)(b) to (e) or 144.1(8)(b) to (e).Power of others to call meetingIf the directors do not call a meeting within 21 days after receiving the requisition, any person who signed the requisition may call the meeting.ProcedureA meeting called under this section shall be called as nearly as possible in the manner in which meetings are to be called pursuant to the by-laws and this Act.ReimbursementUnless the shareholders or members, as the case may be, otherwise resolve at a meeting called under subsection (4), the bank must reimburse the shareholders or members for any expenses reasonably incurred by them in requisitioning, calling and holding the meeting.1991, c. 46, s. 153; 2005, c. 54, s. 25; 2010, c. 12, s. 1963
Court may order meeting to be calledA court may, on the application of a director of a bank, a person who is entitled to vote at a meeting of shareholders or members of a bank or the Superintendent, order a meeting to be called, held or conducted in the manner that the court directs ifit is impracticable to call the meeting within the time or in the manner in which it is to be called;it is impracticable to conduct the meeting in the manner required by this Act or the by-laws; orthe court thinks that the meeting ought to be called, held or conducted within the time or in the manner that it directs for any other reason.Varying quorumWithout restricting the generality of subsection (1), a court may order that the quorum required by the by-laws or this Act be varied or dispensed with at a meeting called, held and conducted pursuant to this section.Valid meetingA meeting called, held and conducted under this section is for all purposes a meeting of shareholders or members, as the case may be, of the bank duly called, held and conducted.1991, c. 46, s. 154; 2005, c. 54, s. 26; 2010, c. 12, s. 1964
Court review of electionA bank or any of its shareholders, members or directors may apply to a court to resolve any dispute in respect of the election or appointment of a director or an auditor of the bank.Powers of courtOn an application under subsection (1), a court may make any order it thinks fit including, without limiting the generality of the foregoing,an order restraining a director or auditor whose election or appointment is challenged from acting pending determination of the dispute;an order declaring the result of the disputed election or appointment;an order requiring a new election or appointment, and including in the order directions for the management of the business and affairs of the bank until a new election is held or the new appointment is made;an order determining the voting rights of shareholders and of persons claiming to own shares; andan order determining the voting rights of members and of persons claiming to be members.1991, c. 46, s. 155; 2010, c. 12, s. 1965
Notice to SuperintendentA person who makes an application under subsection 154(1) or 155(1) shall give notice of the application to the Superintendent before the hearing and shall deliver a copy of the order of the court, if any, to the Superintendent.Superintendent representationThe Superintendent may appear and be heard in person or by counsel at the hearing of an application referred to in subsection (1).
Proxies
DefinitionsThe definitions in this section apply in this section and sections 156.02 to 156.08.intermediary means a person who holds a security on behalf of another person who is not the registered holder of the security, and includesa securities broker or dealer required to be registered to trade or deal in securities under the laws of any jurisdiction;a securities depositary;a financial institution;in respect of a clearing agency, a securities dealer, trust company, association within the meaning of section 2 of the Cooperative Credit Associations Act, bank or other person, including another clearing agency, on whose behalf the clearing agency or its nominee holds securities of an issuer;a trustee or administrator of a self-administered retirement savings plan, retirement income fund or education savings plan or another similar self-administered savings or investment plan that is registered under the Income Tax Act;a nominee of a person referred to in any of paragraphs (a) to (e); anda person who performs functions similar to those performed by a person referred to in any of paragraphs (a) to (e) and holds a security registered in their name, or in the name of their nominee, on behalf of another person who is not the registered holder of the security. (intermédiaire)registrant[Repealed, 2005, c. 54, s. 27]solicitationincludesa request for a proxy whether or not accompanied by or included in a form of proxy,a request to execute or not to execute or, in Quebec, to sign or not to sign a form of proxy or to revoke a proxy,the sending of a form of proxy or other communication to a shareholder under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy, andthe sending of a form of proxy to a shareholder under subsection 156.04(1); butdoes not includethe sending of a form of proxy in response to an unsolicited request made by or on behalf of a shareholder,the performance of administrative acts or professional services on behalf of a person soliciting a proxy,the sending by an intermediary of the documents referred to in subsection 156.07(1),a solicitation by a person in respect of shares of which they are the beneficial owner,a prescribed public announcement by a shareholder of how they intend to vote and the reasons for that decision,a communication for the purpose of obtaining the support of persons in accordance with paragraph 143(1.1)(b), ora communication, other than a solicitation by or on behalf of the management of a bank, that is made to shareholders in the prescribed circumstances. (sollicitation)solicitation by or on behalf of the management of a bank means a solicitation by any person pursuant to a resolution or instruction of, or with the acquiescence of, the directors or a committee of the directors of the bank. (sollicitation effectuée par la direction d’une banque ou pour son compte)1997, c. 15, s. 10; 2005, c. 54, s. 272019, c. 29, s. 91(E)
Appointing proxyholderA shareholder who is entitled to vote at a meeting of shareholders may, by executing a form of proxy, appoint a proxyholder or one or more alternate proxyholders, who are not required to be shareholders, to attend and act at the meeting in the manner and to the extent authorized by the proxy and with the authority conferred by the proxy.Execution of proxyA form of proxy shall be executed by a shareholder or by a shareholder’s attorney authorized in writing to do so.Limit on authorityNo appointment of a proxyholder provides authority for the proxyholder to act in respect of the appointment of an auditor or the election of a director unless a nominee proposed in good faith for the appointment or election is named in the form of proxy, a management proxy circular, a dissident’s proxy circular or a proposal under subsection 143(1).Required informationA form of proxy must indicate, in bold-face type, that the shareholder by whom or on whose behalf it is executed may appoint a proxyholder, other than a person designated in the form of proxy, to attend and act on the shareholder’s behalf at a meeting to which the proxy relates, and must contain instructions as to the manner in which the shareholder may do so.Validity of proxyA proxy is valid only at the meeting in respect of which it is given or at a continuation of the meeting after an adjournment.Revocation of proxyA shareholder may revoke a proxyby depositing an instrument in writing executed by the shareholder or by the shareholder’s attorney authorized in writing to do soat the head office of the bank at any time up to and including the last business day before the day of a meeting, or a continuation of the meeting after an adjournment, at which the proxy is to be used, orwith the chairperson of the meeting on the day of the meeting or a continuation of the meeting after an adjournment; orin any other manner permitted by law.1997, c. 15, s. 10
Deposit of proxiesThe directors may specify, in a notice calling a meeting of shareholders or a continuation of a meeting of shareholders after an adjournment, a time before which executed forms of proxy to be used at the meeting or the continued meeting must be deposited with the bank or its transfer agent. The time specified may not be more than forty-eight hours, excluding Saturdays and holidays, before the meeting or the continued meeting.1997, c. 15, s. 10
Mandatory solicitationSubject to subsections (2) and 140(2), the management of a bank shall, concurrently with sending notice of a meeting of shareholders, send a form of proxy that is in accordance with the regulations to each shareholder entitled to receive notice of the meeting.ExceptionThe management of a bank is not required to send a form of proxy under subsection (1) if the bankis not a distributing bank; andhas 50 or fewer shareholders who are entitled to vote at a meeting, two or more joint holders of a share being counted as one shareholder.1997, c. 15, s. 10; 2005, c. 54, s. 282019, c. 29, s. 88
Soliciting proxiesA person shall not solicit proxies unless a proxy circular that is in accordance with the regulations is sent to the auditor or auditors of the bank, to each shareholder whose proxy is solicited and, in the case set out in paragraph (b), to the bank as follows:in the case of solicitation by or on behalf of the management of a bank, a management proxy circular, either as an appendix to or as a separate document accompanying the notice of meeting; andin the case of any other solicitation, a dissident’s proxy circular stating the purposes of the solicitation.Exception — limited solicitationDespite subsection (1), a person may solicit proxies, other than by or on behalf of the management of a bank, without sending a dissident’s proxy circular, if the total number of shareholders whose proxies are solicited is 15 or fewer, with two or more joint holders being counted as one shareholder.Exception — solicitation by public broadcastDespite subsection (1), a person may solicit proxies, other than by or on behalf of the management of a bank, without sending a dissident’s proxy circular if the solicitation is, in the prescribed circumstances, conveyed by public broadcast, speech or publication.Copy to SuperintendentA person who sends a management proxy circular or dissident’s proxy circular shall concurrently send to the Superintendent a copy of it together with the form of proxy, any other documents for use in connection with the meeting and, in the case of a management proxy circular, a copy of the notice of meeting.Exemption by SuperintendentOn the application of an interested person, the Superintendent may, on any terms that the Superintendent thinks fit, exempt the person from any of the requirements of subsection (1) and section 156.04, and the exemption may be given retroactive effect.Publication of exemptionsThe Superintendent shall publish in a publication generally available to the public, a notice of a decision made by the Superintendent granting an exemption under subsection (3).1997, c. 15, s. 102019, c. 29, s. 89
Attendance at meetingA person who solicits a proxy and is appointed proxyholder shall attend in person or cause an alternate proxyholder to attend the meeting in respect of which the proxy is valid, and the proxyholder or alternate proxyholder shall comply with the directions of the shareholder who executed the form of proxy.Rights of proxyholderA proxyholder or an alternate proxyholder has the same rights as the appointing shareholder to speak at a meeting of shareholders in respect of any matter, to vote by way of ballot at the meeting and, except where a proxyholder or an alternate proxyholder has conflicting instructions from more than one shareholder, to vote at the meeting in respect of any matter by way of a show of hands.Vote by show of handsDespite subsections (1) and (2) and unless a shareholder or proxyholder demands a ballot, if the chairperson of a meeting of shareholders declares to the meeting that, if a ballot were conducted, the total number of votes attached to shares represented at the meeting by proxy required to be voted against what, to the knowledge of the chairperson, would be the decision of the meeting on a matter or group of matters is less than 5% of all the votes that might be cast by shareholders in person or by proxy,the chairperson may conduct the vote in respect of that matter or group of matters by way of a show of hands; anda proxyholder or alternate proxyholder may vote in respect of that matter or group of matters by way of a show of hands.1997, c. 15, s. 10; 2005, c. 54, s. 30
Duty of intermediaryShares of a bank that are registered in the name of an intermediary or an intermediary’s nominee and not beneficially owned by the intermediary may not be voted unless the intermediary sends to the beneficial ownera copy of the notice of the meeting, annual statement, management proxy circular and dissident’s proxy circular and any other documents, other than the form of proxy, that were sent to shareholders by or on behalf of any person for use in connection with the meeting; anda written request for voting instructions except if the intermediary has already received written voting instructions from the beneficial owner.When documents to be sentThe intermediary shall send the documents referred to in subsection (1) without delay after they receive the documents referred to in paragraph (1)(a).Restriction on votingAn intermediary or a proxyholder appointed by them may not vote shares that the intermediary does not beneficially own and that are registered in the name of the intermediary or their nominee unless the intermediary or proxyholder, as the case may be, receives written voting instructions from the beneficial owner.CopiesA person by or on behalf of whom a solicitation is made shall on request and without delay provide the intermediary, at the person’s expense, with the necessary number of copies of the documents referred to in paragraph (1)(a).Instructions to intermediaryThe intermediary shall vote or appoint a proxyholder to vote in accordance with any written voting instructions received from the beneficial owner.Beneficial owner as proxyholderIf a beneficial owner so requests and provides an intermediary with the appropriate documentation, the intermediary shall appoint the beneficial owner or a nominee of the beneficial owner as proxyholder.Effect of intermediary’s failure to complyThe failure of an intermediary to comply with any of subsections (1) to (6) does not render void any meeting of shareholders or any action taken at the meeting.Intermediary may not voteNothing in this Part gives an intermediary the right to vote shares that they are otherwise prohibited from voting.1997, c. 15, s. 10; 2005, c. 54, s. 31
RegulationsThe Governor in Council may make regulationsrespecting the powers that may be granted by a shareholder in a form of proxy;respecting proxy circulars and forms of proxy, including the form and content of those documents; andrespecting the conditions under which a bank is exempt from any of the requirements of sections 156.02 to 156.07.2005, c. 54, s. 312019, c. 29, s. 90
Restraining orderIf a form of proxy, management proxy circular or dissident’s proxy circular contains an untrue statement of a material fact or omits to state a material fact that is required to be contained in it or that is necessary to make a statement contained in it not misleading in light of the circumstances in which the statement is made, an interested person or the Superintendent may apply to a court and the court may make any order it thinks fit, includingan order restraining the solicitation or the holding of the meeting, or restraining any person from implementing or acting on a resolution passed at the meeting, to which the form of proxy, management proxy circular or dissident’s proxy circular relates;an order requiring correction of any form of proxy or proxy circular and a further solicitation; andan order adjourning the meeting.Notice of applicationWhere a person other than the Superintendent is an applicant under subsection (1), the applicant shall give notice of the application to the Superintendent and the Superintendent is entitled to appear and to be heard in person or by counsel.1997, c. 15, s. 10
Restrictions on Voting
Meaning of eligible votesIn this section, eligible votes means the total number of votes that may be cast by or on behalf of shareholders on a vote of shareholders or a vote of holders of a class or series of shares, as the case may be, in respect of any particular matter, calculated without regard to subsection (2).RestrictionAt a meeting of shareholders of a bank with equity of twelve billion dollars or more, no person and no entity controlled by any person may, in respect of any vote of shareholders or holders of any class or series of shares of the bank, cast votes in respect of any shares beneficially owned by the person or the entity that are, in aggregate, more than 20 per cent of the eligible votes that may be cast in respect of that vote.Exception — federal credit unionSubsection (2) does not apply in respect of a meeting of shareholders or members of a federal credit union.ProxyholdersNo person who is a proxyholder for a person or for an entity controlled by a person may cast votes to which the proxy relates that the person or entity may not cast by reason of subsection (2).ExceptionIf a person is, with respect to a bank, a person referred to in subsection 375(1), subsections (2) and (3) do not apply with respect to votes cast by or on behalf of the person during any period that the person is entitled under section 375 to remain a major shareholder of the bank.ExceptionSubsections (2) and (3) do not apply in respect of votes cast by or on behalf of any entity that controls the bank or any entity that is controlled by an entity that controls the bank.ExceptionSubsection (2) does not apply in respect of a vote held under section 218.Validity of voteA vote in respect of a particular matter is not invalid merely because a person voted contrary to subsection (2) or (3).Disposition of shareholdingsIf, with respect to any bank, a person contravenes subsection (2) or (3), the Minister may, by order, direct the shareholder of the shares to which the contravention relates or any person controlled by that shareholder to dispose of any number of shares of the bank beneficially owned by any of those persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the shareholder and the persons controlled by that shareholder that is specified in the order.Restriction on voting rightsIf the Minister makes an order under subsection (8), the person to whom the order relates may not, in person or by proxy, exercise any voting rights that are attached to shares of the bank beneficially owned by the person.Subsection (9) ceases to applySubsection (9) ceases to apply in respect of a person when the shares to which the order relates have been disposed of.Reliance on number in noticeFor the purpose of this section, a person is entitled to rely on the number of eligible votes set out in a notice of a meeting under subsection 138(1.1).Designation of personsFor the purpose of this section, the Minister may, with respect to a particular bank, designate two or more persons who are parties to an agreement, commitment or understanding referred to in section 9 to be a single person.2001, c. 9, s. 67; 2007, c. 6, s. 132; 2010, c. 12, s. 1966; 2012, c. 5, s. 6
Directors and OfficersDuties
Duty to manageSubject to this Act, the directors of a bank shall manage or supervise the management of the business and affairs of the bank.Specific dutiesWithout limiting the generality of subsection (1), the directors of a bank shallestablish an audit committee to perform the duties referred to in subsections 194(3) and (4);establish a conduct review committee to perform the duties referred to in subsection 195(3);establish procedures to resolve conflicts of interest, including techniques for the identification of potential conflict situations and for restricting the use of confidential information;designate a committee of the board of directors to monitor the procedures referred to in paragraph (c);designate a committee of the board of directors to perform the duties set out in section 195.1; and[Repealed, 2018, c. 27, s. 316]establish investment and lending policies, standards and procedures in accordance with section 465.ExceptionParagraphs (2)(a) and (b) do not apply to the directors of a bank ifall the voting shares of the bank are beneficially owned by a Canadian financial institution described in any of paragraphs (a) to (d) of the definition financial institution in section 2; andthe audit committee or conduct review committee of the financial institution performs for and on behalf of the bank all the functions that would otherwise be required to be performed by the audit committee or conduct review committee of the bank under this Act.1991, c. 46, s. 157; 1997, c. 15, s. 11; 2001, c. 9, s. 68(F)2018, c. 27, s. 316
Duty of careEvery director and officer of a bank in exercising any of the powers of a director or an officer and discharging any of the duties of a director or an officer shallact honestly and in good faith with a view to the best interests of the bank; andexercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.Duty to complyEvery director, officer and employee of a bank shall comply with this Act, the regulations, the bank’s incorporating instrument and the by-laws of the bank.No exculpationNo provision in any contract, in any resolution or in the by-laws of a bank relieves any director, officer or employee of the bank from the duty to act in accordance with this Act and the regulations or relieves a director, officer or employee from liability for a breach thereof.
Qualification and Number — Directors
Minimum number of directorsA bank shall have at least seven directors.Residency requirementAt least one half of the directors of a bank that is a subsidiary of a foreign bank and a majority of the directors of any other bank must be, at the time of each director’s election or appointment, resident Canadians.1991, c. 46, s. 159; 2001, c. 9, s. 69; 2007, c. 6, s. 12
Directors as membersNot less than two thirds of the directors of a federal credit union, or any greater proportion that is provided for by the by-laws, must be members of the federal credit union or representatives of members of the federal credit union.2010, c. 12, s. 1967
Disqualified personsThe following persons are disqualified from being directors of a bank:a person who is less than eighteen years of age;a person who is of unsound mind and has been so found by a court in Canada or elsewhere;a person who has the status of a bankrupt;a person who is not a natural person;a person who is prohibited by subsection 156.09(9) or section 392 or 401.3 from exercising voting rights attached to shares of the bank or whose voting rights attached to the shares are suspended under section 402.2 or subsection 973.03(4);a person who is an officer, director or full time employee of an entity that is prohibited by subsection 156.09(9) or section 392 or 401.3 from exercising voting rights attached to shares of the bank or whose voting rights attached to the shares are suspended under section 402.2 or subsection 973.03(4);a person who is an officer, director, employee or agent of — or any other person acting on behalf of — an eligible agent within the meaning of subsection 370(1);[Repealed, 2013, c. 40, s. 161]a minister of Her Majesty in right of Canada or in right of a province;a person who is an agent or employee of the government of a foreign country or any political subdivision thereof; andif the bank is a federal credit union, a person who fails to meet any of the qualification requirements set out in its by-laws.1991, c. 46, s. 160; 1994, c. 47, s. 15; 1997, c. 15, s. 12; 2001, c. 9, s. 70; 2010, c. 12, s. 1968; 2012, c. 19, s. 330, c. 31, s. 109; 2013, c. 40, s. 1612023, c. 26, s. 540
[Repealed, 2013, c. 40, s. 162]
No shareholder requirementA director of a bank is not required to hold shares of the bank.
Affiliated personThe Governor in Council may make regulations specifying the circumstances under which a natural person is affiliated with a bank for the purposes of this Act.
Affiliated director determinationNotwithstanding section 162, the Superintendent may determine that a particular director is affiliated with a bank for the purposes of this Act if, in the opinion of the Superintendent, the director has a significant or sufficient commercial, business or financial relationship with the bank or with an affiliate of the bank to the extent that the relationship can be construed as being material to the director and can reasonably be expected to affect the exercise of the director’s best judgment.Notification by SuperintendentA determination by the Superintendent under subsection (1)becomes effective on the day of the next annual meeting of the persons who are entitled to elect directors unless a notice in writing by the Superintendent revoking the determination is received by the bank prior to that day; andceases to be in effect on the day of the next annual meeting of those persons after a notice in writing by the Superintendent revoking the determination is received by the bank.1996, c. 6, s. 5; 2010, c. 12, s. 1969
Unaffiliated directorsAt the election of directors at each annual meeting of a bank and at all times until the day of the next annual meeting, no more than two thirds of the directors may be persons affiliated with the bank.ExceptionSubsection (1) does not apply where all the voting shares of a bank, other than directors’ qualifying shares, if any, are beneficially owned by a Canadian financial institution incorporated by or under an Act of Parliament.Determination of affiliationFor the purposes of subsection (1), whether or not a person is affiliated with a bank is to be determined as at the day the notice of the annual meeting is sent under section 138 and that determination becomes effective on the day of that meeting, and a person is deemed to continue to be affiliated or unaffiliated, as the case may be, until the next annual meeting of the shareholders or members, as the case may be.TransitionalSubsection (1) does not apply in respect of a bank that was in existence immediately prior to the day that subsection comes into force until the day that is three years after the day that subsection comes into force.1991, c. 46, s. 163; 2010, c. 12, s. 1970
Limit on directorsNo more than 15 per cent of the directors of a bank may, at each director’s election or appointment, be employees of the bank or a subsidiary of the bank, except that up to four persons who are employees of the bank or a subsidiary of the bank may be directors of the bank if those directors constitute not more than one half of the directors of the bank.
Election and Tenure — Directors
Number of directorsSubject to subsection 159(1) and sections 168 and 217, the directors of a bank that is not a federal credit union must, by by-law, determine the number of directors or the minimum and maximum number of directors, but no by-law that decreases the number of directors shortens the term of an incumbent director.Number of directors — federal credit unionSubject to subsection 159(1), the members of a federal credit union must, by by-law, determine the number of directors or the minimum and maximum number of directors.Election at annual meetingA by-law made under subsection (1) or (2) that provides for a minimum and maximum number of directors may provide that the number of directors to be elected at any annual meeting of the shareholders or members, as the case may be, be the number that is fixed by the directors before the annual meeting.1991, c. 46, s. 165; 2010, c. 12, s. 1971
Election or appointment as directorThe election or appointment of a person as a director is subject to the following:the person was present at the meeting when the election or appointment took place and did not refuse to hold office as a director; orthe person was not present at the meeting when the election or appointment took place butconsented in writing to hold office as a director before the election or appointment or within 10 days after it, oracted as a director after the election or appointment.2005, c. 54, s. 32
Term of directorsExcept where this Act or the by-laws of a bank provide for cumulative voting, a bank may, by by-law, provide that the directors be elected for terms of one, two or three years.Term of one, two or three yearsA director elected for a term of one, two or three years holds office until the close, as the case may be, of the first, second or third annual meeting of shareholders or members, as the case may be, following the election of the director.No stated termA director who is not elected for an expressly stated term of office ceases to hold office at the close of the next annual meeting of shareholders or members, as the case may be, following the election of the director.Tenure of officeIt is not necessary that all directors elected at a meeting of shareholders or members hold office for the same term.IdemIf a by-law of a bank provides that the directors be elected for a term of two or three years, it may also provide that the term of office of each director be for the whole of that term, or that, as nearly as may be, one half of the directors retire each year if the term is two years, and that one third of the directors retire each year if the term is three years.Composition requirementsSubject to subsection 163(4), if a director of a bank is elected or appointed for a term of more than one year, the bank must comply with subsections 159(2) and 163(1) and section 164 at each annual meeting of shareholders or members, as the case may be, during the director’s term of office as if that director were elected or appointed on that date.1991, c. 46, s. 166; 2010, c. 12, s. 1972
Determining election of directorsExcept where this Act or the by-laws of a bank provide for cumulative voting, the persons, to the number authorized to be elected, who receive the greatest number of votes at an election of directors of a bank shall be the directors thereof.IdemIf, at any election of directors referred to in subsection (1), two or more persons receive an equal number of votes and there are not sufficient vacancies remaining to enable all the persons receiving an equal number of votes to be elected, the directors who receive a greater number of votes or the majority of them shall, in order to complete the full number of directors, determine which of the persons so receiving an equal number of votes are to be elected.
Cumulative votingWhere this Act or the by-laws provide for cumulative voting,there shall be a stated number of directors fixed by by-law and not a minimum and maximum number of directors;each shareholder entitled to vote at an election of directors has the right to cast a number of votes equal to the number of votes attached to the shares held by the shareholder multiplied by the number of directors to be elected, and the shareholder may cast all such votes in favour of one candidate or distribute them among the candidates in any manner;a separate vote of shareholders shall be taken with respect to each candidate nominated for director unless a resolution is passed unanimously permitting two or more persons to be elected by a single vote;if a shareholder has voted for more than one candidate without specifying the distribution of the votes among the candidates, the shareholder is deemed to have distributed the votes equally among the candidates for whom the shareholder voted;if the number of candidates nominated for director exceeds the number of positions to be filled, the candidates who receive the least number of votes shall be eliminated until the number of candidates remaining equals the number of positions to be filled;each director ceases to hold office at the close of the next annual meeting of shareholders following the director’s election;a director may be removed from office only if the number of votes cast in favour of a motion to remove the director is greater than the product of the number of directors required by the by-laws and the number of votes cast against the motion; andthe number of directors required by the by-laws may be decreased only if the number of votes cast in favour of a motion to decrease the number of directors is greater than the product of the number of directors required by the by-laws and the number of votes cast against the motion.Mandatory cumulative votingWhere the aggregate of the voting shares beneficially owned by a person and any entities controlled by the person carries more than 10 per cent of the voting rights attached to all the outstanding voting shares of a bank, the directors shall be elected by cumulative voting.ExceptionSubsection (2) does not applywhere all the voting shares of the bank that are outstanding are beneficially owned byone person,one person and one or more entities controlled by that person, orone or more entities controlled by the same person;in respect of a bank that was in existence immediately prior to the day that subsection comes into force whose shareholders are confined to entities incorporated or formed by or under an Act of Parliament or of the legislature of a province that are, in the opinion of the directors, operating as credit unions or cooperative associations.ExceptionSubsection (2) does not apply to a widely held bank with equity of twelve billion dollars or more or to a bank in respect of which subsection 378(1) applies.Transitional electionWhere this Act or the by-laws of a bank provide for cumulative voting, the shareholders of the bank shall,at the first annual meeting of shareholders held not earlier than ninety days following the date that cumulative voting is required under subsection (2) or provided for in the by-laws, andat each succeeding annual meeting,elect the stated number of directors to hold office until the close of the next annual meeting of shareholders following their election.ExceptionNothing in this Act precludes the holders of any class or series of shares of a bank from having an exclusive right to elect one or more directors.1991, c. 46, s. 168; 1997, c. 15, s. 14; 2001, c. 9, s. 73; 2005, c. 54, s. 33; 2007, c. 6, s. 132; 2012, c. 5, s. 7
No cumulative votingDespite section 168 or any provision of its by-laws, cumulative voting is not permitted in a federal credit union.2010, c. 12, s. 1973
Re-election of directorsA director who has completed a term of office is, if otherwise qualified, eligible for re-election.
Incomplete Elections and Director Vacancies
Void election or appointmentIf, immediately after the time of any purported election or appointment of directors, the board of directors would fail to comply with subsection 159(2) or 163(1) or section 164, the purported election or appointment of all persons purported to be elected or appointed at that time is void unless the directors, within forty-five days after the discovery of the non-compliance, develop a plan, approved by the Superintendent, to rectify the non-compliance.Failure to elect minimumIf, at the close of a meeting of shareholders or members of a bank, the shareholders or members have failed to elect the number or minimum number of directors required by this Act or the by-laws of a bank, the purported election of directors at the meetingis valid if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together constitute a quorum; oris void if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together do not constitute a quorum.[Repealed, 1997, c. 15, s. 15]1991, c. 46, s. 170; 1997, c. 15, s. 15; 2010, c. 12, s. 1974
Directors where elections or appointments incomplete or voidDespite subsections 166(2) and (3) and paragraphs 168(1)(f) and 172(1)(a), if subsection 170(1) or (2) applies at the close of any meeting of shareholders or members of a bank, the board of directors, until their successors are elected or appointed, consists solely ofwhere paragraph 170(2)(a) applies, the directors referred to in that paragraph; orwhere subsection 170(1) or paragraph 170(2)(b) applies, the persons who were the incumbent directors immediately before the meeting.Where there is no approved rectification planNotwithstanding subsections 166(2) and (3) and paragraphs 168(1)(f) and 172(1)(a), where a plan to rectify the non-compliance referred to in subsection 170(1) has not been approved by the Superintendent by the end of the forty-five day period referred to in that subsection, the board of directors shall, until their successors are elected or appointed, consist solely of the persons who were the incumbent directors immediately before the meeting at which the purported election or appointment referred to in that subsection occurred.Directors to call meetingIf subsection (1) or (2) applies, the board of directors referred to in that subsection must, without delay, call a special meeting of shareholders or members, as the case may be, to fill the vacancies if paragraph 170(2)(a) applies, or elect a new board of directors if subsection 170(1) or paragraph 170(2)(b) applies.Others may call meetingIf the directors fail to call a special meeting required by subsection (3), the meeting may be called by any person who would be entitled to vote at the meeting.1991, c. 46, s. 171; 1997, c. 15, s. 16; 2010, c. 12, s. 1975
Ceasing to hold officeA director ceases to hold officeat the close of the annual meeting at which the director’s term of office expires;when the director dies or resigns;when the director becomes disqualified under section 160 or ineligible to hold office pursuant to subsection 203(2);when the director is removed under section 173; orwhen the director is removed from office under section 647 or 647.1.Date of resignationThe resignation of a director of a bank becomes effective at the time a written resignation is sent to the bank by the director or at the time specified in the resignation, whichever is later.1991, c. 46, s. 172; 2001, c. 9, s. 74
Removal of directorSubject to paragraph 168(1)(g), the shareholders of a bank that is not a federal credit union may by resolution at a special meeting of shareholders remove any director or all the directors from office.Removal of director — federal credit unionA director of a federal credit union may be removed from office by resolution at a special meeting of the persons who are entitled to vote in the election of that director.ExceptionWhere the holders of any class or series of shares of a bank have the exclusive right to elect one or more directors, a director so elected may be removed only by a resolution at a meeting of the shareholders of that class or series.Exception — membersIf members of a federal credit union have the exclusive right to elect one or more directors, a director so elected may be removed only by a resolution of the members having that right.Vacancy by removalSubject to paragraphs 168(1)(b) to (e), a vacancy created by the removal of a director may be filled at the meeting of the shareholders or members, as the case may be, at which the director is removed or, if not so filled, may be filled under section 177 or 178.1991, c. 46, s. 173; 2010, c. 12, s. 1976
Statement of directorA director whoresigns,receives a notice or otherwise learns of a meeting called for the purpose of removing the director from office, orreceives a notice or otherwise learns of a meeting of directors, shareholders or members at which another person is to be appointed or elected to fill the office of director, whether because of the director’s resignation or removal or because the director’s term of office has expired or is about to expire,is entitled to submit to the bank a written statement giving the reasons for the resignation or the reasons why the director opposes any proposed action or resolution.Statement re disagreementWhere a director resigns as a result of a disagreement with the other directors or the officers of a bank, the director shall submit to the bank and the Superintendent a written statement setting out the nature of the disagreement.1991, c. 46, s. 174; 2010, c. 12, s. 1977
Circulation of statementA bank that is not a federal credit union must without delay on receipt of a director’s statement referred to in subsection 174(1) relating to a matter referred to in paragraph 174(1)(b) or (c), or a director’s statement referred to in subsection 174(2), send a copy of it to each shareholder entitled to receive a notice of meetings and to the Superintendent, unless the statement is included in or attached to a management proxy circular required by subsection 156.05(1).Circulation of statement — federal credit unionA federal credit union must, without delay on receipt of a director’s statement referred to in subsection 174(1) relating to a matter referred to in paragraph 174(1)(b) or (c), or a director’s statement referred to in subsection 174(2), send a copy of it to the Superintendent, to each member and, if the director was elected by the holders of shares of a class, to those shareholders.Immunity for statementNo bank or person acting on its behalf incurs any liability by reason only of circulating a director’s statement in compliance with subsection (1) or (2).1991, c. 46, s. 175; 1997, c. 15, s. 17; 2010, c. 12, s. 1978
Shareholders filling vacancyThe by-laws of a bank that is not a federal credit union may provide that a vacancy among the directors is to be filled onlyby a vote of the shareholders; orby a vote of the holders of any class or series of shares having an exclusive right to elect one or more directors if the vacancy occurs among the directors elected by the holders of that class or series.Filling vacancy — federal credit unionThe by-laws of a federal credit union may provide that a vacancy among its directors is to be filled by election or appointment by members only or by an election or appointment by persons having an exclusive right to elect or appoint one or more directors if the vacancy occurs among the directors appointed or elected by those persons.1991, c. 46, s. 176; 2010, c. 12, s. 1978
Directors filling vacancyDespite section 183 but subject to subsection (2) and sections 176 and 178, a quorum of directors may fill a vacancy among the directors except a vacancy resulting from a change in the by-laws by which the number or the minimum or maximum number of directors is increased or from a failure to elect the number or minimum number of directors provided for in the by-laws.Where composition failsNotwithstanding sections 176 and 183, where by reason of a vacancy the number of directors or the composition of the board of directors fails to meet any of the requirements of section 159, subsection 163(1) and section 164, the directors who, in the absence of any by-law, would be empowered to fill that vacancy shall do so forthwith.1991, c. 46, s. 177; 2005, c. 54, s. 34
Class vacancyDespite section 183, if a class of persons have an exclusive right to elect one or more directors and a vacancy occurs among those directors, then, subject to section 176,the remaining directors elected by those persons may fill the vacancy except one resulting from an increase in the number or the minimum or maximum number of directors who may be elected by that class from a failure to elect the number or minimum number of directors provided for in the by-laws for that class;if there are no such remaining directors and, by reason of the vacancy, the number of directors or the composition of the board of directors fails to meet any of the requirements of section 159, subsection 163(1) and section 164, the other directors may fill that vacancy; andif there are no such remaining directors and paragraph (b) does not apply, any person of that class may call a meeting of the class for the purpose of filling the vacancy.1991, c. 46, s. 178; 2005, c. 54, s. 35; 2010, c. 12, s. 1979
Unexpired termUnless the by-laws otherwise provide, a director elected or appointed to fill a vacancy holds office for the unexpired term of the director’s predecessor in office.AffiliationNotwithstanding subsection 163(3), the affiliation of a person to be elected or appointed to fill a vacancy shall be determined as at the date of the person’s election or appointment and that person shall be deemed to continue to be affiliated or unaffiliated, as the case may be, until the next annual meeting of the shareholders.
Additional directorsThe directors of a bank that is not a federal credit union may appoint one or more additional directors if the by-laws of the bank allow them to do so and the by-laws determine the minimum and maximum numbers of directors.Term of officeA director appointed under subsection (1) holds office for a term expiring not later than the close of the next annual meeting of shareholders of the bank.Limit on number appointedThe total number of directors appointed under subsection (1) may not exceed one third of the number of directors elected at the previous annual meeting of shareholders of the bank.1997, c. 15, s. 18; 2010, c. 12, s. 1980
Meetings of the Board
Meetings requiredThe directors shall meet at least four times during each financial year.Place for meetingsThe directors may meet at any place unless the by-laws provide otherwise.Notice for meetingsThe notice for the meetings must be given as required by the by-laws.1991, c. 46, s. 180; 1997, c. 15, s. 19
Notice of meetingA notice of a meeting of directors shall specify each matter referred to in section 198 that is to be dealt with at the meeting but, unless the by-laws otherwise provide, need not otherwise specify the purpose of or the business to be transacted at the meeting.Waiver of noticeA director may in any manner waive notice of a meeting of directors and the attendance of a director at a meeting of directors is a waiver of notice of that meeting except where the director attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.Adjourned meetingNotice of an adjourned meeting of directors is not required to be given if the time and place of the adjourned meeting was announced at the original meeting.
QuorumSubject to section 183, the number of directors referred to in subsection (2) constitutes a quorum at any meeting of directors or a committee of directors and, notwithstanding any vacancy among the directors, a quorum of directors may exercise all the powers of the directors.IdemThe number of directors constituting a quorum at any meeting of directors or a committee of directors shall bea majority of the minimum number of directors required by this Act for the board of directors or a committee of directors; orsuch greater number of directors than the number calculated pursuant to paragraph (a) as may be established by the by-laws of the bank.Director continues to be presentA director who is present at a meeting of directors or of a committee of directors but is not, in accordance with subsection 203(1), present at any particular time during the meeting is considered to be present for the purposes of this section.1991, c. 46, s. 182; 2005, c. 54, s. 36
Resident Canadian majorityThe directors of a bank shall not transact business at a meeting of directors unlessin the case of a bank that is a subsidiary of a foreign bank, at least one half of the directors present are resident Canadians; orin any other case, a majority of the directors present are resident Canadians.ExceptionDespite subsection (1), the directors of a bank may transact business at a meeting of directors without the required proportion of directors who are resident Canadians ifa director who is a resident Canadian unable to be present approves, in writing or by telephonic, electronic or other communications facilities, the business transacted at the meeting; andthere would have been present the required proportion of directors who are resident Canadians had that director been present at the meeting.1991, c. 46, s. 183; 2001, c. 9, s. 75; 2013, c. 33, s. 105
Directors of federal credit unionThe directors of a federal credit union that has issued shares that provide for the election of directors must not transact business at a meeting of directors or of a committee of directors unless the majority of the directors present at the meeting are members.2010, c. 12, s. 1981
Presence of unaffiliated directorThe directors of a bank shall not transact business at a meeting of directors unless at least one of the directors who is not affiliated with the bank is present.ExceptionDespite subsection (1), the directors of a bank may transact business at a meeting of directors if a director who is not affiliated with the bank and who is not able to be present approves, in writing or by telephonic, electronic or other communications facilities, the business transacted at the meeting.ExceptionSubsection (1) does not apply if all the voting shares of the bank, other than directors’ qualifying shares, if any, are beneficially owned by a Canadian financial institution incorporated by or under an Act of Parliament.2001, c. 9, s. 76
Electronic meetingSubject to the by-laws of a bank, a meeting of directors or of a committee of directors may be held by means of such telephonic, electronic or other communications facilities as permit all persons participating in the meeting to communicate adequately with each other during the meeting.Deemed presentA director participating in a meeting by any means referred to in subsection (1) is deemed for the purposes of this Act to be present at that meeting.
Resolution outside board meetingA resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of directors is as valid as if it had been passed at a meeting of directors.Filing directors’ resolutionA copy of the resolution referred to in subsection (1) shall be kept with the minutes of the proceedings of the directors.Resolution outside committee meetingA resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of a committee of directors, other than a resolution of the audit committee in carrying out its duties under subsection 194(3) or a resolution of the conduct review committee in carrying out its duties under subsection 195(3), is as valid as if it had been passed at a meeting of that committee.Filing committee resolutionA copy of the resolution referred to in subsection (3) shall be kept with the minutes of the proceedings of that committee.EvidenceUnless a ballot is demanded, an entry in the minutes of a meeting that the chairperson declared a resolution to be carried or defeated is in the absence of evidence to the contrary proof of that fact without proof of the number or proportion of votes recorded in favour of or against the resolution.1997, c. 15, s. 20; 2005, c. 54, s. 37
Dissent of directorA director of a bank who is present at a meeting of directors or a committee of directors is deemed to have consented to any resolution passed or action taken at that meeting unlessthe director requests that the director’s dissent be entered or the director’s dissent is entered in the minutes of the meeting;the director sends a written dissent to the secretary of the meeting before the meeting is adjourned; orthe director sends the director’s dissent by registered mail or delivers it to the head office of the bank immediately after the meeting is adjourned.Loss of right to dissentA director of a bank who votes for or consents to a resolution is not entitled to dissent under subsection (1).Dissent of absent directorA director of a bank who is not present at a meeting at which a resolution is passed or action taken is deemed to have consented thereto unless, within seven days after the director becomes aware of the resolution, the directorcauses the director’s dissent to be placed with the minutes of the meeting; orsends the director’s dissent by registered mail or delivers it to the head office of the bank.
Record of attendanceA bank shall keep a record of the attendance at each meeting of directors and each committee meeting of directors.Statement to shareholders and membersA bank must attach to the notice of each annual meeting it sends to its shareholders or members, as the case may be, a statement showing, in respect of the financial year immediately preceding the meeting, the total number of directors’ meetings and directors’ committee meetings held during the financial year and the number of those meetings attended by each director.1991, c. 46, s. 186; 1997, c. 15, s. 21; 2010, c. 12, s. 1982
Meeting required by SuperintendentWhere in the opinion of the Superintendent it is necessary, the Superintendent may, by notice in writing, require a bank to hold a meeting of directors of the bank to consider the matters set out in the notice.Attendance of SuperintendentThe Superintendent may attend and be heard at a meeting referred to in subsection (1).
By-laws
By-lawsUnless this Act otherwise provides, the directors of a bank that is not a federal credit union may by resolution make, amend or repeal any by-law that regulates the business or affairs of the bank.Shareholder approvalThe directors shall submit a by-law, or an amendment to or a repeal of a by-law, that is made under subsection (1) to the shareholders at the next meeting of shareholders, and the shareholders may, by resolution, confirm or amend the by-law, amendment or repeal.Effective date of by-lawUnless this Act otherwise provides, a by-law, or an amendment to or a repeal of a by-law, is effective from the date of the resolution of the directors under subsection (1) until it is confirmed, confirmed as amended or rejected by the shareholders under subsection (2) or until it ceases to be effective under subsection (4) and, where the by-law is confirmed, or confirmed as amended, it continues in effect in the form in which it was so confirmed.Effect where no shareholder approvalIf a by-law, or an amendment to or a repeal of a by-law, is rejected by the shareholders, or is not submitted to the shareholders by the directors as required under subsection (2), the by-law, amendment or repeal ceases to be effective from the date of its rejection or the date of the next meeting of shareholders, as the case may be, and no subsequent resolution of the directors to make, amend or repeal a by-law having substantially the same purpose or effect is effective until it is confirmed, or confirmed as amended, by the shareholders.1991, c. 46, s. 188; 2010, c. 12, s. 1983
Shareholder proposal of by-lawA shareholder entitled to vote at an annual meeting of shareholders may, in accordance with sections 143 and 144, make a proposal to make, amend or repeal a by-law.1991, c. 46, s. 189; 2010, c. 12, s. 1984(F)
By-laws of existing bankSubject to section 191, where a by-law of a bank that was in existence immediately prior to the day this section comes into force was in effect immediately prior to that day, the by-law continues in effect until amended or repealed, unless it is contrary to a provision of this Act.
By-laws re remunerationA by-law of a bank respecting the remuneration of the directors of the bank, as directors, that is in effect on the coming into force of this section ceases to have effect on the day on which the first annual meeting is held following the coming into force of this section.Existing by-lawsA by-law made by the directors of a bank under section 45 of the Bank Act, being chapter B-1 of the Revised Statutes of Canada, 1985, as that section read immediately prior to the day this section comes into force, and not confirmed by the shareholders of the bank in accordance with that section on or before the day this section comes into force, continues to have effect, unless it is contrary to the provisions of this Act, until the first meeting of the shareholders following the day this section comes into force.Shareholder approvalA by-law referred to in subsection (2) shall be submitted to the shareholders at the first meeting of shareholders following the coming into force of this section.Application of ss. 188(3) and (4) and 189Subsections 188(3) and (4) and section 189 apply in respect of a by-law referred to in this section as if it were a by-law made under section 188.
Deemed by-lawsAny matter that,immediately prior to the day this section comes into force, was provided for in the incorporating instrument of a bank that was in existence immediately prior to that day, orimmediately prior to the day a body corporate is continued as a bank other than a federal credit union, was provided for in the incorporating instrument of the body corporate,and that, under this Act, would be provided for in the by-laws of a bank, is deemed to be provided for in the by-laws of the bank.By-law prevailsWhere a by-law of the bank made in accordance with sections 188 and 189 amends or repeals any matter referred to in subsection (1), the by-law prevails.1991, c. 46, s. 192; 2010, c. 12, s. 1985
By-laws — mandatory provisionsThe by-laws of a federal credit union must provide forthe qualifications of members and the procedures for acceptance of members;the membership obligations of members, including any obligation to use the services of the federal credit union and any fees to be paid by members;the rights of joint members, if any;the fact that a delegate has only one vote even though the delegate is a member or represents more than one member;the limit, if any, on the number of membership shares;the selection, qualifications, term of office and removal of directors and members of committees of directors;the manner of distribution of any surplus earnings arising from the operations of the federal credit union;the rights of withdrawing members and members who are expelled;if the federal credit union wishes to permit members or shareholders to attend a meeting of the federal credit union by means of a communication facility referred to in subsection 136(2), the ways in which votes must be held; andthe date on which the federal credit union’s financial year ends.By-laws — other provisionsThe by-laws of a federal credit union may provide for any other matter that the members consider necessary or desirable, includingrestrictions on the classes of persons to which membership may be available, as long as the restrictions are consistent with applicable laws with respect to human rights;the representation of members by delegates;the distribution of patronage allocations;the manner of distribution of any remaining property on the voluntary liquidation and dissolution of the federal credit union;a formula for calculating the value of membership shares;a formula for calculating the redemption price of membership shares; andvoting by mail.Selection and removal of delegatesIf the by-laws of a federal credit union provide for the representation of members by delegates, the by-laws must set out procedures for their selection and removal.2010, c. 12, s. 1986
CopiesEach member and shareholder of a federal credit union may on request, not more than once in each calendar year, receive free of charge one copy of the letters patent and by-laws of the federal credit union, and one copy of any amendments to them.CopiesThe federal credit union must provide each creditor, and, if the federal credit union is a distributing federal credit union, any other person, on payment of a reasonable fee, with a copy of the federal credit union’s letters patent and by-laws.2010, c. 12, s. 1986
Making or amendment of by-law by membersThe members of a federal credit union may, by special resolution, make, amend or repeal any by-law that regulates the business and affairs of the federal credit union, including a by-law changing the federal credit union’s name or the province in which its head office is situated.Making or amendment of by-law by directorsUnless the by-laws of a federal credit union provide otherwise, the directors may, by special resolution, make a by-law or amend a by-law of the federal credit union, including a by-law changing the federal credit union’s name or the province in which its head office is situated, but only if the by-law or amendment is not contrary to a by-law made by the members.ApprovalThe directors must present a by-law or an amendment to a by-law that is made under subsection (2) to the members at the next meeting of members and the members may, by special resolution, confirm or amend it.By-law not confirmedIf a by-law or an amendment to a by-law made by the directors is not confirmed, with or without amendments, under subsection (3), the by-law or amendment is repealed as of the date of the meeting of members at which it was not confirmed.Effective date of by-lawIf a by-law, or an amendment to or a repeal of a by-law, made under subsection (1) or (2) does any thing referred to in subsection 218(1) in relation to any class or series of shares, the by-law, amendment or repeal is not effective until it is confirmed or confirmed as amended by the holders of shares of that class or series in accordance with section 218.Effective date of by-lawIf a by-law or an amendment to a by-law made under subsection (1) or (2) changes the name of the federal credit union, the by-law or the amendment is not effective until it is approved by the Superintendent.Letters patentIf the name of a federal credit union or the province in which its head office is situated is changed under subsection (1) or (2), the Superintendent may issue letters patent to amend the federal credit union’s incorporating instrument accordingly.Effect of letters patentLetters patent issued under subsection (7) become effective on the day stated in the letters patent.2010, c. 12, s. 1986
Proposal of by-lawA member may, in accordance with section 144.1, make a proposal to make, amend or repeal a by-law.2010, c. 12, s. 1986
Effective date of by-lawA by-law or an amendment to or repeal of a by-law made by the members is effective from the later of the date of the resolution made under subsection 192.03(1) and the date specified in the by-law, amendment or repeal.Effective date of by-lawA by-law or an amendment to a by-law made by the directors of a federal credit union is effective from the later of the date the by-law is made or amended by the directors and the date specified in the by-law, until it is confirmed, with or without amendment, under subsection 192.03(3) or repealed under subsection 192.03(4) and, if the by-law is confirmed, or confirmed as amended, it is in effect in the form in which it was so confirmed.If by-law not approvedIf a by-law or an amendment to a by-law made by the directors under subsection 192.03(2) is not submitted by the directors to the next meeting of the members as required under subsection 192.03(3), the by-law or amendment ceases to be effective from the date of that meeting.New resolution of directorsIf a by-law or an amendment to a by-law made by the directors under subsection 192.03(2) is repealed under subsection 192.03(4) or ceases to be effective under subsection (3), no subsequent resolution of the directors to make or amend a by-law that has substantially the same purpose or effect is effective until it is confirmed, or confirmed as amended, by the members.2010, c. 12, s. 1986
By-laws of continued body corporateSubject to section 192.05, the by-laws of a body corporate that is continued as a federal credit union under this Act continue in effect until amended or repealed, unless contrary to a provision of this Act.2010, c. 12, s. 1986
Existing resolutionsIf the remuneration of directors of a body corporate that is continued as a federal credit union was, immediately before the issuance of the federal credit union’s letters patent, fixed by a resolution of the directors, that resolution continues to have effect, unless it is contrary to the provisions of this Act, until the first meeting of the federal credit union’s members.2010, c. 12, s. 1986
Deemed by-lawsAny matter provided for in the incorporating instrument of a body corporate that is continued as a federal credit union that, under this Act, is to be provided for in the by-laws of a federal credit union is deemed to be provided for in the by-laws of the federal credit union.By-law prevailsIf a by-law of the federal credit union made in accordance with section 192.03 amends or repeals any matter referred to in subsection (1), the by-law prevails.2010, c. 12, s. 1986
Rights preservedNo amendment to the letters patent or by-laws of a federal credit union affects an existing cause of action or claim or liability to prosecution in favour of or against the federal credit union or its directors or officers, or any civil, criminal or administrative action or proceeding to which the federal credit union or any of its directors or officers are a party.2010, c. 12, s. 1986
By-laws bindingSubject to this Act, every by-law of a federal credit union binds the federal credit union and its members to the same extent as ifeach member had duly approved the by-law; andthere were in the by-law a covenant under seal on the part of each member, and the successors and assigns of the member, to conform to the by-law.2010, c. 12, s. 1986
Committees of the Board
CommitteesThe directors of a bank may appoint from their number, in addition to the committees referred to in subsection 157(2), such other committees as they deem necessary and, subject to section 198, delegate to those committees such powers of the directors, and assign to those committees such duties, as the directors consider appropriate.
Audit committeeThe audit committee of a bank shall consist of at least three directors.MembershipA majority of the members of the audit committee must consist of directors who are not persons affiliated with the bank and none of the members of the audit committee may be officers or employees of the bank or a subsidiary of the bank.Duties of audit committeeThe audit committee of a bank shallreview the annual statement of the bank before the annual statement is approved by the directors;review such returns of the bank as the Superintendent may specify;require the management of the bank to implement and maintain appropriate internal control procedures;review, evaluate and approve those procedures;review such investments and transactions that could adversely affect the well-being of the bank as the auditor or auditors or any officer of the bank may bring to the attention of the committee;meet with the auditor or auditors to discuss the annual statement and the returns and transactions referred to in this subsection; andmeet with the chief internal auditor of the bank, or the officer or employee of the bank acting in a similar capacity, and with management of the bank, to discuss the effectiveness of the internal control procedures established for the bank.ReportIn the case of the annual statement and returns of a bank that under this Act must be approved by the directors of the bank, the audit committee of the bank shall report thereon to the directors before the approval is given.Required meeting of directorsThe audit committee of a bank may call a meeting of the directors of the bank to consider any matter of concern to the committee.TransitionalSubsection (2), in so far as it relates to the affiliation of directors with the bank, does not apply in respect of a bank that was in existence immediately prior to the day that subsection comes into force until the day that is three years after the day that subsection comes into force.1991, c. 46, s. 194; 1997, c. 15, s. 22
Conduct review committeeThe conduct review committee of a bank shall consist of at least three directors.MembershipA majority of the members of the conduct review committee of a bank must consist of directors who are not persons affiliated with the bank and none of the members of the conduct review committee may be officers or employees of the bank or a subsidiary of the bank.Duties of conduct review committeeThe conduct review committee of a bank shallrequire the management of the bank to establish procedures for complying with Part XI;review those procedures and their effectiveness in ensuring that the bank is complying with Part XI;if a widely held bank holding company or a widely held insurance holding company has a significant interest in any class of shares of the bank,establish policies for entering into transactions referred to in subsection 495.1(1), andreview transactions referred to in subsection 495.3(1); andreview the practices of the bank to ensure that any transactions with related parties of the bank that may have a material effect on the stability or solvency of the bank are identified.Bank report to SuperintendentA bank shall report to the Superintendent on the mandate and responsibilities of the conduct review committee and the procedures referred to in paragraph (3)(a).Committee report to directorsAfter each meeting of the conduct review committee of the bank, the committee shall report to the directors of the bank on matters reviewed by the committee.Directors’ report to SuperintendentWithin ninety days after the end of each financial year, the directors of a bank shall report to the Superintendent on what the conduct review committee did during the year in carrying out its responsibilities under subsection (3).[Repealed, 1997, c. 15, s. 23]1991, c. 46, s. 195; 1997, c. 15, s. 23; 2001, c. 9, s. 77
CommitteeThe committee designated under paragraph 157(2)(e) shall consist of at least three directors.MembershipA majority of the members of the committee shall consist of directors who are not persons affiliated with the bank, and none of the members of the committee may be officers or employees of the bank or a subsidiary of the bank.Duties of committeeThe committee shallrequire the management of the bank to establish procedures for complying with the consumer provisions;review those procedures to determine whether they are appropriate to ensure that the bank is complying with the consumer provisions; andrequire the management of the bank to report at least annually to the committee on the implementation of the procedures and on any other activities that the bank carries out in relation to the protection of its customers.Bank’s report to CommissionerA bank shall report to the Commissioner on the mandate and responsibilities of the committee and the procedures referred to in paragraph (3)(a).Committee’s report to directorsAfter each meeting of the committee, the committee shall report to the directors of the bank on matters reviewed by the committee.Directors’ report to CommissionerWithin 90 days after the end of each financial year, the directors of a bank shall report to the Commissioner on what the committee did during the year in performing its duties under subsection (3).2018, c. 27, s. 317
Directors and Officers — Authority
Chief executive officerThe directors of a bank shall appoint from their number a chief executive officer who must be ordinarily resident in Canada and, subject to section 198, may delegate to that officer any of the powers of the directors.[Repealed, 1997, c. 15, s. 24]1991, c. 46, s. 196; 1997, c. 15, s. 24
Appointment of officersThe directors of a bank may, subject to the by-laws, designate the offices of the bank, appoint officers thereto, specify the duties of those officers and delegate to them powers, subject to section 198, to manage the business and affairs of the bank.Directors as officersSubject to section 164, a director of a bank may be appointed to any office of the bank.Two or more officesTwo or more offices of a bank may be held by the same person.
Limits on power to delegateThe directors of a bank that is not a federal credit union may not delegate the power tosubmit to the shareholders a question or matter requiring the approval of the shareholders;fill a vacancy among the directors, on a committee of directors or in the office of auditor, or appoint additional directors;issue or cause to be issued securities, including an issue of shares of a series that is authorized in accordance with section 62, except in accordance with any authorization made by the directors;declare a dividend;authorize the redemption or other acquisition by the bank pursuant to section 71 of shares issued by the bank;authorize the payment of a commission on a share issue;approve a management proxy circular;except as provided in this Act, approve the annual statement of the bank and any other financial statements issued by the bank; oradopt, amend or repeal by-laws.1991, c. 46, s. 198; 1997, c. 15, s. 25; 2005, c. 54, s. 38; 2010, c. 12, s. 1987
Limits on power to delegateThe directors of a federal credit union may not delegate the power tosubmit to the members or shareholders a question or matter requiring their approval;admit members, except in accordance with any authorization made by the members;fill a vacancy among the directors, on a committee of directors or in the office of auditor;issue or cause to be issued securities, including an issue of shares of a series that is authorized in accordance with section 62, except in accordance with any authorization made by the directors;declare a dividend on membership shares or shares or allocate an amount as a patronage allocation;authorize the redemption or other acquisition by the federal credit union under section 71 of membership shares, or shares, issued by the federal credit union;authorize the payment of a commission on a share issue;approve a management proxy circular;except as provided in this Act, approve the annual statement of the federal credit union and any other financial statements it issued;expel members; oradopt or amend by-laws.2010, c. 12, s. 1988
Remuneration of directors, officers and employeesSubject to this section and the by-laws, the directors of a bank may fix the remuneration of the directors, officers and employees of the bank.By-law requiredNo remuneration shall be paid to a director as director until a by-law fixing the aggregate of all amounts that may be paid to all directors in respect of directors’ remuneration during a fixed period of time has been confirmed by special resolution.1991, c. 46, s. 199; 1994, c. 26, s. 4
Validity of actsAn act of a director or an officer of a bank is valid notwithstanding a defect in the director’s qualification or an irregularity in the director’s election or in the appointment of the director or officer.IdemAn act of the board of directors of a bank is valid notwithstanding a defect in the composition of the board or an irregularity in the election of the board or in the appointment of a member of the board.
Right to attend meetingsA director of a bank is entitled to attend and to be heard at every meeting of shareholders or members.1991, c. 46, s. 201; 2010, c. 12, s. 1989
Conflicts of Interest
Disclosure of interestA director or officer of a bank shall disclose to the bank, in writing or by requesting to have it entered in the minutes of a meeting of directors or a meeting of a committee of directors, the nature and extent of any interest they have in a material contract or material transaction with the bank, whether entered into or proposed, if theyare a party to the contract or transaction;are a director or officer of a party to the contract or transaction or a person acting in a similar capacity; orhave a material interest in a party to the contract or transaction.Time of disclosure — directorThe disclosure shall be made in the case of a directorat the meeting of directors, or of a committee of directors, at which the proposed contract or transaction is first considered;if at the time of the meeting referred to in paragraph (a) the director was not interested in the proposed contract or transaction, at the first one after they become interested in it;if the director becomes interested after a contract or transaction is entered into, at the first one after they become interested; orif a person who is interested in a contract or transaction becomes a director, at the first one after they become a director.Time of disclosure — officerThe disclosure shall be made in the case of an officer who is not a directorimmediately after they become aware that the contract, transaction, proposed contract or proposed transaction is to be considered or has been considered at a meeting of directors or of a committee of directors;if they become interested after the contract or transaction is entered into, immediately after they become interested; orif a person who is interested in a contract or transaction becomes an officer, immediately after they become an officer.Time of disclosure — contract not requiring approvalIf the material contract or material transaction, whether entered into or proposed, is one that in the ordinary course of the bank’s business would not require approval by the directors, shareholders or members, as the case may be, the director or officer must disclose to the bank, in writing or by requesting to have it entered in the minutes of a meeting of directors or of a committee of directors, the nature and extent of their interest immediately after they become aware of the contract or transaction.1991, c. 46, s. 202; 2005, c. 54, s. 39; 2010, c. 12, s. 1990
Director to abstainA director who is required to make a disclosure under subsection 202(1) shall not be present at any meeting of directors, or of a committee of directors, while the contract or transaction is being considered or vote on any resolution to approve it unless the contract or transactionrelates primarily to their remuneration as a director, officer, employee or agent of the bank, an entity controlled by the bank or an entity in which the bank has a substantial investment;is for indemnity under section 212 or insurance under section 213; oris with an affiliate of the bank.IneligibilityAny director who knowingly contravenes subsection (1) ceases to hold office as director and is not eligible, for a period of five years after the date on which the contravention occurred, for election or appointment as a director of any financial institution that is incorporated or formed by or under an Act of Parliament.Validity of actsAn act of the board of directors of a bank, or of a committee of the board of directors, is not invalid because a person acting as a director had ceased under subsection (2) to hold office as a director.1991, c. 46, s. 203; 1997, c. 15, s. 26; 2005, c. 54, s. 40
General noticeFor the purposes of subsection 202(1), a general notice to the directors declaring that a director or officer is to be regarded as interested for any of the following reasons in a contract or transaction entered into with a party is a sufficient declaration of interest in relation to any contract or transaction with that party:the director or officer is a director or officer of a party referred to in paragraph 202(1)(b) or (c) or a person acting in a similar capacity;the director or officer has a material interest in the party; orthere has been a material change in the nature of the director’s or officer’s interest in the party.Access to disclosuresThe shareholders and members of the bank may examine the portions of any minutes of meetings of directors or committees of directors that contain disclosures under subsection 202(1), or the portions of any other documents that contain those disclosures, during the usual business hours of the bank.1991, c. 46, s. 204; 2001, c. 9, s. 77.1(F); 2005, c. 54, s. 41; 2010, c. 12, s. 1991
Avoidance standardsA contract or transaction for which disclosure is required under subsection 202(1) is not invalid and a director or officer is not accountable to the bank or its shareholders or members for any profit realized from it by reason only of the director’s or officer’s interest in the contract or transaction or the fact that the director was present or was counted to determine whether a quorum existed at the meeting of directors, or of a committee of directors, that considered it ifthe director or officer disclosed their interest in accordance with section 202 and subsection 204(1);the directors approved the contract or transaction; andthe contract or transaction was reasonable and fair to the bank at the time that it was approved.ConfirmationEven if the conditions set out in subsection (1) are not met, a director or officer acting honestly and in good faith is not accountable to the bank or its shareholders or members for any profit realized from a contract or transaction for which disclosure was required and the contract or transaction is not invalid by reason only of the director’s or officer’s interest in it ifthe contract or transaction is approved or confirmed by special resolution atin the case of a bank that is not a federal credit union, a meeting of shareholders, orin the case of a federal credit union, at a meeting of its members and, if it has shareholders, at a meeting of its shareholders;disclosure of the interest was made to the shareholders or, in the case of a federal credit union, to the members and shareholders, if any, in a manner sufficient to indicate its nature before the contract or transaction was approved or confirmed; andthe contract or transaction was reasonable and fair to the bank at the time that it was approved or confirmed.1991, c. 46, s. 205; 2005, c. 54, s. 41; 2010, c. 12, s. 1992
Court may set aside or require accountingIf a director or officer of a bank fails to comply with any of sections 202 to 205, a court, on application of the bank or any of its shareholders or members, may set aside the contract or transaction on any terms that the court thinks fit and may require the director or officer to account to the bank for any profit or gain realized on it.1991, c. 46, s. 206; 2005, c. 54, s. 41; 2010, c. 12, s. 1992
Liability, Exculpation and Indemnification
Director’s liabilityDirectors of a bank who vote for or consent to a resolution of the directors authorizing the issue of a share contrary to subsection 65(1), the issue of a membership share contrary to subsection 79.1(2) or the issue of subordinated indebtedness contrary to section 80 for a consideration other than money are jointly and severally, or solidarily, liable to the bank to make good any amount by which the consideration received is less than the fair equivalent of the money that the bank would have received if the share, membership share or subordinated indebtedness had been issued for money on the date of the resolution.Further liabilityDirectors of a bank who vote for or consent to a resolution of the directors authorizing any of the following are jointly and severally, or solidarily, liable to restore to the bank any amounts so distributed or paid and not otherwise recovered by the bank and any amounts in relation to any loss suffered by the bank:a redemption or purchase of shares or membership shares contrary to section 71;a reduction of capital contrary to section 75;a payment of a dividend or patronage allocation contrary to section 79;a payment of an indemnity contrary to section 212; orany transaction contrary to Part XI.1991, c. 46, s. 207; 2005, c. 54, s. 42(E); 2010, c. 12, s. 1992
ContributionA director who has satisfied a judgment in relation to the director’s liability under section 207 is entitled to contribution from the other directors who voted for or consented to the unlawful act on which the judgment was founded.RecoveryA director who is liable under section 207 is entitled to apply to a court for an order compelling a shareholder, member or other person to pay or deliver to the directorany money or property that was paid or distributed to the shareholder, member or other person contrary to section 71, 75, 79 or 212; oran amount equal to the value of the loss suffered by the bank as a result of any transaction contrary to Part XI.Court orderWhere an application is made to a court under subsection (2), the court may, where it is satisfied that it is equitable to do so,order a shareholder, member or other person to pay or deliver to a director any money or property that was paid or distributed to the shareholder, member or other person contrary to section 71, 75, 79 or 212 or any amount referred to in paragraph (2)(b);order a bank to return or issue shares or membership shares to a person from whom the bank has purchased, redeemed or otherwise acquired shares or membership shares; ormake any further order it thinks fit.1991, c. 46, s. 208; 2010, c. 12, s. 1993
LimitationAn action to enforce a liability imposed by section 207 may not be commenced after two years from the date of the resolution authorizing the action complained of.
Directors liable for wagesSubject to subsections (2) and (3), the directors of a bank are jointly and severally, or solidarily, liable to each employee of the bank for all debts not exceeding six months wages payable to the employee for services performed for the bank while they are directors.Conditions precedentA director is not liable under subsection (1) unlessthe bank has been sued for the debt within six months after it has become due and execution has been returned unsatisfied in whole or in part;the bank has commenced liquidation and dissolution proceedings or has been dissolved and a claim for the debt has been proven within six months after the earlier of the date of commencement of the liquidation and dissolution proceedings and the date of dissolution; ora winding-up order has been issued in respect of the bank under the Winding-up and Restructuring Act and a claim for the debt has been allowed or proven within six months after the issue of the winding-up order.LimitationsA director is not liable under subsection (1) unless the director is sued for a debt referred to in that subsection while a director or within two years after the director has ceased to be a director.Amount due after executionWhere execution referred to in paragraph (2)(a) has issued, the amount recoverable from a director is the amount remaining unsatisfied after execution.Subrogation of directorWhere a director of a bank pays a debt referred to in subsection (1) that is proven in liquidation and dissolution or winding-up proceedings, the director is entitled to any preference that the employee would have been entitled to and, where a judgment has been obtained, the director is entitled to an assignment of the judgment.Contribution entitlementA director of a bank who has satisfied a claim under this section is entitled to a contribution from the other directors of the bank who are liable for the claim.1991, c. 46, s. 210; 1996, c. 6, s. 167; 2005, c. 54, s. 43(E)
Defence — due diligenceA director, officer or employee of a bank is not liable under section 207 or 210 or subsection 506(1) and has fulfilled their duty under subsection 158(2) if they exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith onfinancial statements of the bank that were represented to them by an officer of the bank or in a written report of the auditor or auditors of the bank fairly to reflect the financial condition of the bank; ora report of a person whose profession lends credibility to a statement made by them.Defence — good faithA director or officer of a bank has fulfilled their duty under subsection 158(1) if they relied in good faith onfinancial statements of the bank that were represented to them by an officer of the bank or in a written report of the auditor or auditors of the bank fairly to reflect the financial condition of the bank; ora report of a person whose profession lends credibility to a statement made by them.1991, c. 46, s. 211; 2001, c. 9, s. 78; 2005, c. 54, s. 44
IndemnificationA bank may indemnify a director or officer of the bank, a former director or officer of the bank or another person who acts or acted, at the bank’s request, as a director or officer of or in a similar capacity for another entity against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by them in respect of any civil, criminal, administrative, investigative or other proceeding in which they are involved because of that association with the bank or other entity.AdvancesA bank may advance amounts to the director, officer or other person for the costs, charges and expenses of a proceeding referred to in subsection (1). They shall repay the amounts if they do not fulfil the conditions set out in subsection (3).No indemnificationA bank may not indemnify a person under subsection (1) unlessthe person acted honestly and in good faith with a view to the best interests of, as the case may be, the bank or the other entity for which they acted at the bank’s request as a director or officer or in a similar capacity; andin the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the person had reasonable grounds for believing that their conduct was lawful.Indemnification — derivative actionsA bank may with the approval of a court indemnify a person referred to in subsection (1) or advance amounts to them under subsection (2) — in respect of an action by or on behalf of the bank or other entity to procure a judgment in its favour to which the person is made a party because of the association referred to in subsection (1) with the bank or other entity — against all costs, charges and expenses reasonably incurred by them in connection with that action if they fulfil the conditions set out in subsection (3).Right to indemnityDespite subsection (1), a person referred to in that subsection is entitled to be indemnified by the bank in respect of all costs, charges and expenses reasonably incurred by them in connection with the defence of any civil, criminal, administrative, investigative or other proceeding to which the person is subject because of the association referred to in subsection (1) with the bank or other entity described in that subsection if the personwas not judged by the court or other competent authority to have committed any fault or omitted to do anything that they ought to have done; andfulfils the conditions set out in subsection (3).Heirs and personal representativesA bank may, to the extent referred to in subsections (1) to (5) in respect of the person, indemnify the heirs or personal representatives of any person whom the bank may indemnify under those subsections.1991, c. 46, s. 212; 2001, c. 9, s. 79(F); 2005, c. 54, s. 44
Directors’ and officers’ insuranceA bank may purchase and maintain insurance for the benefit of any person referred to in section 212 against any liability incurred by the personin the capacity of a director or an officer of the bank, except where the liability relates to a failure to act honestly and in good faith with a view to the best interests of the bank; orin the capacity of a director or officer of another entity or while acting in a similar capacity for another entity, if they act or acted in that capacity at the bank’s request, except if the liability relates to a failure to act honestly and in good faith with a view to the best interests of the entity.1991, c. 46, s. 213; 2005, c. 54, s. 45
Application to court for indemnificationA bank or a person referred to in section 212 may apply to a court for an order approving an indemnity under that section and the court may so order and make any further order it thinks fit.Notice to SuperintendentAn applicant under subsection (1) shall give the Superintendent written notice of the application and the Superintendent is entitled to appear and to be heard at the hearing of the application in person or by counsel.Other noticeOn an application under subsection (1), the court may order notice to be given to any interested person and that person is entitled to appear and to be heard in person or by counsel at the hearing of the application.
Fundamental ChangesAmendments — Letters Patent
Incorporating instrumentOn the application of a bank duly authorized by special resolution, the Minister may approve a proposal to add, change or remove any provision that is permitted by this Act to be set out in the bank’s incorporating instrument.1991, c. 46, s. 215; 2001, c. 9, s. 80
Letters patent to amendOn receipt of an application referred to in section 215, the Minister may issue letters patent to effect the proposal.Effect of letters patentLetters patent issued pursuant to subsection (1) become effective on the day stated in the letters patent.1991, c. 46, s. 216; 2001, c. 9, s. 81
Conversion into Federal Credit Union
Conversion into federal credit unionOn the application of a bank that is not a federal credit union, the Minister may, by letters patent, amend the bank’s incorporating instrument to convert the bank into a federal credit union.2010, c. 12, s. 1995
Shareholder approval of conversion proposalBefore a bank makes an application under section 216.01, the directors of the bank must obtain from the shareholders, by special resolution,approval of a conversion proposal that meets the requirements of the regulations and that has been approved by the Superintendent;confirmation of any by-law or of any amendment to or repeal of a by-law that is necessary to implement the conversion proposal; andauthorization to make the application.Additional informationThe Minister may require the federal credit union to provide the Minister with any additional information that he or she considers necessary.2010, c. 12, s. 1995
Right to voteFor the purposes of subsection 216.02(1), each share of the bank carries the right to vote in respect of any matter referred to in that subsection whether or not it otherwise carries the right to vote.Class voteFor the purposes of subsection 216.02(1), the holders of shares of a class or series of shares of the bank are entitled to vote separately as a class or series in respect of any matter referred to in that subsection.2010, c. 12, s. 1995
Time of applicationAn application under section 216.01 may be made no later than three months after the bank’s conversion proposal has been approved by the shareholders.2010, c. 12, s. 1995
Criteria for issuance of letters patentIn determining whether to issue letters patent to amend a bank’s incorporating instrument to convert it into a federal credit union, the Minister must consider all matters that the Minister considers relevant, including whetherthe applicant bank will, on the issuance of the letters patent, be organized and carry on business on a cooperative basis in accordance with section 12.1;there are no reasonable grounds for believing that the issuance of the letters patent would cause the federal credit union to be in contravention of subsection 485(1), any regulation made under subsection 485(2) or any order made under subsection 485(3);the bank’s conversion proposal was approved by special resolution of the shareholders;the conversion of the bank into a federal credit union may reasonably be expected to be achieved under the terms of the conversion proposal;the conversion is fair and reasonable to the shareholders; andthe conversion is in the best interests of the financial system in Canada, including the best interests of the cooperative financial system in Canada.2010, c. 12, s. 1995
Effect of letters patentIf the Minister issues letters patent to amend a bank’s incorporating instrument to convert it into a federal credit union, then, on the day stated in the letters patent,the holders of the common shares of the bank are deemed to be the members of the federal credit union;any common shares of the bank that are not to be converted into shares of the federal credit union according to the bank’s conversion proposal are deemed to be membership shares of the federal credit union to which are attached the rights, privileges and restrictions set out in this Act; andany common shares of the bank that are to be converted into shares of the federal credit union according to the bank’s conversion proposal are deemed to be shares of the federal credit union to which are attached the rights, privileges and restrictions set out in this Act.2010, c. 12, s. 1995
RegulationsThe Governor in Council may make regulationsrespecting applications under section 216.01, including their form and the information to be contained in them;respecting conversion proposals to become a federal credit union, including the information to be contained in them;respecting the by-laws that must be made or repealed, or the amendments that must be made to by-laws, to give effect to a conversion proposal to become a federal credit union; andgenerally, respecting the conversion of a bank into a federal credit union.Conversion of common sharesRegulations made under paragraph (1)(b) must provide that a conversion proposal must provide that at least one common share held by every holder of common shares is converted into a membership share.Canada Deposit Insurance Corporation ActA regulation made under subsection (1) may provide for different provisions respecting a bank that is subject to an order under paragraph 39.13(1)(a) of the Canada Deposit Insurance Corporation Act or is a bridge institution within the meaning of that Act.Exemption by SuperintendentA regulation made under subsection (1) may provide that the Superintendent may, on any terms and conditions that the Superintendent considers appropriate, exempt a bank from any requirements of that regulation.Exemption by MinisterThe Minister may, on any terms and conditions that the Minister considers appropriate, exempt a bank from any requirement of this Act or the regulations if the bank is applying for the approval of a proposal to convert itself into a federal credit union andthe Minister is of the opinion that the bank is, or is about to be, in financial difficulty and that the exemption would help to facilitate an improvement in the financial condition of the bank; oris subject to an order under paragraph 39.13(1)(a) of the Canada Deposit Insurance Corporation Act or is a bridge institution within the meaning of that Act.2010, c. 12, s. 1995
Conversion into Bank with Common Shares
Conversion into bank with common sharesOn the application of a federal credit union, the Minister may, by letters patent, amend the federal credit union’s incorporating instrument to convert the federal credit union into a bank with common shares.2010, c. 12, s. 1995
Approval of conversion proposalBefore a federal credit union makes an application under section 216.08, the directors of the federal credit union must obtain from the members by special resolution and, if the federal credit union has issued shares, from the shareholders, by separate special resolution,approval of a conversion proposal that meets the requirements of the regulations and that has been approved by the Superintendent;confirmation of any by-law or of any amendment to or repeal of a by-law that is necessary to implement the conversion proposal; andauthorization to make the application.Additional informationThe Minister may require the federal credit union to provide the Minister with any additional information that he or she considers necessary.2010, c. 12, s. 1995
Right to voteFor the purposes of subsection 216.09(1), each share of the federal credit union carries the right to vote in respect of any matter referred to in that subsection whether or not it otherwise carries the right to vote.Class voteFor the purposes of subsection 216.09(1), the holders of shares of a class or series of shares of the federal credit union are entitled to vote separately as a class or series in respect of any matter referred to in that subsection.2010, c. 12, s. 1995
Time of applicationAn application under section 216.08 may be made no later than three months after the bank’s conversion proposal has been approved by the members and shareholders, if any.2010, c. 12, s. 1995
Criteria for issuance of letters patentIn determining whether to issue letters patent converting a federal credit union into a bank with common shares, the Minister must consider all matters that the Minister considers relevant, including whetherthere are no reasonable grounds for believing that the issuance of the letters patent would cause the bank with common shares to be in contravention of subsection 485(1), any regulation made under subsection 485(2) or any order made under subsection 485(3);the federal credit union’s conversion proposal was approved by special resolution of the members and a separate special resolution of the shareholders, if any;the conversion of the federal credit union into a bank with common shares may reasonably be expected to be achieved under the terms of the conversion proposal;the conversion is fair and reasonable to the members and shareholders, if any; andthe conversion is in the best interests of the financial system in Canada, including the best interests of the cooperative financial system in Canada.2010, c. 12, s. 1995
Effect of letters patentIf the Minister issues letters patent to amend a federal credit union’s incorporating instrument to convert it into a bank with common shares, then, on the day stated in the letters patent, members of the federal credit union become, in accordance with the conversion proposal, holders of common shares of the bank to which are attached the rights, privileges and restrictions set out in this Act.2010, c. 12, s. 1995
RegulationsThe Governor in Council may make regulationsrespecting applications under section 216.08, including their form and the information to be contained in them;respecting conversion proposals to become a bank with common shares, including the information to be contained in them;respecting the by-laws that must be made or repealed, or the amendments that must be made to by-laws, to give effect to a conversion proposal to become a bank with common shares;respecting, for the purposes of a proposal to become a bank with common shares, the value of the converting federal credit union and of its membership shares and shares, if any, and authorizing the Superintendent to specify a day as of which those values must be estimated;concerning the fair and equitable treatment of members and shareholders, if any, under a federal credit union’s conversion proposal to become a bank with common shares;concerning the conversion of membership shares and shares, if any, of a federal credit union into common shares or other shares;authorizing the Superintendent torequire a federal credit union that proposes to become a bank with common shares to hold one or more information sessions for its members and shareholders, if any, and to take other measures to assist its members and shareholders, if any, in forming a reasoned judgment on the proposal, andset the rules under which the information sessions must be held;respecting restrictions on any fee, compensation or other consideration that may be paid, in respect of the conversion of a federal credit union into a bank with common shares, to any director, officer or employee of the federal credit union or to any entity with which a director, officer or employee of the federal credit union is associated;prohibiting, except for those issued as a result of the implementation of a conversion proposal, the issuance or provision during the period set out in the regulations of shares, share options or rights to acquire shares, of a bank that has been converted from a federal credit union into a bank with common shares toany director, officer or employee of the bank, orany person who was a director, officer or employee of the federal credit union during the year preceding the effective date of conversion of the federal credit union; andgenerally, respecting the conversion of a federal credit union into a bank with common shares.Canada Deposit Insurance Corporation ActA regulation made under subsection (1) may provide for different provisions respecting a federal credit union that is subject to an order under paragraph 39.13(1)(a) of the Canada Deposit Insurance Corporation Act or is a bridge institution within the meaning of that Act.Exemption by SuperintendentA regulation made under subsection (1) may provide that the Superintendent may, on any terms and conditions that the Superintendent considers appropriate, exempt a federal credit union from any requirements of that regulation.Exemption by MinisterThe Minister may, on any terms and conditions that the Minister considers appropriate, exempt a federal credit union from any requirement of this Act or the regulations if the federal credit union is applying for the approval of a proposal to convert itself into a bank with common shares andthe Minister is of the opinion that the federal credit union is, or is about to be, in financial difficulty and that the exemption would help to facilitate an improvement in the financial condition of the federal credit union; orthe federal credit union is subject to an order under paragraph 39.13(1)(a) of the Canada Deposit Insurance Corporation Act or is a bridge institution within the meaning of that Act.2010, c. 12, s. 1995; 2012, c. 5, s. 223
Amendments — By-laws
By-lawsThe directors of a bank that is not a federal credit union may make, amend or repeal any by-laws, in the manner set out in subsections (2) and (3) and sections 218 to 222, tochange the maximum number, if any, of shares of any class that the bank is authorized to issue;create new classes of shares;change the designation of any or all of the bank’s shares, and add, change or remove any rights, privileges, restrictions and conditions, including rights to accrued dividends, in respect of any or all of the bank’s shares, whether issued or unissued;change the shares of any class or series, whether issued or unissued, into a different number of shares of the same class or series or into the same or a different number of shares of other classes or series;divide a class of shares, whether issued or unissued, into series and fix the maximum number of shares, if any, in each series and the rights, privileges, restrictions and conditions attached thereto;authorize the directors to divide any class of unissued shares into series and fix the maximum number of shares, if any, in each series and the rights, privileges, restrictions and conditions attached thereto;authorize the directors to change the rights, privileges, restrictions and conditions attached to unissued shares of any series;revoke, diminish or enlarge any authority conferred under paragraphs (f) and (g);increase or decrease the number of directors or the minimum or maximum number of directors, subject to subsection 159(1) and section 168;change the name of the bank; orchange the province in which the head office of the bank is situated.Shareholder approvalThe directors shall submit a by-law, or an amendment to or a repeal of a by-law, that is made under subsection (1) to the shareholders, and the shareholders may, by special resolution, confirm, amend or reject the by-law, amendment or repeal.Effective date of by-lawA by-law, or an amendment to or a repeal of a by-law, made under subsection (1) is not effective until it is confirmed or confirmed as amended by the shareholders under subsection (2) and, in the case of a by-law respecting a change to the name of the bank, approved by the Superintendent.Letters patentIf the name of a bank or the province in Canada in which the head office of the bank is situated is changed under this section, the Superintendent may issue letters patent to amend the bank’s incorporating instrument accordingly.Effect of letters patentLetters patent issued under subsection (4) become effective on the day stated in the letters patent.1991, c. 46, s. 217; 2001, c. 9, s. 82; 2005, c. 54, s. 46; 2007, c. 6, s. 13; 2010, c. 12, s. 1996
Class voteThe holders of shares of a class or, subject to subsection (2), of a series are, unless the by-laws otherwise provide in the case of an amendment to the by-laws referred to in paragraph (a), (b) or (e), entitled to vote separately as a class or series on a proposal to amend the by-laws toincrease or decrease any maximum number of authorized shares of that class, or increase any maximum number of authorized shares of a class having rights or privileges equal or superior to the shares of that class;effect an exchange, reclassification or cancellation of all or part of the shares of that class;add, change or remove the rights, privileges, restrictions or conditions attached to the shares of that class and, without limiting the generality of the foregoing,remove or change prejudicially rights to accrued dividends or rights to cumulative dividends,add, remove or change prejudicially redemption rights,reduce or remove a dividend preference or a liquidation preference, oradd, remove or change prejudicially conversion privileges, options, voting, transfer or pre-emptive rights, or rights to acquire securities of the bank, or sinking fund provisions;increase the rights or privileges of any class of shares having rights or privileges equal or superior to the shares of that class;create a new class of shares equal or superior to the shares of that class;make any class of shares having rights or privileges inferior to the shares of that class equal or superior to the shares of that class; oreffect an exchange or create a right of exchange of all or part of the shares of another class into the shares of that class.Right limitedThe holders of a series of shares of a class are entitled to vote separately as a series under subsection (1) if that series is affected by an addition or amendment to the by-laws in a manner different from other shares of the same class.Right to voteSubsections (1) and (2) apply whether or not the shares of a class otherwise carry the right to vote.
Separate resolutionsA proposed addition or amendment to the by-laws referred to in subsection 218(1) is adopted when the holders of the shares of each class or series entitled to vote separately thereon as a class or series have approved the addition or amendment by a special resolution.
Revoking resolutionWhere a special resolution referred to in subsection 217(2) so states, the directors may, without further approval of the shareholders, revoke the special resolution.
Proposal to amendSubject to subsection (2), a director or a shareholder who is entitled to vote at an annual meeting of shareholders of a bank may, in accordance with sections 143 and 144, make a proposal to make an application referred to in section 215 or to make, amend or repeal the by-laws referred to in subsection 217(1) of the bank.Notice of amendmentNotice of a meeting of shareholders at which a proposal to amend the incorporating instrument or to make, amend or repeal the by-laws of a bank is to be considered must set out the proposal.1991, c. 46, s. 221; 2001, c. 9, s. 83
Rights preservedNo amendment to the incorporating instrument or by-laws of a bank affects an existing cause of action or claim or liability to prosecution in favour of or against the bank or its directors or officers, or any civil, criminal or administrative action or proceeding to which the bank or any of its directors or officers are a party.
Amalgamation
Application to amalgamateOn the joint application of two or more bodies corporate incorporated by or under an Act of Parliament, including banks that are not federal credit unions and bank holding companies, the Minister may issue letters patent amalgamating and continuing the applicants as one bank, other than a federal credit union.Application to amalgamate — federal credit unionsOn the joint application of two or more federal credit unions, the Minister may issue letters patent amalgamating and continuing the applicants as one federal credit union.Federal credit union and local cooperative credit societyOn the joint application of one or more federal credit unions and one or more local cooperative credit societies that have applied under subsection 33(3) to be continued as federal credit unions, the Minister may issue letters patent amalgamating and continuing the applicants as one federal credit union.Local cooperative credit societiesOn the joint application of two or more local cooperative credit societies that have applied under subsection 33(4) to be continued as federal credit unions, the Minister may issue letters patent amalgamating and continuing the applicants as one federal credit union.RestrictionDespite subsection (1), if one of the applicants is a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, other than a bank in respect of which the Minister has specified that subsection 378(1) no longer applies, the Minister shall not issue letters patent referred to in subsection (1) unlessthe amalgamated bank would be a widely held bank; orthe amalgamated bank would be controlled by a widely held bank holding company that, at the time the application was made, controlledthe applicant, orany other applicant that is a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, other than a bank in respect of which the Minister has specified that subsection 378(1) no longer applies.RestrictionDespite subsection (1), if the amalgamated bank would be a bank with equity of twelve billion dollars or more, the Minister shall not issue letters patent referred to in that subsection unless the amalgamated bank iswidely held;controlled, within the meaning of paragraphs 3(1)(a) and (d), by a widely held bank, or by a widely held bank holding company, that controlled one of the applicants at the time the application was made; orcontrolled, within the meaning of paragraph 3(1)(d), by a widely held insurance holding company, or by an eligible Canadian financial institution, as defined in subsection 370(1), other than a bank, or by an eligible foreign institution, as defined in subsection 370(1), that controlled one of the applicants at the time the application was made.1991, c. 46, s. 223; 2001, c. 9, s. 84; 2007, c. 6, s. 132; 2010, c. 12, s. 1997; 2012, c. 5, s. 8; 2014, c. 39, s. 274
Amalgamation agreementEach applicant proposing to amalgamate shall enter into an amalgamation agreement.Contents of agreementEvery amalgamation agreement shall set out the terms and means of effecting the amalgamation and, in particular,the name of the amalgamated bank and the province in which its head office is to be situated;if the amalgamated bank is to be a federal credit union, a statement that the amalgamated bank will be organized and carry on business on a cooperative basis in accordance with section 12.1;the name and place of ordinary residence of each proposed director of the amalgamated bank;the manner in which the shares or membership shares of each applicant are to be converted into shares or other securities, or into membership shares, of the amalgamated bank;if any shares or membership shares of an applicant are not to be converted into shares or other securities, or into membership shares, of the amalgamated bank, the amount of money or securities that the holders of those shares are to receive in addition to or in lieu of shares or other securities, or membership shares, of the amalgamated bank;the manner of payment of money in lieu of the issue of fractional shares of the amalgamated bank or of any other body corporate that are to be issued in the amalgamation;the proposed by-laws of the amalgamated bank;details of any other matter necessary to perfect the amalgamation and to provide for the subsequent management and operation of the amalgamated bank; andthe proposed effective date of the amalgamation.Cross ownership of sharesIf shares or membership shares of one of the applicants are held by or on behalf of another of the applicants, other than shares or membership shares held in the capacity of a personal representative or by way of security, the amalgamation agreement must provide for the cancellation of those shares or membership shares when the amalgamation becomes effective without any repayment of capital in respect of them, and no provision may be made in the agreement for the conversion of those shares or membership shares into shares or membership shares of the amalgamated bank.1991, c. 46, s. 224; 2005, c. 54, s. 47; 2010, c. 12, s. 1998
Approval of agreement by SuperintendentAn amalgamation agreement must be submitted to the Superintendent for approval, and any approval of the agreement under subsection 226(4) by the holders of any class or series of shares of an applicant, and, if applicable, by the members, is invalid unless, before the date of the approval, the Superintendent has approved the agreement in writing.1991, c. 46, s. 225; 2007, c. 6, s. 14; 2010, c. 12, s. 1999(E)
ApprovalThe directors of each applicant must submit an amalgamation agreement for approval to a meeting of the shareholders of the applicant — or, if the applicant is a federal credit union or a local cooperative credit society, to a meeting of its members and to a meeting of its shareholders, if any.Right to voteEach share of an applicant carries the right to vote in respect of an amalgamation agreement whether or not it otherwise carries the right to vote.Separate vote for class or seriesThe holders of shares of a class or series of shares of each applicant are entitled to vote separately as a class or series in respect of an amalgamation agreement if the agreement contains a provision that, if it were contained in a proposed amendment to the by-laws or incorporating instrument of the applicant, would entitle those holders to vote separately as a class or series.Special resolutionSubject to subsection (3), an amalgamation agreement is approved when the shareholders of each applicant bank or body corporate have approved the amalgamation by special resolution or, if an applicant is a federal credit union or a local cooperative credit society, the members and shareholders, if any, have approved the amalgamation by separate special resolutions.TerminationAn amalgamation agreement may provide that, at any time before the issue of letters patent of amalgamation, the agreement may be terminated by the directors of an applicant even if the agreement has been approved by the shareholders — or the members and shareholders, if any — of all or any of the applicant banks or bodies corporate.1991, c. 46, s. 226; 2005, c. 54, s. 48; 2010, c. 12, s. 2000; 2014, c. 39, s. 275
Members of amalgamated federal credit unionOn the issuance of letters patent amalgamating and continuing two or more federal credit unions as one federal credit union, the members of the federal credit unions become members of the amalgamated federal credit union.2010, c. 12, s. 2001
Vertical short-form amalgamationA bank, other than a federal credit union, may, without complying with sections 224 to 226, amalgamate with one or more bodies corporate that are incorporated by or under an Act of Parliament if the body or bodies corporate, as the case may be, are wholly-owned subsidiaries of the bank andthe amalgamation is approved by a resolution of the directors of the bank and of each amalgamating subsidiary; andthe resolutions provide thatthe shares of each amalgamating subsidiary will be cancelled without any repayment of capital in respect thereof,the letters patent of amalgamation and the by-laws of the amalgamated bank will be the same as the incorporating instrument and the by-laws of the amalgamating bank that is the holding body corporate, andno securities will be issued by the amalgamated bank in connection with the amalgamation.Horizontal short-form amalgamationTwo or more bodies corporate incorporated by or under an Act of Parliament, none of which is a federal credit union, may amalgamate and continue as one bank, without complying with sections 224 to 226 ifat least one of the applicants is a bank;the applicants are all wholly-owned subsidiaries of the same holding body corporate;the amalgamation is approved by a resolution of the directors of each of the applicants; andthe resolutions provide thatthe shares of all applicants, except those of one of the applicants that is a bank, will be cancelled without any repayment of capital in respect thereof,the letters patent of amalgamation and the by-laws of the amalgamated bank will be the same as the incorporating instrument and the by-laws of the amalgamating bank whose shares are not cancelled, andthe stated capital of the amalgamating banks and bodies corporate whose shares are cancelled will be added to the stated capital of the amalgamating bank whose shares are not cancelled.1991, c. 46, s. 227; 2010, c. 12, s. 2002
Joint application to MinisterSubject to subsection (2), unless an amalgamation agreement is terminated in accordance with subsection 226(5), the applicants shall, within three months after the approval of the agreement in accordance with subsection 226(4) or the approval of the directors in accordance with subsection 227(1) or (2), jointly apply to the Minister for letters patent of amalgamation continuing the applicants as one bank.Conditions precedent to applicationNo application for the issue of letters patent under subsection (1) may be made unlessnotice of intention to make such an application has been published at least once a week for a period of four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of each applicant is situated; andthe application is supported by satisfactory evidence that the applicants have complied with the requirements of this Part relating to amalgamations.Application of sections 23 to 26If two or more bodies corporate, none of which is a bank, apply for letters patent under subsection (1), sections 23 to 26 apply in respect of the application with any modifications that the circumstances require.Matters for considerationBefore issuing letters patent of amalgamation continuing the applicants as one bank, the Minister shall take into account all matters that the Minister considers relevant to the application, includingthe sources of continuing financial support for the amalgamated bank;the soundness and feasibility of the plans of the applicants for the future conduct and development of the business of the amalgamated bank;the business record and experience of the applicants;the reputation of the applicants for being operated in a manner that is consistent with the standards of good character and integrity;whether the amalgamated bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;the impact of any integration of the operations and businesses of the applicants on the conduct of those operations and businesses;the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the amalgamated bank and its affiliates may affect the supervision and regulation of the amalgamated bank, having regard tothe nature and extent of the proposed financial services activities to be carried out by the amalgamated bank and its affiliates, andthe nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the amalgamated bank;if the amalgamated bank will be a federal credit union, that it will be organized and carry on business on a cooperative basis in accordance with section 12.1; andthe best interests of the financial system in Canada, including, if the amalgamated bank will be a federal credit union, the best interests of the cooperative financial system in Canada.1991, c. 46, s. 228; 2001, c. 9, s. 85; 2010, c. 12, s. 2003
Issue of letters patentWhere an application has been made to the Minister in accordance with section 228, the Minister may issue letters patent of amalgamation continuing the applicants as one bank.ExceptionIn the case of an application made under subsection 223(1.2) or (1.3), the Minister shall not issue letters patent of amalgamation unless the Minister has issued, under subsection 35(1), letters patent continuing as a federal credit union each applicant that was a local cooperative credit society.Letters patentWhere letters patent are issued pursuant to this section, section 28 applies with such modifications as the circumstances require in respect of the issue of the letters patent.Publication of noticeThe Superintendent shall cause to be published in the Canada Gazette notice of the issuance of letters patent pursuant to subsection (1).1991, c. 46, s. 229; 2014, c. 39, s. 276; 2016, c. 7, s. 125
Court enforcementIf a bank or any director, officer, employee or agent of a bank is contravening or has failed to comply with any term or condition made in respect of the issuance of letters patent of amalgamation, the Minister may, in addition to any other action that may be taken under this Act, apply to a court for an order directing the bank or the director, officer, employee or agent to comply with the term or condition, cease the contravention or do any thing that is required to be done, and on the application the court may so order and make any other order it thinks fit.AppealAn appeal from an order of a court under this section lies in the same manner as, and to the same court to which, an appeal may be taken from any other order of the court.2001, c. 9, s. 86
Effect of letters patentOn the day provided for in the letters patent issued under section 229the amalgamation of the applicants and their continuance as one bank becomes effective;the property of each applicant continues to be the property of the amalgamated bank;the amalgamated bank continues to be liable for the obligations of each applicant;any existing cause of action, claim or liability to prosecution is unaffected;any civil, criminal or administrative action or proceeding pending by or against an applicant may be continued to be prosecuted by or against the amalgamated bank;any conviction against, or ruling, order or judgment in favour of or against, an applicant may be enforced by or against the amalgamated bank;if any director or officer of an applicant continues as a director or officer of the amalgamated bank, any disclosure by that director or officer of a material interest in any contract made to the applicant shall be deemed to be disclosure to the amalgamated bank; and[Repealed, 2001, c. 9, s. 87]the letters patent of amalgamation are the incorporating instrument of the amalgamated bank.MinutesAny deemed disclosure under paragraph (1)(g) shall be recorded in the minutes of the first meeting of directors of the amalgamated bank.1991, c. 46, ss. 230, 576; 1997, c. 15, s. 27; 1999, c. 28, s. 14; 2001, c. 9, s. 87
TransitionalNotwithstanding any other provision of this Act or the regulations, the Minister may, by order, on the recommendation of the Superintendent, grant to a bank in respect of which letters patent were issued under subsection 229(1) permission toengage in a business activity specified in the order that a bank is not otherwise permitted by this Act to engage in and that one or more of the amalgamating bodies corporate was engaging in at the time application for the letters patent was made;continue to have issued and outstanding debt obligations the issue of which is not authorized by this Act if the debt obligations were outstanding at the time the application for the letters patent was made;[Repealed, 1994, c. 47, s. 16]hold assets that a bank is not otherwise permitted by this Act to hold if the assets were held by one or more of the amalgamating bodies corporate at the time the application for the letters patent was made;acquire and hold assets that a bank is not otherwise permitted by this Act to acquire or hold if one or more of the amalgamating bodies corporate were obliged, at the time the application for the letters patent was made, to acquire those assets; andmaintain outside Canada any records or registers required by this Act to be maintained in Canada.Duration of exceptionsThe permission granted under any of paragraphs (1)(a) to (f) shall be expressed to be granted for a period specified in the order not exceedingwith respect to any matter described in paragraph (1)(a), 30 days after the date of issue of the letters patent orif the activity is conducted under an agreement existing on the date of issue of the letters patent, the expiry of the agreement, orif the bank is a federal credit union and an undertaking to cease engaging in the activity has been given under subsection 973.02(1), the cessation date set out in the undertaking in respect of the activity;with respect to any matter described in paragraph (1)(b), ten years; andwith respect to any matter described in any of paragraphs (1)(d) to (f), two years.RenewalSubject to subsection (4), the Minister may, by order on the recommendation of the Superintendent, renew a permission granted by order under subsection (1) with respect to any matter described in any of paragraphs (1)(b) to (e) for any further period or periods that the Minister considers necessary.LimitationThe Minister shall not grant to a bank any permissionwith respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the date of the approval for the bank to commence and carry on business, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the bank that the bank will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; andwith respect to matters described in paragraphs (1)(d) and (e), that purports to be effective more than ten years after the date of issue of the letters patent.1991, c. 46, s. 231; 1994, c. 47, s. 16; 1997, c. 15, s. 28; 2007, c. 6, s. 15; 2014, c. 39, s. 277
Transfer of Business
Sale by bankA bank may sell all or substantially all of its assets to a financial institution incorporated by or under an Act of Parliament or to an authorized foreign bank in respect of its business in Canada if the purchasing financial institution or authorized foreign bank assumes all or substantially all of the liabilities of the bank.Sale agreementAn agreement of purchase and sale (in subsection (3), section 233, subsections 234(1) and (4) and section 236 referred to as a “sale agreement”) shall set out the terms of, and means of effecting, the sale of assets referred to in subsection (1).ConsiderationNotwithstanding anything in this Act, the consideration for a sale referred to in subsection (1) may be cash or fully paid securities of the purchasing financial institution or authorized foreign bank or in part cash and in part fully paid securities of the purchasing financial institution or authorized foreign bank or any other consideration that is provided for in the sale agreement.1991, c. 46, s. 232; 1999, c. 28, s. 15
Agreement to SuperintendentA sale agreement must be sent to the Superintendent before it is submitted to shareholders or to members and shareholders, as the case may be, of the selling bank under subsection 234(1).1991, c. 46, s. 233; 2007, c. 6, s. 16; 2010, c. 12, s. 2004
Shareholder approvalThe directors of a selling bank must submit a sale agreement for approval to a meeting of shareholders, or, if the bank is a federal credit union, to a meeting of members and shareholders of the bank and, subject to subsection (3), to the holders of each class or series of shares of the bank.Right to voteEach share of a selling bank carries the right to vote in respect of a sale referred to in subsection 232(1) whether or not the share otherwise carries the right to vote.Class voteThe holders of shares of a class or series of shares of a selling bank are entitled to vote separately as a class or series in respect of a sale referred to in subsection 232(1) only if the shares of the class or series are affected by the sale in a manner different from the shares of another class or series.Special resolutionA sale agreement is approved when the shareholders and the holders of each class or series of shares entitled to vote separately as a class or series under subsection (3) of the selling bank have approved the sale by special resolution and, if the selling bank is a federal credit union, the members have also approved the sale by a separate special resolution.1991, c. 46, s. 234; 2010, c. 12, s. 2005
Abandoning saleIf a special resolution approving a sale under subsection 234(4) so states, the directors of a selling bank may, subject to the rights of third parties, abandon the sale without further approval of the shareholders or the members and shareholders, as the case may be.1991, c. 46, s. 235; 2010, c. 12, s. 2006
Application to MinisterSubject to subsection (2), unless a sale agreement is abandoned in accordance with section 235, the selling bank shall, within three months after the approval of the sale agreement in accordance with subsection 234(4), apply to the Minister for approval of the sale agreement.Conditions precedent to applicationNo application for approval under subsection (1) may be made unlessnotice of intention to make such an application has been published at least once a week for a period of four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the selling bank is situated; andthe application is supported by satisfactory evidence that the selling bank has complied with the requirements of sections 232 to 235 and this section.Approval by MinisterA sale agreement has no force or effect until it has been approved by the Minister.IdemWhere an application has been made to the Minister in accordance with subsections (1) and (2), the Minister may approve the sale agreement to which the application relates.
Corporate RecordsHead Office and Corporate Records
Head officeA bank shall at all times have a head office in the province specified in its incorporating instrument or by-laws.Change of head officeThe directors of a bank may change the address of the head office within the province specified in the incorporating instrument or by-laws.Notice of change of addressA bank shall send to the Superintendent, within fifteen days after any change of address of its head office, a notice of the change of address.1991, c. 46, s. 237; 2005, c. 54, s. 49
Bank recordsA bank shall prepare and maintain records containingits incorporating instrument and the by-laws of the bank and all amendments thereto;minutes of meetings and resolutions of shareholders and members;the information referred to in paragraphs 632(1)(a), (c) and (e) to (h) contained in all returns provided to the Superintendent pursuant to section 632;particulars of any authorizations, conditions and limitations established by the Superintendent pursuant to section 53 or subsection 54(1) that are from time to time applicable to the bank;particulars of exceptions granted under section 39, 55 or 231 that are from time to time applicable to the bank; andparticulars from Schedule I or II that are applicable to the bank as they are from time to time amended and published in the Canada Gazette.Additional recordsIn addition to the records described in subsection (1), a bank shall prepare and maintain adequatecorporate accounting records;records containing minutes of meetings and resolutions of the directors and any committee thereof; andrecords showing, for each customer of the bank, on a daily basis, particulars of the transactions between the bank and that customer and the balance owing to or by the bank in respect of that customer and, if the bank is a federal credit union, whether the customer is a member of the federal credit union.Continued banksFor the purposes of paragraph (1)(b) and subsection (2),in the case of a body corporate continued as a bank under this Act, records includes similar records required by law to be maintained by the body corporate before it was so continued; andin the case of a body corporate amalgamated and continued as a bank under this Act, records includes similar records required by law to be maintained by the body corporate before it was so amalgamated.1991, c. 46, s. 238; 1997, c. 15, s. 29(E); 1999, c. 28, s. 16; 2010, c. 12, s. 2007
Place of recordsThe records described in section 238 shall be kept at the head office of the bank or at such other place in Canada as the directors think fit.Notice of place of recordsWhere any of the records described in section 238 are not kept at the head office of a bank, the bank shall notify the Superintendent of the place where the records are kept.ExceptionSubsection (1) does not apply in respect of records of a branch of the bank outside Canada or in respect of customers of such a branch.ExceptionSubject to subsection 245(1.1), subsection (1) does not apply to a bank that is a subsidiary of a foreign bank incorporated or formed otherwise in a country or territory other than Canada in which a trade agreement listed in Schedule IV is applicable or of a regulated foreign entity.InspectionThe records described in section 238, other than those described in paragraph 238(2)(c), shall at all reasonable times be open to inspection by the directors.Access to bank recordsShareholders, members and creditors of a bank and their personal representatives may examine the records referred to in subsection 238(1) during the usual business hours of the bank and may take extracts from them free of charge or have copies of them made on payment of a reasonable fee. If the bank is a distributing bank, any other person may on payment of a reasonable fee examine those records during the usual business hours of the bank and take extracts from them or have copies of them made.Electronic accessA bank may make the information contained in records referred to in subsection 238(1) available to persons by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing the records in intelligible written form within a reasonable time.Copies of by-lawsEvery shareholder and every member of a bank is entitled, on request made not more frequently than once in each calendar year, to receive, free of charge, one copy of the by-laws of the bank.1991, c. 46, s. 239; 2001, c. 9, s. 88; 2005, c. 54, s. 50; 2010, c. 12, s. 20082020, c. 1, s. 160
ListsA person who is entitled to a basic list of shareholders or members of a bank (in this section referred to as the “applicant”) may request the bank to furnish the applicant with a basic list within ten days after receipt by the bank of the affidavit referred to in subsection (2) and, on payment of a reasonable fee by the applicant, the bank must comply with the request.Affidavit and contentsA request under subsection (1) must be accompanied by an affidavit containingthe name and address of the applicant,the name and address for service of the entity, if the applicant is an entity, andan undertaking that the basic list and any supplemental lists obtained pursuant to subsections (5) and (6) will not be used except as permitted under section 242,and, if the applicant is an entity, the affidavit shall be made by a director or an officer of the entity, or any person acting in a similar capacity.Entitlement to listA shareholder, member or creditor of a bank or their personal representative — or, if the bank is a distributing bank, any person — is entitled to a basic list of shareholders or members of the bank.Basic listA basic list of shareholders or members of a bank consists of a list of shareholders or members that is made up to a date not more than ten days before the receipt of the affidavit referred to in subsection (2) and that sets outthe names of the shareholders or members, as the case may be, of the bank;the number of shares owned by each shareholder, or the number of membership shares owned by each member, as the case may be; andthe address of each shareholder or member as shown in the records of the bank.Supplemental listsA person requiring a bank to supply a basic list may, if the person states in the accompanying affidavit that supplemental lists are required, request the bank or its agent, on payment of a reasonable fee, to provide supplemental lists of shareholders or members setting out any changes from the basic list in the names and addresses of the shareholders or members, as the case may be, and the number of shares owned by each shareholder, or the number of membership shares owned by each member, as the case may be, for each business day following the date to which the basic list is made up.When supplemental lists to be furnishedA bank or its agent shall provide a supplemental list of shareholders required under subsection (5)within ten days following the date the basic list is provided, where the information relates to changes that took place prior to that date; andwithin ten days following the day to which the supplemental list relates, where the information relates to changes that took place on or after the date the basic list was provided.1991, c. 46, s. 240; 2005, c. 54, s. 51; 2010, c. 12, s. 2009
Option holdersA person requiring a bank to supply a basic list or a supplemental list of shareholders or members may also require the bank to include in that list the name and address of any known holder of an option or right to acquire shares of the bank.1991, c. 46, s. 241; 2010, c. 12, s. 2010(E)
Use of listNo person shall use a list of shareholders or members obtained under section 240 except in connection withan effort to influence the voting of shareholders or members of the bank;an offer to acquire shares of the bank; orany other matter relating to the affairs of the bank.1991, c. 46, s. 242; 2010, c. 12, s. 2011
Form of recordsA register or other record required or authorized by this Act to be prepared and maintained by a bankmay be in a bound or loose-leaf form or in a photographic film form; ormay be entered or recorded by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.Conversion of recordsRegisters and records maintained in one form may be converted to any other form.Destruction of converted recordsNotwithstanding section 246, a bank may destroy any register or other record referred to in subsection (1) at any time after the register or other record has been converted to another form.
Protection of recordsA bank and its agents shall take reasonable precautions toprevent loss or destruction of,prevent falsification of entries in,facilitate detection and correction of inaccuracies in, andensure that unauthorized persons do not have access to or use of information inthe registers and records required or authorized by this Act to be prepared and maintained.
Requirement to maintain copies and process information in CanadaIf the Superintendent is of the opinion that it is incompatible with the fulfilment of the Superintendent’s responsibilities under this Act for a bank to maintain, in another country, copies of records referred to in section 238 or of its central securities register or members register or for a bank to process, in another country, information or data relating to the preparation and maintenance of those records or of its central securities register or members register — or if the Superintendent is advised by the Minister that, in the opinion of the Minister, it is not in the national interest for a bank to do any of those activities in another country — the Superintendent must direct the bank to not maintain those copies, or to not process the information or data, as the case may be, in that other country or to maintain those copies or to process the information or data only in Canada.Direction — immediate, direct, complete and ongoing accessWhere a bank referred to in subsection 239(3.1) or 251(3) maintains records referred to in section 238 or the central securities register at a place outside Canada, the Superintendent may, in the case referred to in paragraph (a), and must, in the case referred to in paragraph (b), by order, direct the bank to maintain a copy of those records or register at any place in Canada as the directors think fitif the Superintendent is of the opinion that he or she does not have immediate, direct, complete and ongoing access to those records or register; orif the Superintendent is advised by the Minister that the Minister is of the opinion that it is not in the national interest for the bank not to maintain a copy of those records or register at any place in Canada.Bank to complyA bank shall without delay comply with any order issued under subsection (1) or (1.1).1991, c. 46, s. 245; 2001, c. 9, s. 89; 2005, c. 54, s. 52; 2007, c. 6, s. 17; 2010, c. 12, s. 20122020, c. 1, s. 161
Retention of recordsA bank shall retainthe records of the bank referred to in subsection 238(1);any record of the bank referred to in paragraph 238(2)(a) or (b);the central securities register referred to in subsection 248(1); andthe members register referred to in subsection 254.1(1).IdemA bank shall retain all signature cards and signing authorities or copies thereof relating to any deposit or instrument in respect of which the bank has paid an amount to the Bank of Canada pursuant to section 438 until the Bank of Canada notifies the bank that they need no longer be retained.EvidenceCopies of the signature cards and signing authorities referred to in subsection (2) may be kept in any manner or form referred to in paragraphs 243(1)(a) and (b) and any such copies, or prints therefrom, are admissible in evidence in the same manner and to the same extent as the original signature cards and signing authorities.ReliefNothing in this section affects the operation of any statute of limitation or prescription or relieves the bank from any obligation to the Bank of Canada in respect of any deposit or instrument in respect of which section 438 applies.1991, c. 46, s. 246; 2010, c. 12, s. 2013
RegulationsThe Governor in Council may make regulations respecting the records, papers and documents to be retained by a bank, including the length of time those records, papers and documents are to be retained, and what constitutes immediate, direct, complete and ongoing access, for the purpose of paragraph 245(1.1)(a).1991, c. 46, s. 2472020, c. 1, s. 162
Securities Registers
Central securities registerA bank shall maintain a central securities register in which it shall record the securities, within the meaning of section 81, issued by it in registered form, showing in respect of each class or series of securitiesthe names, alphabetically arranged, and latest known addresses of the persons who are security holders, and the names and latest known addresses of the persons who have been security holders;the number of securities held by each security holder; andthe date and particulars of the issue and transfer of each security.Existing and continued banksFor the purposes of subsection (1), “central securities register” includes similar registers required by law to be maintained by a bank that was in existence immediately prior to the day that subsection comes into force or by a body corporate continued, or amalgamated and continued, as a bank under this Act before the continuance, amalgamation or coming into force of that subsection, as the case may be.Access to central securities registerShareholders and creditors of a bank and their personal representatives — and, if the bank is a federal credit union, its members and their personal representatives — may examine the central securities register during the usual business hours of the bank and may take extracts from it free of charge or have copies of it made on payment of a reasonable fee. If the bank is a distributing bank, any other person may, on payment of a reasonable fee, examine the central securities register during the usual business hours of the bank and take extracts from it or have copies of it made.Electronic accessThe bank may make the information contained in the central securities register available by any mechanical or electronic data processing system or other information storage device that is capable of reproducing it in intelligible written form within a reasonable time.Affidavit and undertakingA person who wishes to examine the central securities register, take extracts from it or have copies of it made shall provide the bank with an affidavit containing their name and address — or if they are an entity, the name and address for service of the entity — and with an undertaking that the information contained in the register will not be used except in the same way as a list of shareholders may be used under section 242. In the case of an entity, the affidavit is to be sworn by a director or officer of the entity or a person acting in a similar capacity.Supplemental informationA person who wishes to examine a central securities register, take extracts from it or have copies of it made may on payment of a reasonable fee, if they state in the accompanying affidavit that supplementary information is required, request the bank or its agent to provide supplementary information setting out any changes made to the register.When supplementary information to be providedA bank or its agent shall provide the supplementary information within10 days after the day on which the central securities register is examined if the changes take place before that day; and10 days after the day to which the supplementary information relates if the changes take place on or after the day on which the central securities register is examined.1991, c. 46, s. 248; 2001, c. 9, s. 90; 2005, c. 54, s. 53; 2010, c. 12, s. 2014
Branch registersA bank may establish as many branch securities registers as it considers necessary.
AgentsA bank may appoint an agent to maintain its central securities register and each of its branch securities registers.
Location of central securities registerThe central securities register of a bank shall be maintained by the bank at its head office or at any other place in Canada designated by the directors of the bank.Location of branch securities registerA branch securities register of a bank may be kept at any place in or outside Canada designated by the directors of the bank.ExceptionSubject to subsection 245(1.1), subsection (1) does not apply to a bank that is a subsidiary of a foreign bank incorporated or formed otherwise in a country or territory other than Canada in which a trade agreement listed in Schedule IV is applicable or of a regulated foreign entity.1991, c. 46, s. 2512020, c. 1, s. 163
Effect of registrationRegistration of the issue or transfer of a security in the central securities register or in a branch securities register is complete and valid registration for all purposes.
Particulars in branch registerA branch securities register shall only contain particulars of the securities issued or transferred at the branch for which that register is established.Particulars in central registerParticulars of each issue or transfer of a security registered in a branch securities register of a bank shall also be kept in the central securities register of the bank.
Destruction of certificatesA bank, its agent or a trustee within the meaning of section 294 is not required to producea cancelled security certificate in registered form or an instrument referred to in subsection 69(1) that is cancelled or a like cancelled instrument in registered form after six years from the date of its cancellation;a cancelled security certificate in bearer form or an instrument referred to in subsection 69(1) that is cancelled or a like cancelled instrument in bearer form after the date of its cancellation; oran instrument referred to in subsection 69(1) or a like instrument, irrespective of its form, after the date of its expiration.
Members Register
Members registerA federal credit union must maintain a members register in which it must recordthe names, alphabetically arranged, and latest known addresses of the members and former members of the federal credit union;the number of membership shares held by each member; andthe date and particulars of the issue and transfer of each membership share.Similar registersFor the purposes of subsection (1), “members register” includes similar registers required by law to be maintained by a body corporate that was continued, or amalgamated and continued, as a federal credit union before the continuance or amalgamation and continuance.Access to members registerMembers, shareholders and creditors of a federal credit union, and their personal representatives, may examine the members register during the usual business hours of the federal credit union and may take extracts from it free of charge or have copies of it made on payment of a reasonable fee. If the federal credit union is a distributing bank, any other person may, on payment of a reasonable fee, examine the members register during the usual business hours of the bank and take extracts from it or have copies of it made.Electronic accessThe federal credit union may make the information contained in the members register available by any mechanical or electronic data processing system or other information storage device that is capable of reproducing it in intelligible written form within a reasonable time.Affidavit and undertakingA person who wishes to examine the members register, take extracts from it or have copies of it made must provide the federal credit union with an affidavit containing their name and address — or, if they are an entity, the name and address for service of the entity — and an undertaking that the information contained in the register will not be used except in the same way as a list of shareholders or members may be used under section 242. In the case of an entity, the affidavit is to be sworn by a director or officer of the entity or a person acting in a similar capacity.Supplementary informationA person who wishes to examine a members register, take extracts from it or have copies of it made may, on payment of a reasonable fee, if they state in the accompanying affidavit that supplementary information is required, request the federal credit union or its agent to provide supplementary information setting out any changes made to the register.When supplementary information to be providedA federal credit union or its agent must provide the supplementary information within10 days after the day on which the members register is examined if the changes take place before that day; and10 days after the day to which the supplementary information relates if the changes take place on or after the day on which the members register is examined.2010, c. 12, s. 2015
Branch members registersA federal credit union may establish as many branch members registers as it considers necessary.2010, c. 12, s. 2015
AgentsA federal credit union may appoint an agent to maintain its members register and each of its branch members registers.2010, c. 12, s. 2015
Location of members registerThe members register of a federal credit union is to be maintained by the federal credit union at its head office or at any other place in Canada designated by the federal credit union’s directors.Location of branch members registerA branch members register of a federal credit union may be kept at any place in or outside Canada designated by the directors of the federal credit union.2010, c. 12, s. 2015
Particulars in branch members registerA branch members register must contain only particulars of the membership shares issued or transferred at the branch for which that register is established.Particulars in members registerParticulars of each issue or transfer of a membership share registered in a branch members register of a federal credit union must also be kept in the members register of the federal credit union.2010, c. 12, s. 2015
Cancelled membership share certificatesA federal credit union, its agent or a trustee within the meaning of section 294 is not required to produce a cancelled membership share certificate in registered form after six years from the day on which it is cancelled.2010, c. 12, s. 2015
Corporate Name and Seal
Publication of nameA bank shall set out its name in legible characters in all contracts, invoices, negotiable instruments and other documents evidencing rights or obligations with respect to other parties that are issued or made by or on behalf of the bank.
Corporate sealA bank may adopt a corporate seal and change one that it adopted.Validity of unsealed documentsA document executed on behalf of a bank is not invalid merely because a corporate seal is not affixed to it.1991, c. 46, s. 256; 2005, c. 54, s. 54
[Repealed, 1997, c. 15, s. 30]
Insiders
DefinitionsIn this section and sections 266 to 272,affiliate means a body corporate that is affiliated with another body corporate within the meaning of subsection 6(2); (groupe)business combination means an acquisition of all or substantially all of the assets of one body corporate by another, an amalgamation of two or more bodies corporate or any similar reorganization between two or more bodies corporate; (regroupement d’entreprises)call means an option, transferable by delivery, to demand delivery of a specified number or amount of shares at a fixed price within a specified time but does not include an option or right to acquire shares of the body corporate that granted the option or right to acquire; (option d’achat)distributing bank[Repealed, 2005, c. 54, s. 55]insider[Repealed, 2005, c. 54, s. 55]officer, in relation to a bank, meansan officer as defined in paragraph (a) of the definition officer in section 2, orany natural person who performs functions for the bank similar to those performed by a person referred to in paragraph (a) of the definition officer in section 2; (dirigeant d’une banque)put means an option, transferable by delivery, to deliver a specified number or amount of shares at a fixed price within a specified time; (option de vente)share means a voting share and includesa security currently convertible into a voting share,a currently exercisable option or a right to acquire a voting share or a security referred to in paragraph (a), anda membership share. (action)ControlFor the purposes of this section and sections 266 to 272, a person controls a body corporate when the person controls the body corporate within the meaning of section 3, determined without regard to paragraph 3(1)(d).[Repealed, 2005, c. 54, s. 55]1991, c. 46, s. 265; 2005, c. 54, s. 55; 2010, c. 12, s. 2016
Insider Reporting
Insider reportAn insider shall submit an insider report in accordance with the regulations.1991, c. 46, s. 266; 1997, c. 15, s. 31; 2005, c. 54, s. 56
Exemption by SuperintendentOn application by an insider, the Superintendent may in writing and on any terms that the Superintendent thinks fit exempt the insider from any of the requirements of section 266. The exemption may be given retroactive effect and the Superintendent shall publish the partic­ulars of the exemption and the reasons for it in a periodical available to the public.1991, c. 46, s. 267; 2005, c. 54, s. 56
[Repealed, 2005, c. 54, s. 56]
RegulationsThe Governor in Council may make regulations for carrying out the purposes of sections 266 and 267, includingdefining insider for the purposes of sections 266 and 267;respecting the form and content of an insider report; andrespecting the submission or publication of an insider report.1991, c. 46, s. 268; 2005, c. 54, s. 56
[Repealed, 2005, c. 54, s. 56]
Insider Trading
Meaning of insiderIn this section, insider means with respect to a distributing banka director or officer of the bank;a director or officer of a subsidiary of the bank;a director or officer of a body corporate that enters into a business combination with the bank; ora person employed or retained by the bank.Prohibition — short saleNo insider may knowingly sell, directly or indirectly, a security of a distributing bank or of any of the distributing bank’s affiliates if the insider does not own or has not fully paid for the security.ExceptionDespite subsection (2), an insider may sell a security that they do not own if they own another security that is convertible into the security that was sold or they own an option or right to acquire the security that was sold, and if within 10 days after the sale theyexercise the conversion privilege, option or right and deliver the security so acquired to the purchaser; ortransfer the convertible security, option or right to the purchaser.Prohibition — calls and putsNo insider may knowingly, directly or indirectly, buy or sell a call or put in respect of a security of a bank or of any of the bank’s affiliates.1991, c. 46, s. 270; 2005, c. 54, s. 57
Civil remedies
Extended meaning of insiderIn this section and sections 271.1 and 272, insider with respect to a bank meansthe bank;an affiliate of the bank;a director or officer of the bank or of any person described in paragraph (b), (d) or (f);a person who beneficially owns directly or indirectly, or who exercises control or direction over or has a combination of ownership, control and direction in respect of, shares of the bank carrying more than the prescribed percentage of the voting rights attached to all of the bank’s outstanding shares not including shares held by the person as underwriter while those shares are in the course of a distribution to the public;a person, other than a person described in paragraph (f), who is employed or retained by the bank or by a person described in paragraph (f);a person who engages in or proposes to engage in any business or professional activity with or on behalf of the bank;a person who received material confidential information concerning the bank while they were a person described in any of paragraphs (a) to (f);a person who receives material confidential information from a person who is and who they know or ought reasonably to have known is a person described in this subsection, including in this paragraph, or subsection (3) or (4); ora prescribed person.Extended meaning of insider — federal credit unionIn addition to subsection (1), in this section and sections 271.1 and 272, insider with respect to a bank that is a federal credit union means a member of the federal credit union who holds more than the prescribed percentage of the membership shares of the federal credit union.Extended meaning of securityFor the purposes of this section, each of the following is deemed to be a security of a bank:a membership share of the bank, if the bank is a federal credit union;a put, call, option or other right or obligation to purchase or sell a security of the bank; anda security of another entity, the market price of which varies materially with the market price of the securities of the bank.Deemed insider — take-over bid or business combinationFor the purposes of this section and subsection 271.1(1), a person who proposes to make a take-over bid as defined in the regulations for securities of a bank or to enter into a business combination with a bank is an insider of the bank with respect to material confidential information obtained from the bank.Deemed insider — affiliate or associateAn insider of a person referred to in subsection (3), or the person’s affiliate or associate, is an insider of the bank referred to in that subsection. Paragraphs (1)(b) to (i) apply in making this determination except that references to “bank” are to be read as references to “person described in subsection (3)”.Meaning of associateIn subsection (4), associate means with respect to a persona body corporate that the person directly or indirectly controls, determined without regard to paragraph 3(1)(d), or of which they beneficially own shares or securities currently convertible into shares carrying more than 10% of the voting rights under all circumstances or by reason of the occurrence of an event that has occurred and is continuing or a currently exercisable option or right to purchase the shares or convertible securities;a partner of the person acting on behalf of the partnership of which they are partners;a trust or estate in which the person has a substantial beneficial interest or in respect of which they serve as a trustee or a liquidator of the succession or in a similar capacity;a spouse or common-law partner of the person;a child of the person or of their spouse or common-law partner; orif that relative has the same residence as the person, a relative of the person or of their spouse or common-law partner.Insider trading — compensation to sellers and purchasersAn insider of a bank who purchases or sells a security of the bank with knowledge of confidential information that if it were generally known might reasonably be expected to materially affect the value of any of the securities of the bank is liable to compensate the seller or purchaser of the security, as the case may be, for any loss suffered by them as a result of the purchase or sale unless the insider establishes thatthe insider reasonably believed that the information had been generally disclosed;the information was known or ought reasonably to have been known by the seller or purchaser; orthe purchase or sale of the security took place in the prescribed circumstances.Insider trading — compensation to bankThe insider is accountable to the bank for any benefit or advantage received or receivable by the insider as a result of a purchase or sale described in subsection (6) unless they establish the circumstances described in paragraph (6)(a).1991, c. 46, s. 271; 2005, c. 54, s. 57; 2010, c. 12, s. 2017
Tipping — compensation to sellers and purchasersAn insider of a bank who discloses confidential information with respect to the bank that has not been generally disclosed and that if it were generally known might reasonably be expected to materially affect the value of any of the securities of the bank is liable to compensate any person who subsequently sells securities of the bank to or purchases them from any person who received the information unless the insider establishes thatthe insider reasonably believed that the information had been generally disclosed;the information was known or ought reasonably to have been known by the person who alleges that they suffered the loss;if the insider is not a person described in subsection 271(3) or (4), the disclosure of the information was necessary in the course of their business; orif the insider is a person described in subsection 271(3) or (4), the disclosure of the information was necessary to effect the take-over bid or business combination.Tipping — compensation to bankThe insider is accountable to the bank for any benefit or advantage received or receivable by them as a result of a disclosure of information as described in subsection (1) unless they establish the circumstances described in paragraph (1)(a), (c) or (d).2005, c. 54, s. 57
Measure of damagesThe court may assess damages under subsection 271(6) or 271.1(1) in accord­ance with any measure of damages that it considers relevant in the circumstances. However, in assessing damages in respect of a security of a distributing bank, the court shall consider the following:if the plaintiff is a purchaser, the price that they paid for the security less the average market price of the security over the 20 trading days immediately following general disclosure of the information; andif the plaintiff is a seller, the average market price of the security over the 20 trading days immediately following general disclosure of the information, less the price that they received for the security.Liability — more than one insiderIf more than one insider is liable under subsection 271(6) or 271.1(1) with respect to the same transaction or series of transactions, their liability is joint and several, or solidary.LimitationAn action to enforce a right created by subsection 271(6) or (7) or section 271.1 may be commenced only within two years after discovery of the facts that gave rise to the cause of action.1991, c. 46, s. 272; 2005, c. 54, s. 57
Prospectus
DistributionNo person, including a bank, shall distribute securities of a bank that is not a federal credit union except in accordance with the regulations made under subsection (2).RegulationsThe Governor in Council may make regulations respecting the distribution of securities of a bank that is not a federal credit union, includingrespecting the information that is to be disclosed by such a bank before the distribution of any of its securities, including the information that is to be included in a prospectus;respecting the manner of disclosure and the form of the information that is to be disclosed; andexempting any class of distribution of securities from the application of subsection (1).1991, c. 46, s. 273; 2005, c. 54, s. 57; 2012, c. 5, s. 9
Distribution — federal credit unionNo person, including a bank, shall distribute securities of a federal credit union except in accordance with the regulations made under subsection (2).RegulationsThe Governor in Council may make regulations respecting the distribution of securities of a federal credit union, includingrespecting the information that is to be disclosed by a federal credit union before the distribution of any of its securities, including the information that is to be included in a prospectus;respecting the manner of disclosure and the form of the information that is to be disclosed; andexempting any class of distribution of securities from the application of subsection (1).2012, c. 5, s. 10
Order of exemptionOn application by a bank or any person proposing to make a distribution, the Superintendent may, by order, exempt that distribution from the application of any regulations made under subsection 273(2) or 273.1(2) if the Superintendent is satisfied that the bank or federal credit union, as the case may be, has disclosed or is about to disclose, in compliance with the laws of the relevant jurisdiction, information relating to the distribution that in form and content substantially complies with the requirements of those regulations.ConditionsAn order under subsection (1) may contain any conditions or limitations that the Superintendent deems appropriate.1991, c. 46, s. 274; 2005, c. 54, s. 57; 2012, c. 5, s. 11
Going-private Transactions and Squeeze-out Transactions
Going-private transactionsA bank may carry out a going-private transaction if it complies with any applicable provincial securities laws.1991, c. 46, s. 275; 1994, c. 26, s. 5(F); 1999, c. 31, s. 11; 2005, c. 54, s. 57
Squeeze-out transactionsNo bank may carry out a squeeze-out transaction unless, in addition to any approval by holders of shares required by or under this Act or the bank’s by-laws, the transaction is approved by ordinary resolution of the holders of each class of shares affected by the transaction, voting separately, whether or not the shares otherwise carry the right to vote. However, the following do not have the right to vote on the resolution:affiliates of the bank; andholders of shares that following the squeeze-out transaction would be entitled to consideration of greater value or to superior rights or privileges than those available to other holders of shares of the same class.1991, c. 46, s. 276; 1999, c. 31, s. 12; 2005, c. 54, s. 57
Right to dissentA holder of shares of a bank may dissent if the bank resolves to carry out a going-private transaction or squeeze-out transaction that affects those shares.Payment for sharesIn addition to any other right that the shareholder may have, but subject to subsection (25), a shareholder who complies with this section is, when the action approved by the resolution from which the shareholder dissents becomes effective, entitled to be paid by the bank the fair value of the shares in respect of which the shareholder dissents, determined as of the close of business on the day before the resolution was adopted by the shareholders.No partial dissentA dissenting shareholder may claim under this section only with respect to all of the shares of a class held on behalf of any one beneficial owner and registered in the name of the dissenting shareholder.ObjectionA dissenting shareholder shall send to the bank, at or before any meeting of shareholders at which a resolution referred to in subsection (2) is to be voted on by the shareholders, a written objection to the resolution unless the bank did not give notice to the shareholder of the purpose of the meeting and their right to dissent.Notice that resolution was adoptedThe bank shall within 10 days after the day on which the shareholders adopt the resolution send to each shareholder who sent an objection under subsection (4) notice that the resolution was adopted. If it is necessary for the Minister or Superintendent to approve the transaction within the meaning of subsection 973(1) before it becomes effective, the bank shall send notice within 10 days after the approval. Notice is not required to be sent to a shareholder who voted for the resolution or one who has withdrawn their objection.Demand for paymentA dissenting shareholder shall within 20 days after receiving the notice referred to in subsection (5) — or, if they do not receive it, within 20 days after learning that the resolution was adopted by the shareholders — send to the bank a written notice containingtheir name and address;the number and class of shares in respect of which they dissent; anda demand for payment of the fair value of those shares.Share certificatesA dissenting shareholder shall within 30 days after sending a notice under subsection (6) send the certificates representing the shares in respect of which they dissent to the bank or its transfer agent.ForfeitureA dissenting shareholder who fails to comply with subsection (7) has no right to make a claim under this section.Endorsing certificateA bank or its transfer agent shall endorse on any share certificate received in accordance with subsection (7) a notice that the holder is a dissenting shareholder under this section and shall without delay return the share certificates to the dissenting shareholder.Suspension of rightsOn sending a notice under subsection (6), a dissenting shareholder ceases to have any rights as a shareholder other than to be paid the fair value of their shares as determined under this section. However, the shareholder’s rights are reinstated as of the date the notice was sent ifthe shareholder withdraws the notice before the bank makes an offer under subsection (11);the bank fails to make an offer in accordance with subsection (11) and the shareholder withdraws the notice; orthe directors revoke under section 220 the special resolution that was made in respect of the going-private transaction or squeeze-out transaction.Offer to payA bank shall, no later than seven days after the later of the day on which the action approved by the resolution from which the shareholder dissents becomes effective and the day on which the bank received the notice referred to in subsection (6), send to each dissenting shareholder who sent a noticea written offer to pay for their shares in an amount considered by the directors of the bank to be the fair value, accompanied by a statement showing how the fair value was determined; orif subsection (25) applies, a notice that it is unable to lawfully pay dissenting shareholders for their shares.Same termsEvery offer made under subsection (11) for shares of the same class or series is to be on the same terms.PaymentSubject to subsection (25), a bank shall pay for the shares of a dissenting shareholder within 10 days after the day on which an offer made under subsection (11) is accepted, but the offer lapses if the bank does not receive an acceptance within 30 days after the day on which the offer is made.Court may fix fair valueIf a bank fails to make an offer under subsection (11) or if a dissenting shareholder fails to accept an offer, the bank may, within 50 days after the day on which the action approved by the resolution from which the shareholder dissents becomes effective or within any further period that a court may allow, apply to the court to fix a fair value for the shares of any dissenting shareholder.Shareholder applicationIf a bank fails to apply to a court under subsection (14), a dissenting shareholder may apply to a court for the same purpose within a further period of 20 days or within any further period that the court may allow.VenueAn application under subsection (14) or (15) is to be made to a court having jurisdiction where the bank’s head office is situated or, if the bank carries on business in the province in which the dissenting shareholder resides, in that province.No security for costsA dissenting shareholder is not required to give security for costs in an application made under subsection (14) or (15).Parties and SuperintendentOn an application to a court under subsection (14) or (15),all dissenting shareholders whose shares have not been purchased by the bank are to be joined as parties and are bound by the decision of the court;the bank shall notify each of them of the date, place and consequences of the application and their right to appear and be heard in person or by counsel; andthe bank shall notify the Superintendent of the date and place of the application and the Superintendent may appear and be heard in person or by counsel.Powers of courtOn an application to a court under subsection (14) or (15), the court may determine whether any other person is a dissenting shareholder and is to be joined as a party and the court shall then fix a fair value for the shares of all dissenting shareholders.AppraisersThe court may appoint one or more appraisers to assist the court to fix a fair value for the shares of the dissenting shareholders.Final orderThe final order of the court is to be rendered against the bank in favour of each dissenting shareholder for the value of the shares as fixed by the court.InterestThe court may allow a reasonable rate of interest on the amount payable to each dissenting shareholder from the date the action approved by the resolution from which the shareholder dissents becomes effective until the date of payment.Notice that s. (25) appliesIf subsection (25) applies, the bank shall within 10 days after an order is made under subsection (21) notify each dissenting shareholder that it is unable to lawfully pay dissenting shareholders for their shares.Effect of s. (25)If subsection (25) applies, a dissenting shareholder may by written notice delivered to the bank within 30 days after receiving notice under subsection (23)withdraw their notice of dissent, in which case the bank is deemed to consent to the withdrawal and the shareholder is reinstated to their full rights as a shareholder; orretain their status as a claimant against the bank, to be paid as soon as the bank is able to lawfully pay them or, in a liquidation, to be ranked subordinate to the rights of the bank’s creditors but in priority to its shareholders.LimitationA bank may not make a payment to a dissenting shareholder under this section if there are reasonable grounds for believing that the bank is or the payment would cause the bank to be in contravention of a regulation referred to in subsection 485(1) or (2) or of an order made under subsection 485(3).1991, c. 46, s. 277; 2005, c. 54, s. 57
[Repealed, 2005, c. 54, s. 57]
[Repealed, 2005, c. 54, s. 57]
[Repealed, 2005, c. 54, s. 57]
[Repealed, 2005, c. 54, s. 57]
[Repealed, 2005, c. 54, s. 57]
Compulsory Acquisitions
DefinitionsIn this section and sections 284 to 293,affiliate means a body corporate that is affiliated with another body corporate within the meaning of subsection 6(2); (groupe)associate of the offeror meansa body corporate that an offeror, directly or indirectly, controls, determined without regard to paragraph 3(1)(d), or of which an offeror beneficially owns shares or securities currently convertible into shares carrying more than 10 per cent of the voting rights under all circumstances or by reason of the occurrence of an event that has occurred and is continuing, or a currently exercisable option or right to purchase the shares or the convertible securities,a partner of the offeror acting on behalf of the partnership of which they are partners,a trust or estate in which the offeror has a substantial beneficial interest or in respect of which they serve as a trustee or a liquidator of the succession or in a similar capacity,a spouse or common-law partner of the offeror,a child of the offeror or of the offeror’s spouse or common-law partner, ora relative of the offeror or of the offeror’s spouse or common-law partner, if that relative has the same residence as the offeror; (associé du pollicitant)dissenting offeree means a holder of a share who does not accept a take-over bid or a subsequent holder of the share who acquires it from the first-mentioned holder; (pollicité opposant)exempt offer[Repealed, 2005, c. 54, s. 58]offeree means a person to whom a take-over bid is made; (pollicité)offeree bank means a bank the shares of which are the object of a take-over bid; (banque pollicitée)offeror means a person, other than an agent, who makes a take-over bid, and includes two or more persons who, directly or indirectly,make take-over bids jointly or in concert, orintend to exercise jointly or in concert voting rights attached to shares for which a take-over bid is made; (pollicitant)share means a share with or without voting rights and includesa security that is currently convertible into a share, anda currently exercisable option or right to acquire a share or a security referred to in paragraph (a); (action)take-over bid means an offer made by an offeror at approximately the same time to all of the shareholders of a distributing bank to acquire all of the shares of a class of issued shares, and includes an offer by a distributing bank to repurchase all of the shares of a class. (offre d’achat visant à la mainmise)ControlFor the purposes of this section and sections 284 to 293, a person controls a body corporate when the person controls the body corporate within the meaning of section 3, determined without regard to paragraph 3(1)(d).Date of bidA take-over bid is deemed to be dated as of the date on which it is sent.1991, c. 46, s. 283; 2000, c. 12, s. 4; 2005, c. 54, s. 58
Right to acquire sharesIf, within one hundred and twenty days after the date of a take-over bid, the bid is accepted by the holders of not less than 90 per cent of the shares of any class of shares to which the take-over bid relates, other than shares held at the date of the take-over bid by or on behalf of the offeror or an affiliate or associate of the offeror, the offeror is entitled, on complying with sections 285 to 290, subsections 291(1) and (2) and section 292, to acquire the shares held by the dissenting offerees.1991, c. 46, s. 284; 2005, c. 54, s. 59(F)
Offeror’s notice to dissentersAn offeror may acquire shares held by a dissenting offeree by sending by registered mail within sixty days after the date of termination of the take-over bid and in any event within one hundred and eighty days after the date of the take-over bid, an offeror’s notice to each dissenting offeree and to the Superintendent stating thatofferees holding not less than 90 per cent of the shares of any class of shares to which the take-over bid relates, other than shares held at the date of the take-over bid by or on behalf of the offeror or an affiliate or associate of the offeror, have accepted the take-over bid;the offeror is bound to take up and pay for or has taken up and paid for the shares of the offerees who accepted the take-over bid;a dissenting offeree is required to electto transfer the dissenting offeree’s shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid, orto demand payment of the fair value of the dissenting offeree’s shares in accordance with sections 289 to 292 by notifying the offeror within twenty days after receipt of the offeror’s notice;a dissenting offeree who does not notify the offeror in accordance with paragraph 286(b) is deemed to have elected to transfer the shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid; anda dissenting offeree must send the dissenting offeree’s shares to which the take-over bid relates to the offeree bank within twenty days after the dissenting offeree receives the offeror’s notice.Notice of adverse claimConcurrently with sending the offeror’s notice under subsection (1), the offeror shall send to the offeree bank a notice of adverse claim in accordance with subsection 129(1) with respect to each share held by a dissenting offeree.1991, c. 46, s. 285; 2005, c. 54, s. 60
Share certificates and electionA dissenting offeree to whom a notice is sent under subsection 285(1) shall within 20 days after receiving the noticesend to the offeree bank the share certificates representing the shares to which the take-over bid relates; andelect to transfer the shares to the offeror on the same terms as those on which the offeror acquired shares from the offerees who accepted the take-over bid or to demand payment of the fair value of the shares in accordance with sections 289 to 292 by notifying the offeror.1991, c. 46, s. 286; 2005, c. 54, s. 61
Deemed electionA dissenting offeree who does not notify the offeror in accordance with paragraph 286(b) is deemed to have elected to transfer the shares to the offeror on the same terms as those on which the offeror acquired shares from the offerees who accepted the take-over bid.2005, c. 54, s. 61
Payment to offeree bankWithin 20 days after the offeror sends a notice under subsection 285(1), the offeror shall pay the money, or transfer the other consideration, to the offeree bank that the offeror would have had to pay or transfer to a dissenting offeree if the dissenting offeree had elected to transfer their shares in accordance with paragraph 286(b).Consideration in trustAn offeree bank is deemed to hold in a fiduciary capacity for the dissenting offerees the money or other consideration it receives under subsection (1).Deposit or custodyAn offeree bank shall deposit the money received under subsection (1) in a separate account in another deposit-taking financial institution in Canada and the offeree bank shall place any other consideration in the custody of another deposit-taking financial institution in Canada.1991, c. 46, s. 287; 2005, c. 54, s. 62
Fiduciary capacity of bankA bank that is making a take-over bid to repurchase all of the shares of a class is deemed to hold in a fiduciary capacity for the dissenting shareholders the money that it would have had to pay, and the other consideration that it would have had to transfer, to a dissenting offeree if the dissenting offeree had elected to transfer their shares in accordance with paragraph 286(b). The bank shall within 20 days after a notice is sent under subsection 285(1) deposit the money in a separate account in another deposit-taking financial institution in Canada and place any other consideration in the custody of another deposit-taking financial institution in Canada.2005, c. 54, s. 63
Duty of offeree bankWithin thirty days after an offeror sends an offeror’s notice under subsection 285(1), the offeree bank shallif the payment or transfer required by subsection 287(1) is made, issue to the offeror a share certificate in respect of the shares that were held by the dissenting offerees;give to each dissenting offeree who elects to transfer shares under paragraph 286(b) and who sends the share certificates as required under paragraph 286(a) the money or other consideration to which they are entitled, disregarding fractional shares, which may be paid for in money; andif the payment or transfer required by subsection 287(1) is made and the money or other consideration is deposited as required by subsections 287(2) and (3) or by section 287.1, send to each dissenting offeree who has not sent share certificates as required under paragraph 286(a) a notice stating thattheir shares have been cancelled,the offeree bank or its designated person holds in a fiduciary capacity for that offeree the money or other consideration to which they are entitled as payment for or in exchange for the shares, andthe offeree bank will, subject to sections 289 to 292, send that money or other consideration to that offeree without delay after receiving the share certificates.1991, c. 46, s. 288; 2005, c. 54, s. 64
Court may fix fair valueIf a dissenting offeree has elected to demand payment of the fair value of their shares under paragraph 286(b), the offeror may, within 20 days after it has paid the money or transferred the other consideration under subsection 287(1), apply to a court to fix the fair value of the shares of that dissenting offeree.IdemIf an offeror fails to apply to a court under subsection (1), a dissenting offeree may apply to a court for the same purpose within a further period of twenty days.VenueAn application under subsection (1) or (2) shall be made to a court having jurisdiction in the place at which the head office of the bank is situated or in the province in which the dissenting offeree resides if the bank carries on business in that province.No security for costsA dissenting offeree is not required to give security for costs in an application made under subsection (1) or (2).1991, c. 46, s. 289; 2005, c. 54, s. 65
Parties and noticeOn an application under subsection 289(1) or (2),all dissenting offerees who have made elections to demand payment under paragraph 286(b) and whose shares have not been acquired by the offeror shall be joined as parties and are bound by the decision of the court; andthe offeror shall notify each affected dissenting offeree of the date, place and consequences of the application and of the dissenting offeree’s right to appear and be heard in person or by counsel at the hearing of the application.1991, c. 46, s. 290; 2005, c. 54, s. 66
Powers of courtOn an application to a court under subsection 289(1) or (2), the court may determine whether any other person is a dissenting offeree who should be joined as a party, and the court shall then fix a fair value for the shares of all dissenting offerees.AppraisersA court may in its discretion appoint one or more appraisers to assist the court in fixing a fair value for the shares of a dissenting offeree.Final orderThe final order of a court shall be made against the offeror in favour of each dissenting offeree and for the amount for each dissenting offeree’s shares as fixed by the court.Additional powers of courtIn connection with proceedings under subsection 289(1) or (2), a court may make any order it thinks fit and, without limiting the generality of the foregoing, mayfix the amount of money or other consideration that is deemed to be held in a fiduciary capacity under subsection 287(2) or section 287.1;order that the money or other consideration is to be held in trust by a person other than the offeree bank;allow a reasonable rate of interest on the amount payable to each dissenting offeree from the date the dissenting offeree sends the share certificates required under section 286 until the date of payment; ororder that any money payable to a shareholder who cannot be found is to be paid to the Minister.1991, c. 46, s. 291; 2005, c. 54, s. 67
Status of dissenterWhere no application is made to a court under subsection 289(2) within the period set out in that subsection, a dissenting offeree is deemed to have elected to transfer the dissenting offeree’s shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid.
Obligation to acquire sharesIf a shareholder who holds shares of an offeree bank does not receive the notice referred to in subsection 285(1), the shareholder may require the offeror to acquire the shareswithin 90 days after the date of termination of the take-over bid; orif the shareholder did not receive an offer under the take-over bid, within 90 days after the later ofthe date of termination of the take-over bid, andthe day on which the shareholder learned of the take-over bid.Acquisition on same termsIf the shareholder requires the offeror to acquire shares, the offeror shall acquire them on the same terms as those on which the offeror acquires shares from offerees who accept the take-over bid.2005, c. 54, s. 68
Payment of unclaimed moneyThe Minister shall pay to the Bank of Canada any amounts paid to the Minister under subsection 291(4), and section 367 applies in respect thereof as if the amounts paid under subsection 291(4) had been paid under subsection 366(3).
Trust Indentures
DefinitionsIn this section and sections 295 to 306,event of default means, in relation to a trust indenture, an event specified in the trust indenture on the occurrence of which the principal, interest and other moneys payable thereunder become or may be declared to be payable before maturity, but the event is not an event of default until all the conditions set out in the trust indenture in connection with the giving of notice of the event have been satisfied or the period of time for giving the notice has elapsed; (cas de défaut)issuer means a bank that has issued, is about to issue or is in the process of issuing subordinated indebtedness; (émetteur)trustee means any person appointed as trustee under the terms of a trust indenture to which a bank is a party, and includes any successor trustee; (fiduciaire)trust indenture means any deed, indenture or other instrument, including any supplement or amendment thereto, made by a bank under which the bank issues subordinated indebtedness and in which a person is appointed as trustee for the holders of the subordinated indebtedness issued thereunder. (acte de fiducie)
ApplicationSections 296 to 306 apply in respect of a trust indenture if the subordinated indebtedness issued or to be issued under the trust indenture is part of a distribution to the public.
ExemptionThe Superintendent may, in writing, exempt a trust indenture from the application of sections 297 to 306 if, in the Superintendent’s opinion, the trust indenture and the subordinated indebtedness are subject to a law of a province or other jurisdiction, other than Canada, that is substantially equivalent to the provisions of this Act relating to trust indentures.
Conflict of interestNo person shall be appointed as trustee if at the time of the appointment there is a material conflict of interest between the person’s role as trustee and any other role of the person.Eliminating conflict of interestA trustee shall, within ninety days after the trustee becomes aware that a material conflict of interest exists,eliminate the conflict of interest; orresign from office.
Validity despite conflictA trust indenture and any subordinated indebtedness issued thereunder are valid notwithstanding a material conflict of interest of the trustee.
Removal of trusteeIf a trustee is appointed in contravention of subsection 297(1) or if a trustee contravenes subsection 297(2), any interested person may apply to a court for an order that the trustee be replaced, and the court may make an order on such terms as it thinks fit.
Trustee qualificationsA trustee, or at least one of the trustees if more than one is appointed, must bea trust company pursuant to subsection 57(2) of the Trust and Loan Companies Act; ora body corporate that is incorporated by or under an Act of the legislature of a province and authorized to carry on business as a trustee.1991, c. 46, ss. 300, 577; 2007, c. 6, s. 18
List of security holdersA holder of subordinated indebtedness issued under a trust indenture may, on payment to the trustee of a reasonable fee and on delivery of a statutory declaration to the trustee, require the trustee to provide, within fifteen days after the delivery to the trustee of the statutory declaration, a list setting outthe names and addresses of the registered holders of the outstanding subordinated indebtedness,the principal amount of outstanding subordinated indebtedness owned by each such holder, andthe aggregate principal amount of subordinated indebtedness outstandingas shown on the records maintained by the trustee on the day the statutory declaration is delivered to that trustee.Duty of issuerOn the demand of a trustee, the issuer of subordinated indebtedness shall provide the trustee with the information required to enable the trustee to comply with subsection (1).Where applicant is entityWhere the person requiring the trustee to provide a list under subsection (1) is an entity, the statutory declaration required under that subsection shall be made by a director or an officer of the entity or a person acting in a similar capacity.Contents of statutory declarationThe statutory declaration required under subsection (1) must statethe name and address of the person requiring the trustee to provide the list and, if the person is an entity, the address for service thereof; andthat the list will not be used except as permitted by subsection (5).Use of listNo person shall use a list obtained under this section except in connection withan effort to influence the voting of the holders of subordinated indebtedness;an offer to acquire subordinated indebtedness; orany other matter relating to the subordinated indebtedness or the affairs of the issuer or guarantor thereof.
Compliance with trust indenturesAn issuer or a guarantor of subordinated indebtedness issued or to be issued under a trust indenture shall, before undertakingthe issue, certification and delivery of subordinated indebtedness under the trust indenture, orthe satisfaction and discharge of the trust indenture,provide the trustee with evidence of compliance with the conditions in the trust indenture in respect thereof.Compliance by issuer or guarantorOn the demand of a trustee, the issuer or guarantor of subordinated indebtedness issued or to be issued under a trust indenture shall provide the trustee with evidence of compliance with the conditions in the trust indenture by the issuer or guarantor in respect of any act to be done by the trustee at the request of the issuer or guarantor.Evidence of complianceThe following documents constitute evidence of compliance for the purposes of subsections (1) and (2):a statutory declaration or certificate made by a director or an officer of the issuer or guarantor stating that the conditions referred to in subsections (1) and (2) have been complied with;an opinion of legal counsel that the conditions of the trust indenture requiring review by legal counsel have been complied with, if the trust indenture requires compliance with conditions that are subject to review by legal counsel; andan opinion or report of the auditors of the issuer or guarantor, or such other accountant as the trustee selects, that the conditions of the trust indenture have been complied with, if the trust indenture requires compliance with conditions that are subject to review by auditors.Further evidence of complianceThe evidence of compliance referred to in subsection (3) shall include a statement by the person giving the evidencedeclaring that the person has read and understands the conditions of the trust indenture referred to in subsections (1) and (2);describing the nature and scope of the examination or investigation on which the person based the certificate, statement or opinion; anddeclaring that the person has made such examination or investigation as the person believes necessary to enable the statements to be made or the opinions contained or expressed therein to be given.
Trustee may require evidenceOn the request of a trustee, the issuer or guarantor of subordinated indebtedness issued under a trust indenture shall provide the trustee with evidence in such form as the trustee requires of compliance with any condition thereof relating to any action required or permitted to be taken by the issuer or guarantor under the trust indenture.Certificate of complianceAt least once in each twelve month period beginning on the date of the trust indenture and at any other time on the demand of a trustee, the issuer or guarantor of subordinated indebtedness issued under a trust indenture shall provide the trustee with a certificate stating that the issuer or guarantor has complied with all requirements contained in the trust indenture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an event of default, or, if there has been failure to so comply, giving particulars thereof.
Notice of defaultA trustee shall, within thirty days after the trustee becomes aware of the occurrence thereof, give to the holders of subordinated indebtedness issued under a trust indenture notice of every event of default arising under the trust indenture and continuing at the time the notice is given, unless the trustee believes on reasonable grounds that it is in the best interests of the holders of the subordinated indebtedness to withhold the notice and so informs the issuer and guarantor in writing.
Duty of careIn exercising a trustee’s powers and discharging a trustee’s duties, the trustee shallact honestly and in good faith with a view to the best interests of the holders of the subordinated indebtedness issued under the trust indenture; andexercise the care, diligence and skill of a reasonably prudent trustee.Reliance on statementsNotwithstanding subsection (1), a trustee is not liable if the trustee relies in good faith on statements contained in a statutory declaration, certificate, opinion or report that complies with this Act or the trust indenture.
No exculpationNo term of a trust indenture or of any agreement between a trustee and the holders of subordinated indebtedness issued thereunder or between the trustee and the issuer or guarantor operates to relieve a trustee from the duties imposed on the trustee by sections 297, 301 and 304 and subsection 305(1).
Financial Statements and AuditorsAnnual Financial Statement
Financial yearThe financial year of a bank ends, at the election of the bank in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in each year.First financial yearIf a bank, after the first day of July in any year, obtains an order approving the commencement and carrying on of business, the first financial year of the bank ends, at the election of the bank in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in the next calendar year.ExceptionDespite subsection (1), the financial year of a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force ends on the expiration of the thirty-first day of October in each year unless the bank elects in its by-laws to have its financial year end on the thirty-first day of December in each year.1991, c. 46, s. 307; 2001, c. 9, s. 91
Annual financial statementThe directors of a bank must place before the shareholders or members, as the case may be, at every annual meetinga comparative annual financial statement (in this Act referred to as an “annual statement”) relating separately tothe financial year immediately preceding the meeting, andthe financial year, if any, immediately preceding the financial year referred to in subparagraph (i);the report of the auditor or auditors of the bank; andany further information respecting the financial position of the bank and the results of its operations required by the by-laws of the bank to be placed before the shareholders or members at the annual meeting.Annual statement — contentsWith respect to each of the financial years to which it relates, the annual statement of a bank must contain the prescribed statements and any information that is in the opinion of the directors necessary to present fairly, in accord­ance with the accounting principles referred to in subsection (4), the financial position of the bank as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the bank for that financial year.Additional informationA bank shall include with its annual statementa list of the subsidiaries of the bank, other than subsidiaries that are not required to be listed by the regulations and subsidiaries acquired pursuant to section 472 or pursuant to a realization of security in accordance with section 473 and which the bank would not otherwise be permitted to hold, showing, with respect to each subsidiary,its name and the address of its head or principal office,the book value of the aggregate of any shares of the subsidiary beneficially owned by the bank and by other subsidiaries of the bank, andthe percentage of the voting rights attached to all the outstanding voting shares of the subsidiary that is carried by the aggregate of any voting shares of the subsidiary beneficially owned by the bank and by other subsidiaries of the bank;in the case of a federal credit union, a statement that sets outthe number of its members at the end of the financial year,the percentage of financial services that during the financial year were transacted with members on the basis of the gross revenue of the federal credit union for the financial year,the percentage of its members who are natural persons at the end of the financial year, andwhether the federal credit union was organized and carrying on business on a cooperative basis at the end of the financial year in accordance with section 12.1; andsuch other information as the Governor in Council may, by order, require in such form as may be prescribed.Accounting principlesThe financial statements referred to in subsection (1), paragraph (3)(b) and subsection 310(1) shall, except as otherwise specified by the Superintendent, be prepared in accordance with generally accepted accounting principles, the primary source of which is the Handbook of the Chartered Professional Accountants of Canada. A reference in any provision of this Act to the accounting principles referred to in this subsection shall be construed as a reference to those generally accepted accounting principles with any specifications so made.RegulationsThe Governor in Council may make regulations respecting subsidiaries that are not required to be listed for the purposes of paragraph (3)(a).1991, c. 46, s. 308; 1997, c. 15, s. 33; 2001, c. 9, s. 92; 2005, c. 54, s. 69; 2010, c. 12, s. 2018; 2017, c. 26, s. 62
Annual statement — approvalThe directors of a bank shall approve the annual statement and their approval shall be evidenced by the signature or a printed or otherwise mechanically reproduced facsimile of the signature ofthe chief executive officer or, in the event of that officer’s absence or inability to act, any other officer of the bank authorized by the directors to sign in the stead of the chief executive officer; andone director, if the signature required by paragraph (a) is that of a director, or two directors if the signature required by that paragraph is that of an officer who is not a director.Condition precedent to publicationA bank shall not publish copies of an annual statement unless it is approved and signed in accordance with subsection (1).1991, c. 46, s. 309; 2005, c. 54, s. 70
Statements — subsidiariesA bank shall keep at its head office a copy of the current financial statements of each subsidiary of the bank.ExaminationSubject to this section, the shareholders and members of a bank and their personal representatives may, on request, examine the statements referred to in subsection (1) during the usual business hours of the bank and may take extracts from those statements free of charge.Barring examinationA bank may refuse to permit an examination under subsection (2) by any person.Application for orderWithin fifteen days after a refusal under subsection (3), the bank shall apply to a court for an order barring the right of the person concerned to make an examination under subsection (2) and the court shall either order the bank to permit the examination or, if it is satisfied that the examination would be detrimental to the bank or to any other body corporate the financial statements of which would be subject to examination, bar the right and make any further order it thinks fit.Notice to SuperintendentA bank shall give the Superintendent and the person seeking to examine the statements referred to in subsection (1) notice of an application to a court under subsection (4), and the Superintendent and the person may appear and be heard in person or by counsel at the hearing of the application.1991, c. 46, s. 310; 2010, c. 12, s. 2019
Distribution of annual statementA bank must, not later than 21 days before the date of each annual meeting or before the signing of a resolution under paragraph 152(1)(b) in lieu of the annual meeting, send to each shareholder or, in the case of a federal credit union, to each member and shareholder, if any, a copy of the documents referred to in subsections 308(1) and (3), unless that time period is waived by the shareholder or member, as the case may be.ExceptionA bank is not required to comply with subsection (1) with respect to a person who has informed the bank, in writing, that the person does not wish to receive the annual statement.Effect of defaultWhere a bank is required to comply with subsection (1) and the bank does not comply with that subsection, the annual meeting at which the documents referred to in that subsection are to be considered shall be adjourned until that subsection has been complied with.1991, c. 46, s. 311; 1997, c. 15, s. 34; 2005, c. 54, s. 71; 2010, c. 12, ss. 2020, 2135
Copy to SuperintendentSubject to subsection (2), a bank must send to the Superintendent a copy of the documents referred to in subsections 308(1) and (3) not later than 21 days before the date of each annual meeting of shareholders or members of the bank.Later filingIf a bank’s shareholders or members sign a resolution under paragraph 152(1)(b) in lieu of an annual meeting, the bank must send a copy of the documents referred to in subsections 308(1) and (3) to the Superintendent not later than 30 days after the signing of the resolution.1991, c. 46, s. 312; 1997, c. 15, s. 35; 2001, c. 9, s. 93; 2010, c. 12, s. 2021
Auditors
DefinitionsFor the purposes of this section and sections 314 to 333,firm of accountants means a partnership, the members of which are accountants engaged in the practice of accounting, or a body corporate that is incorporated by or under an Act of the legislature of a province and engaged in the practice of accounting; (cabinet de comptables)member, in relation to a firm of accountants, meansan accountant who is a partner in a partnership, the members of which are accountants engaged in the practice of accounting, oran accountant who is an employee of a firm of accountants. (membre)
Appointment of auditorsThe shareholders of a bank, or the members of a federal credit union, must, by ordinary resolution at the first meeting of shareholders or members, as the case may be, and at each succeeding annual meeting, appoint a firm of accountants to be the auditor of the bank until the close of the next annual meeting.AuditorsThe shareholders of a bank, or the members of a federal credit union, may, by ordinary resolution at the first meeting of shareholders or members, as the case may be, and at each succeeding annual meeting, appoint two firms of accountants to be the auditors of the bank until the close of the next annual meeting.Remuneration of auditorsThe remuneration of the auditor or auditors may be fixed by ordinary resolution of the shareholders or members of the federal credit union but, if not so fixed, must be fixed by the directors.1991, c. 46, s. 314; 2010, c. 12, s. 2022
Qualification of auditorsA firm of accountants is qualified to be an auditor of a bank iftwo or more members thereof are accountants whoare members in good standing of an institute or association of accountants incorporated by or under an Act of the legislature of a province,each have at least five years experience at a senior level in performing audits of a financial institution,are ordinarily resident in Canada, andare independent of the bank; andthe member of the firm jointly designated by the firm and the bank to conduct the audit of the bank on behalf of the firm is qualified in accordance with paragraph (a).IndependenceFor the purposes of subsection (1),independence is a question of fact; anda member of a firm of accountants is deemed not to be independent of a bank if that member, a business partner of that member or the firm of accountantsis a business partner, director, officer or employee of the bank or of any affiliate of the bank or is a business partner of any director, officer or employee of the bank or of any affiliate of the bank,beneficially owns or controls, directly or indirectly, a material interest in the shares or membership shares of the bank or of any affiliate of the bank, orhas been a liquidator, trustee in bankruptcy, receiver or receiver and manager of any affiliate of the bank within the two years immediately preceding the firm’s proposed appointment as auditor of the bank, other than an affiliate that is a subsidiary of the bank acquired pursuant to section 472 or through a realization of security pursuant to section 473.Business partnersFor the purposes of subsection (2), a business partner of a member of a firm of accountants includesanother member of the firm; anda shareholder of the firm or of a business partner of the member.Notice of designationWithin fifteen days after appointing a firm of accountants as auditor of a bank, the bank and the firm of accountants shall jointly designate a member of the firm who has the qualifications described in subsection (1) to conduct the audit of the bank on behalf of the firm and the bank shall forthwith notify the Superintendent in writing of the designation.New designationWhere for any reason a member of a firm of accountants designated pursuant to subsection (3) ceases to conduct the audit of the bank, the bank and the firm of accountants may jointly designate another member of the same firm of accountants who has the qualifications described in subsection (1) to conduct the audit of the bank and the bank shall forthwith notify the Superintendent in writing of the designation.Deemed vacancyIn any case where subsection (4) applies and a designation is not made pursuant to that subsection within thirty days after the designated member ceases to conduct the audit of the bank, there shall be deemed to be a vacancy in the office of auditor of the bank.1991, c. 46, s. 315; 2001, c. 9, s. 94; 2005, c. 54, s. 72; 2010, c. 12, s. 2023
Duty to resignAn auditor that ceases to be qualified under section 315 shall resign forthwith after any member of the firm becomes aware that the firm has ceased to be so qualified.Disqualification orderAny interested person may apply to a court for an order declaring that an auditor of a bank has ceased to be qualified under section 315 and declaring the office of auditor to be vacant.
Revocation of appointmentThe shareholders of a bank or the members of a federal credit union may, by ordinary resolution at a special meeting, revoke the appointment of an auditor.IdemThe Superintendent may at any time revoke the appointment of an auditor made under subsection (3) or 314(1) or section 319 by notice in writing signed by the Superintendent and sent by registered mail to the auditor and to the bank addressed to the usual place of business of the auditor and the bank.Filling vacancyA vacancy created by the revocation of the appointment of an auditor under subsection (1) may be filled at the meeting at which the appointment was revoked and, if not so filled, shall be filled by the directors under section 319.1991, c. 46, s. 317; 2010, c. 12, s. 2024
Ceasing to hold officeAn auditor of a bank ceases to hold office whenthe auditor resigns; orthe appointment of the auditor is revoked by the Superintendent or by the shareholders or, if the bank is a federal credit union, by the members.Effective date of resignationThe resignation of an auditor becomes effective at the time a written resignation is sent to the bank or at the time specified in the resignation, whichever is later.1991, c. 46, s. 318; 2010, c. 12, s. 2025
Filling vacancySubject to subsection 317(3), where a vacancy occurs in the office of auditor of a bank, the directors shall forthwith fill the vacancy, and the auditor so appointed holds office for the unexpired term of office of the predecessor of that auditor.Where Superintendent may fill vacancyWhere the directors fail to fill a vacancy in accordance with subsection (1), the Superintendent may fill the vacancy and the auditor so appointed holds office for the unexpired term of office of the predecessor of that auditor.Designation of member of firmWhere the Superintendent has, pursuant to subsection (2), appointed a firm of accountants to fill a vacancy, the Superintendent shall designate the member of the firm who is to conduct the audit of the bank on behalf of the firm.
Right to attend meetingsThe auditor or auditors of a bank are entitled to receive notice of every meeting of shareholders and, if the bank is a federal credit union, every meeting of its members and, at the expense of the bank, to attend and be heard at the meeting on matters relating to the duties of the auditor or auditors.Duty to attend meetingIf a director, shareholder or member of a bank, whether or not that person is entitled to vote at the meeting, gives written notice, not less than 10 days before the meeting, to an auditor or former auditor of the bank that the director, member or shareholder wishes the auditor’s attendance at the meeting, the auditor or former auditor must attend the meeting, at the expense of the bank, and answer questions relating to the auditor’s or former auditor’s duties as auditor.Notice to bankThe person who gives notice under subsection (2) must send concurrently a copy of the notice to the bank and the bank must, without delay, send a copy of it to the Superintendent.Superintendent may attendThe Superintendent may attend and be heard at any meeting referred to in subsection (2).1991, c. 46, s. 320; 2010, c. 12, s. 2026
Statement of auditorAn auditor of a bank thatresigns,receives a notice or otherwise learns of a meeting of shareholders, or, if the bank is a federal credit union, of a meeting of members, called for the purpose of revoking the appointment of the auditor, orreceives a notice or otherwise learns of a meeting of directors or shareholders, or, if the bank is a federal credit union, of a meeting of members, at which another firm of accountants is to be appointed in its stead, whether because of the auditor’s resignation or revocation of appointment or because the auditor’s term of office has expired or is about to expire,shall submit to the bank and the Superintendent a written statement giving the reasons for the resignation or the reasons why the auditor opposes any proposed action.Other statementsIn the case of a proposed replacement of an auditor whether because of removal or the expiry of their term, the bank shall make a statement of the reasons for the proposed replacement and the proposed replacement auditor may make a statement in which they comment on those reasons.Statements to be sentThe bank must send a copy of the statements referred to in subsections (1) and (1.1) without delay to every shareholder, or, if the bank is a federal credit union, to every member, entitled to vote at the annual meeting of shareholders or of members and to the Superintendent.1991, c. 46, s. 321; 2005, c. 54, s. 73; 2010, c. 12, s. 2027
Duty of replacement auditorWhere an auditor of a bank has resigned or the appointment of an auditor has been revoked, no firm of accountants shall accept an appointment as auditor of the bank or consent to be an auditor of the bank until the firm of accountants has requested and received from the other auditor a written statement of the circumstances and reasons why the other auditor resigned or why, in the other auditor’s opinion, the other auditor’s appointment was revoked.ExceptionNotwithstanding subsection (1), a firm of accountants may accept an appointment or consent to be appointed as auditor of a bank if, within fifteen days after a request under that subsection is made, no reply from the other auditor is received.Effect of non-complianceUnless subsection (2) applies, an appointment as auditor of a bank is void if subsection (1) has not been complied with.
Auditors’ examinationThe auditor or auditors of a bank must make any examination that the auditor or auditors consider necessary to enable the auditor or auditors to report on the annual statement and on other financial statements required by this Act to be placed before the shareholders or, if the bank is a federal credit union, the members, except any annual statements or parts of those statements that relate to the period referred to in subparagraph 308(1)(a)(ii).Auditing standardsThe examination of the auditor or auditors referred to in subsection (1) shall, except as otherwise specified by the Superintendent, be conducted in accordance with generally accepted auditing standards, the primary source of which is the Handbook of the Chartered Professional Accountants of Canada.1991, c. 46, s. 323; 2010, c. 12, s. 2028; 2017, c. 26, s. 62
Right to informationOn the request of the auditor or auditors of a bank, the present or former directors, officers, employees or agents of the bank shall, to the extent that such persons are reasonably able to do so,permit access to such records, assets and security held by the bank or any entity in which the bank has a substantial investment, andprovide such information and explanationsas are, in the opinion of the auditor or auditors, necessary to enable the auditor or auditors to perform the duties of the auditor or auditors of the bank.Directors to provide informationOn the request of the auditor or auditors of a bank, the directors of the bank shall, to the extent that they are reasonably able to do so,obtain from the present or former directors, officers, employees and agents of any entity in which the bank has a substantial investment the information and explanations that such persons are reasonably able to provide and that are, in the opinion of the auditor or auditors, necessary to enable them to perform the duties of the auditor or auditors of the bank; andprovide the auditor or auditors with the information and explanations so obtained.No civil liabilityA person who in good faith makes an oral or written communication under subsection (1) or (2) shall not be liable in any civil action arising from having made the communication.
Auditors’ report and extended examinationThe Superintendent may, in writing, require that the auditor or auditors of a bank report to the Superintendent on the extent of the procedures of the auditor or auditors in the examination of the annual statement and may, in writing, require that the auditor or auditors enlarge or extend the scope of that examination or direct that any other particular procedure be performed in any particular case, and the auditor or auditors shall comply with any such requirement of the Superintendent and report to the Superintendent thereon.Special examinationThe Superintendent may, in writing, require that the auditor or auditors of a bank make a particular examination relating to the adequacy of the procedures adopted by the bank for the safety of its creditors and shareholders and, if the bank is a federal credit union, for the safety of its members, or any other examination as, in the Superintendent’s opinion, the public interest may require, and report to the Superintendent.IdemThe Superintendent may direct that a special audit of a bank be made if, in the opinion of the Superintendent, it is so required and may appoint for that purpose a firm of accountants qualified pursuant to subsection 315(1) to be an auditor of the bank.Expenses payable by bankThe expenses entailed by any examination or audit referred to in any of subsections (1) to (3) are payable by the bank on being approved in writing by the Superintendent.1991, c. 46, s. 325; 1999, c. 31, s. 13(F); 2010, c. 12, s. 2029
Auditors’ reportThe auditor or auditors must, not less than 21 days before the date of the annual meeting of the shareholders of the bank or, if the bank is a federal credit union, of the annual meeting of the members, make a report in writing to the shareholders or members, as the case may be, on the annual statement referred to in subsection 308(1).Audit for shareholdersIn each report required under subsection (1), the auditor or auditors shall state whether, in the opinion of the auditor or auditors, the annual statement presents fairly, in accordance with the accounting principles referred to in subsection 308(4), the financial position of the bank as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the bank for that financial year.Auditors’ remarksIn each report referred to in subsection (2), the auditor or auditors shall include such remarks as the auditor or auditors consider necessary whenthe examination has not been made in accordance with the auditing standards referred to in subsection 323(2);the annual statement has not been prepared on a basis consistent with that of the preceding financial year; orthe annual statement does not present fairly, in accordance with the accounting principles referred to in subsection 308(4), the financial position of the bank as at the end of the financial year to which it relates or the results of the operations or changes in the financial position of the bank for that financial year.1991, c. 46, s. 326; 2010, c. 12, s. 2030
Report on directors’ statementThe auditor or auditors of a bank must, if required by the shareholders or, if the bank is a federal credit union, by the members or shareholders, if any, audit and report to the shareholders or members, as the case may be, on any financial statement submitted by the directors to the shareholders or members, and the report must state whether, in their opinion, the financial statement presents fairly the information required by the shareholders or members.Making of reportA report of the auditor or auditors made under subsection (1) must be attached to the financial statement to which it relates and a copy of the statement and report must be sent by the directors to the Superintendent, to every shareholder and, if the bank is a federal credit union, to every member and shareholder, if any.1991, c. 46, s. 327; 2010, c. 12, s. 2031
Report to officersIt is the duty of the auditor or auditors of a bank to report in writing to the chief executive officer and chief financial officer of the bank any transactions or conditions that have come to the attention of the auditor or auditors affecting the well-being of the bank that in the opinion of the auditor or auditors are not satisfactory and require rectification and, without restricting the generality of the foregoing, the auditor or auditors shall, as occasion requires, make a report to those officers in respect oftransactions of the bank that have come to the attention of the auditor or auditors and that in the opinion of the auditor or auditors have not been within the powers of the bank, andloans owing to the bank by any person the aggregate amount of which exceeds one half of one per cent of the regulatory capital of the bank and in respect of which, in the opinion of the auditor or auditors, loss to the bank is likely to occur,but when a report required under paragraph (b) has been made in respect of loans to any person, it is not necessary to report again in respect of loans to that person unless, in the opinion of the auditor or auditors, the amount of the loss likely to occur has increased.Transmission of reportWhere the auditor or auditors of a bank make a report under subsection (1),the auditor or auditors shall transmit the report, in writing, to the chief executive officer and chief financial officer of the bank;the report shall be presented to the first meeting of the directors following its receipt;the report shall be incorporated in the minutes of that meeting; andthe auditor or auditors shall, at the time of transmitting the report to the chief executive officer and chief financial officer, provide the audit committee of the bank and the Superintendent with a copy.1991, c. 46, s. 328; 2005, c. 54, s. 74
Auditors of subsidiariesA bank shall take all necessary steps to ensure that each of its subsidiaries has as its auditor the auditor or one of the auditors of the bank.Subsidiary outside CanadaSubsection (1) applies in the case of a subsidiary that carries on its operations in a country other than Canada unless the laws of that country do not permit the appointment of an auditor of the bank as the auditor of that subsidiary.ExceptionSubsection (1) does not apply in respect of any particular subsidiary where the bank, after having consulted its auditor or auditors, is of the opinion that the total assets of the subsidiary are not a material part of the total assets of the bank.
Auditors’ attendanceThe auditors of a bank are entitled to receive notice of every meeting of the committee designated under paragraph 157(2)(e), if that committee is to perform the duties set out in section 195.1 in that meeting, of the audit committee and of the conduct review committee and, at the expense of the bank, to attend and be heard at that meeting.AttendanceIf so requested by a member of the audit committee, the auditor or auditors shall attend every meeting of the audit committee held during the member’s term of office.1991, c. 46, s. 330; 1993, c. 34, s. 7(F)2018, c. 27, s. 318
Calling meetingThe auditor or auditors of a bank or a member of the audit committee may call a meeting of the audit committee.Right to interviewThe chief internal auditor of a bank or any officer or employee of the bank acting in a similar capacity shall, at the request of the auditor or auditors of the bank and on receipt of reasonable notice, meet with the auditor or auditors.
Notice of errorsA director or an officer of a bank shall forthwith notify the audit committee and the auditor or auditors of the bank of any error or misstatement of which the director or officer becomes aware in an annual statement or other financial statement on which the auditor or auditors or any former auditor or auditors have reported.Error noted by auditorsIf the auditor or auditors or former auditor or auditors of a bank are notified or become aware of an error or misstatement in an annual statement or other financial statement on which the auditor or auditors reported and in the opinion of the auditor or auditors the error or misstatement is material, the auditor or auditors or former auditor or auditors shall inform each director of the bank accordingly.Duty of directorsWhen under subsection (2) the auditor or auditors or former auditor or auditors of a bank inform the directors of an error or misstatement in an annual statement or other financial statement, the directors shallprepare and issue a revised annual statement or financial statement; orotherwise inform the shareholders, and, if the bank is a federal credit union, its members, and the Superintendent of the error or misstatement.1991, c. 46, s. 332; 2010, c. 12, s. 2032
Qualified privilege for statementsAny oral or written statement or report made under this Act by the auditor or auditors or former auditor or auditors of a bank has qualified privilege.
Remedial Actions
Derivative actionSubject to subsection (2), a complainant or the Superintendent may apply to a court for leave to bring an action under this Act in the name and on behalf of a bank or any of its subsidiaries, or to intervene in an action under this Act to which the bank or a subsidiary of the bank is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of the bank or the subsidiary.Conditions precedentNo action may be brought and no intervention in an action may be made under subsection (1) by a complainant unless the court is satisfied thatthe complainant has, not less than 14 days before bringing the application or as otherwise ordered by the court, given notice to the directors of the bank or the bank’s subsidiary of the complainant’s intention to apply to the court under subsection (1) if the directors of the bank or the bank’s subsidiary do not bring, diligently prosecute or defend or discontinue the action;the complainant is acting in good faith; andit appears to be in the interests of the bank or the subsidiary that the action be brought, prosecuted, defended or discontinued.Notice to SuperintendentA complainant under subsection (1) shall give the Superintendent notice of the application and the Superintendent may appear and be heard in person or by counsel at the hearing of the application.1991, c. 46, s. 334; 2005, c. 54, s. 75
Powers of courtIn connection with an action brought or intervened in under subsection 334(1), the court may at any time make any order it thinks fit including, without limiting the generality of the foregoing,an order authorizing the Superintendent, the complainant or any other person to control the conduct of the action;an order giving directions for the conduct of the action;an order directing that any amount adjudged payable by a defendant in the action be paid, in whole or in part, directly to the following instead of to the bank or the subsidiary:if the bank is not a federal credit union, former and present security holders of the bank or subsidiary, orif the bank is a federal credit union, former and present members or security holders of the federal credit union or former and present security holders of the subsidiary; andan order requiring the bank or the subsidiary to pay reasonable legal fees incurred by the Superintendent or the complainant in connection with the action.JurisdictionNotwithstanding subsection (1), the court may not make any order in relation to any matter that would, under this Act, require the approval of the Minister or the Superintendent.1991, c. 46, s. 335; 2010, c. 12, s. 2033
Status of approvalAn application made or an action brought or intervened in under subsection 334(1) or section 338 need not be stayed or dismissed by reason only that it is shown that an alleged breach of a right or duty owed to the bank or its subsidiary has been or might be approved by the shareholders or members of the bank, or by the shareholders of the subsidiary, but evidence of approval by the shareholders or the members, as the case may be, may be taken into account by the court in making an order under section 335.Court approval to discontinueAn application made or an action brought or intervened in under subsection 334(1) or section 338 shall not be stayed, discontinued, settled or dismissed for want of prosecution without the approval of the court given on such terms as the court thinks fit and, if the court determines that the interests of any complainant might be substantially affected by any stay, discontinuance, settlement or dismissal, the court may order any party to the application or action to give notice to the complainant.1991, c. 46, s. 336; 2010, c. 12, s. 2034
No security for costsA complainant is not required to give security for costs in any application made or any action brought or intervened in under subsection 334(1) or section 338.Interim costsIn an application made or an action brought or intervened in under subsection 334(1) or section 338, the court may at any time order the bank or its subsidiary to pay to the complainant interim costs, including legal fees and disbursements, but the complainant may be held accountable by the court for those interim costs on final disposition of the application or action.1991, c. 46, s. 337; 2005, c. 54, s. 76(F)
Application to rectify recordsIf the name of a person is alleged to be or to have been wrongly entered or retained in, or wrongly deleted or omitted from, the securities register, the members register or any other record of a bank, the bank, a security holder of the bank, a member of the bank or any aggrieved person may apply to a court for an order that the register or record be rectified.Notice to SuperintendentAn applicant under this section shall give the Superintendent notice of the application and the Superintendent may appear and be heard in person or by counsel at the hearing of the application.Powers of courtIn connection with an application under this section, the court may make any order it thinks fit including, without limiting the generality of the foregoing,an order requiring the register or other record of the bank to be rectified;an order restraining a bank from calling or holding a meeting of shareholders or members, or paying a dividend or patronage allocation, before the rectification;an order determining the right of a party to the proceedings to have the party’s name entered or retained in, or deleted or omitted from, the register or records of the bank, whether the issue arises between two or more security holders or alleged security holders, or two or more members or alleged members, or between the bank and any security holder or alleged security holder or member or alleged member; andan order compensating a party who has incurred a loss.1991, c. 46, s. 338; 2010, c. 12, s. 2035
Liquidation and Dissolution
Definition of courtFor the purposes of subsections 346(1) and 347(1) and (2), sections 348 to 352, subsection 353(1), sections 355 and 357 to 359, subsections 363(3) and (4) and section 368, court means a court having jurisdiction in the place where the bank has its head office.
Application of subsection (2) and sections 341 to 368Subsection (2) and sections 341 to 368 do not apply to a bank that is insolvent within the meaning of the Winding-up and Restructuring Act.Staying proceedings on insolvencyAny proceedings taken under this Part to dissolve or to liquidate and dissolve a bank shall be stayed if the bank is at any time found to be insolvent within the meaning of the Winding-up and Restructuring Act.1991, c. 46, s. 340; 1996, c. 6, s. 167
Returns to SuperintendentA liquidator appointed under this Part to wind up the business of a bank shall provide the Superintendent with such information relating to the business and affairs of the bank in such form as the Superintendent requires.
Simple Liquidation
No property and no liabilitiesA bank that has no property and no liabilities may apply to the Minister for letters patent dissolving the bank if it is authorized byin the case of a bank that is not a federal credit union, a special resolution of the shareholders or, if there are no shareholders, by a resolution of all the directors; orin the case of a federal credit union, a special resolution of the members and a separate special resolution of the shareholders, if any.Dissolution by letters patentWhere the Minister has received an application under subsection (1) and is satisfied that all the circumstances so warrant, the Minister may issue letters patent dissolving the bank.Effect of letters patentA bank in respect of which letters patent are issued under subsection (2) ceases to exist on the day stated in the letters patent.1991, c. 46, s. 342; 2010, c. 12, s. 2036
Proposing liquidationThe voluntary liquidation and dissolution of a bank, other than a bank referred to in subsection 342(1),may be proposed by its directors;may, if the bank is not a federal credit union, be initiated by way of a proposal made by a shareholder who is entitled to vote at an annual meeting of shareholders in accordance with sections 143 and 144; ormay, if the bank is a federal credit union, be initiated by way of a proposal made by a member in accordance with section 144.1.Terms must be set outA notice of any meeting at which the voluntary liquidation and dissolution of a bank is to be proposed must set out the terms of the proposal.1991, c. 46, s. 343; 2010, c. 12, s. 2037
ResolutionsIf the voluntary liquidation and dissolution of a bank is proposed, the bank may apply to the Minister for letters patent dissolving the bankif, in the case of a bank that is not a federal credit union, it is authorized by a special resolution of the shareholders or, if the bank has issued more than one class of shares, by special resolution of each class of shareholders whether or not those shareholders are otherwise entitled to vote; orif, in the case of a federal credit union, it is authorized by a special resolution of the members and, if the federal credit union has issued one or more classes of shares, by separate special resolution of each class of shareholders whether or not those shareholders are otherwise entitled to vote.1991, c. 46, s. 344; 2010, c. 12, s. 2038
Approval of Minister requiredNo action directed toward the voluntary liquidation and dissolution of a bank shall be taken by a bank, other than as provided in sections 343 and 344, until an application made by the bank pursuant to section 344 has been approved by the Minister.Conditional approvalWhere the Minister is satisfied on the basis of an application made pursuant to section 344 that the circumstances warrant the voluntary liquidation and dissolution of a bank, the Minister may, by order, approve the application.Effect of approvalWhere the Minister has approved an application made pursuant to section 344 with respect to a bank, the bank shall not carry on business except to the extent necessary to complete its voluntary liquidation.Liquidation processWhere the Minister has approved an application made pursuant to section 344 with respect to a bank, the bank shallcause notice of the approval to be sent to each known claimant against and creditor of the bank;publish notice of the approval once a week for four consecutive weeks in the Canada Gazette and once a week for two consecutive weeks in one or more newspapers in general circulation in each province in which the bank transacted any business within the preceding twelve months;proceed to collect its property, dispose of property that is not to be distributed in kind to its shareholders or members, as the case may be, discharge all its obligations and do all other acts required to liquidate its business; andafter giving the notice required under paragraphs (a) and (b) and adequately providing for the payment or discharge of all its obligations, distribute its remaining property, either in money or in kind, among its shareholders, according to their respective rights, or its members, as the case may be.1991, c. 46, s. 345; 2010, c. 12, s. 2039
Dissolution instrumentUnless a court has made an order in accordance with subsection 347(1), the Minister may, if satisfied that the bank has complied with subsection 345(4) and that all the circumstances so warrant, issue letters patent dissolving the bank.Bank dissolvedA bank in respect of which letters patent are issued under subsection (1) is dissolved and ceases to exist on the day stated in the letters patent.
Court-supervised Liquidation
Application for court supervisionThe Superintendent or any interested person may, at any time during the liquidation of a bank, apply to a court for an order for the continuance of the voluntary liquidation under the supervision of the court in accordance with this section and sections 348 to 360 and on such application the court may so order and make any further order it thinks fit.IdemAn application under subsection (1) to a court to supervise a voluntary liquidation shall state the reasons, verified by an affidavit of the applicant, why the court should supervise the liquidation.Notice to SuperintendentWhere a person, other than the Superintendent, makes an application under subsection (1), the person shall give the Superintendent notice of the application and the Superintendent may appear and be heard in person or by counsel at the hearing of the application.
Court supervision thereafterWhen a court makes an order under subsection 347(1), the liquidation of the bank shall continue under the supervision of the court.Commencement of liquidationThe supervision of the liquidation of a bank by the court pursuant to an order made under subsection 347(1) commences on the day the order is made.
Powers of courtIn connection with the liquidation and dissolution of a bank, the court may, where it is satisfied that the bank is able to pay or adequately provide for the discharge of all its obligations, make any order it thinks fit including, without limiting the generality of the foregoing,an order to liquidate;an order appointing a liquidator, with or without security, fixing a liquidator’s remuneration and replacing a liquidator;an order appointing inspectors or referees, specifying their powers, fixing their remuneration and replacing inspectors or referees;an order determining the notice to be given to any interested person, or dispensing with notice to any person;an order determining the validity of any claims made against the bank;an order, at any stage of the proceedings, restraining the directors and officers of the bank fromexercising any of their powers, orcollecting or receiving any debt or other property of the bank, and from paying out or transferring any property of the bank, except as permitted by the court;an order determining and enforcing the duty or liability of any present or former director, officer, shareholder or memberto the bank, orfor an obligation of the bank;an order approving the payment, satisfaction or compromise of claims against the bank and the retention of assets for that purpose, and determining the adequacy of provisions for the payment, discharge or transfer of any obligation of the bank, whether liquidated, unliquidated, future or contingent;with the concurrence of the Superintendent, an order providing for the disposal or destruction of the documents, records or registers of the bank;on the application of a creditor, an inspector or the liquidator, an order giving directions on any matter arising in the liquidation;after notice has been given to all interested parties, an order relieving the liquidator from any omission or default on such terms as the court thinks fit and confirming any act of the liquidator;subject to sections 356 to 358, an order approving any proposed, interim or final distribution to shareholders or members, as the case may be, or incorporators, in money or in property;an order disposing of any property belonging to creditors, shareholders, members and incorporators who cannot be found;on the application of any director, officer, shareholder, member, incorporator, creditor or the liquidator,an order staying the liquidation proceedings on such terms and conditions as the court thinks fit,an order continuing or discontinuing the liquidation proceedings, oran order to the liquidator to restore to the bank all of its remaining property; andafter the liquidator has rendered the liquidator’s final account to the court, an order directing the bank to apply to the Minister for letters patent dissolving the bank.1991, c. 46, s. 349; 2005, c. 54, s. 77(F); 2010, c. 12, s. 2040
Cessation of business and powersWhere a court makes an order for the liquidation of a bank,the bank continues in existence but shall cease to carry on business, except the business that is, in the opinion of the liquidator, required for an orderly liquidation; andthe powers of the directors, shareholders and members are vested in the liquidator and cease to be vested in the directors, shareholders and members, except as specifically authorized by the court.Delegation by liquidatorA liquidator may delegate any of the powers vested by paragraph (1)(b) to the directors, shareholders or members, if any.1991, c. 46, s. 350; 2010, c. 12, s. 2041
Appointment of liquidatorWhen making an order for the liquidation of a bank, or at any later time, the court may appoint any person, including a director, an officer, a shareholder or a member of the bank or any other bank, as liquidator of the bank.1991, c. 46, s. 351; 2010, c. 12, s. 2042
Vacancy in liquidator’s officeWhere an order for the liquidation of a bank has been made and the office of liquidator is or becomes vacant, the property of the bank is under the control of the court until the office of liquidator is filled.
Duties of liquidatorA liquidator shallforthwith after appointment give notice thereof to the Superintendent and to each claimant and creditor of the bank known to the liquidator;forthwith after appointment publish notice thereof once a week for four consecutive weeks in the Canada Gazette and once a week for two consecutive weeks in one or more newspapers in general circulation in each province in which the bank has transacted any business within the preceding twelve months, requiringany person indebted to the bank to render an account and pay to the liquidator at the time and place specified in the notice any amount owing,any person possessing property of the bank to deliver it to the liquidator at the time and place specified in the notice, andany person having a claim against the bank, whether liquidated, unliquidated, future or contingent, to present particulars thereof in writing to the liquidator not later than sixty days after the first publication of the notice;take into custody and control the property of the bank;open and maintain a trust account for the moneys received by the liquidator in the course of the liquidation of the bank;keep accounts of the moneys received and paid out by the liquidator in the course of the liquidation of the bank;maintain separate lists of members and of each class of creditors, shareholders and other persons having claims against the bank;if at any time the liquidator determines that the bank is unable to pay or adequately provide for the discharge of its obligations, apply to the court for directions;deliver to the court and to the Superintendent, at least once in every twelve month period after the liquidator’s appointment or more often as the court requires, the annual statement of the bank prepared in accordance with subsection 308(1) or prepared in such manner as the liquidator thinks proper or as the court requires; andafter the final accounts are approved by the court, distribute any remaining property of the bank among the shareholders, incorporators or members, according to their respective rights.Powers of liquidatorA liquidator mayretain lawyers, notaries, accountants, appraisers and other professional advisers;bring, defend or take part in any civil, criminal or administrative action or proceeding in the name and on behalf of the bank;carry on the business of the bank as required for an orderly liquidation;sell by public auction or private sale any property of the bank;do all acts and execute documents in the name and on behalf of the bank;borrow money on the security of the property of the bank;settle or compromise any claims by or against the bank; anddo all other things necessary for the liquidation of the bank and distribution of its property.1991, c. 46, s. 353; 2010, c. 12, s. 2043
Due diligenceA liquidator is not liable if they exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith onfinancial statements of the bank represented to the liquidator by an officer of the bank or in a written report of the auditor or auditors of the bank fairly to reflect the financial condition of the bank; ora report of a person whose profession lends credibility to a statement made by them.1991, c. 46, s. 354; 2005, c. 54, s. 78
Examination of othersWhere a liquidator has reason to believe that any property of the bank is in the possession or under the control of a person or that a person has concealed, withheld or misappropriated any such property, the liquidator may apply to the court for an order requiring that person to appear before the court at the time and place designated in the order and to be examined.Restoration and compensationWhere an examination conducted pursuant to subsection (1) discloses that a person has concealed, withheld or misappropriated any property of the bank, the court may order that person to restore the property or pay compensation to the liquidator.
Costs of liquidationA liquidator shall pay the costs of liquidation out of the property of the bank and shall pay or make adequate provision for all claims against the bank.
Final accountsWithin one year after the appointment of a liquidator and after paying or making adequate provision for all claims against the bank, the liquidator shall apply to the courtfor approval of the final accounts of the liquidator and for an order permitting the distribution, in money or in kind, of the remaining property of the bank to its shareholders, or members, if any, or to the incorporators, according to their respective rights; orfor an extension of time, setting out the reasons therefor.Application by shareholder or memberIf a liquidator fails to make the application required by subsection (1), a shareholder of the bank or, if there are no shareholders of the bank, an incorporator — or, if the bank is a federal credit union, a member or shareholder of the federal credit union or, if there are no members or shareholders, an incorporator — may apply to the court for an order for the liquidator to show cause why a final accounting and distribution should not be made.Notification of final accountsA liquidator must give notice of their intention to make an application under subsection (1) to the Superintendent, to each inspector appointed under section 349, to each shareholder of the bank or, if there are no shareholders, to each incorporator and to any person who provided a security or fidelity bond for the liquidation. If the bank is a federal credit union, the liquidator must also give the notice to each member of the federal credit union.PublicationThe liquidator shall publish the notice required under subsection (3) in the Canada Gazette and once a week for two consecutive weeks in one or more newspapers in general circulation in each province in which the bank has transacted any business within the preceding twelve months or as otherwise directed by the court.1991, c. 46, s. 357; 2010, c. 12, s. 2044
Final orderIf the court approves the final accounts rendered by a liquidator, the court shall make an orderdirecting the bank to apply to the Minister for letters patent dissolving the bank;directing the custody or disposal of the documents, records and registers of the bank; anddischarging the liquidator except in respect of the duty of a liquidator under subsection (2).Delivery of orderThe liquidator shall forthwith send a certified copy of the order referred to in subsection (1) to the Superintendent.
Right to distribution of moneyIf in the course of the liquidation of a bank that is not a federal credit union the shareholders resolve, or the liquidator proposes, to exchange all or substantially all of the remaining property of the bank for securities of another entity that are to be distributed to the shareholders or to the incorporators — or to distribute all or part of the remaining property of the bank to the shareholders or to the incorporators in kind — a shareholder or incorporator may apply to the court for an order requiring the distribution of the remaining property of the bank to be in money.Right to distribution of money — federal credit unionIf in the course of the liquidation of a federal credit union the members resolve, or the liquidator proposes, to exchange all or substantially all of the remaining property of the federal credit union for securities of another entity that are to be distributed to the members or to members and shareholders — or to distribute all or part of the remaining property of the federal credit union to the members or to members and shareholders in kind — a member or shareholder may apply to the court for an order requiring the distribution of the remaining property of the federal credit union to be in money.Powers of courtOn an application under subsection (1) or (2) , the court may orderall of the remaining property of the bank to be converted into and distributed in money; orthe claim of any person applying under this section to be satisfied by a distribution in money.Order by courtIf an order is made by a court under paragraph (3)(b), the courtmust fix a fair value on the share of the property of the bank attributable to the person;may in its discretion appoint one or more appraisers to assist the court in fixing a fair value in accordance with paragraph (a); andmust render a final order against the bank in favour of the person for the amount of the share of the bank’s property attributable to the person.1991, c. 46, s. 359; 2010, c. 12, s. 2045
Dissolution by letters patentOn an application made pursuant to an order under paragraph 358(1)(a), the Minister may issue letters patent dissolving the bank.Bank dissolvedA bank in respect of which letters patent are issued under subsection (1) is dissolved and ceases to exist on the date of the issuance of the letters patent.
General
Definition of shareholder, member and incorporatorIn sections 363 and 364, shareholder, member and incorporator include the heirs and personal representatives of a shareholder, member or incorporator, respectively.1991, c. 46, s. 361; 2010, c. 12, s. 2046
Continuation of actionsNotwithstanding the dissolution of a bank under this Part,a civil, criminal or administrative action or proceeding commenced by or against the bank before its dissolution may be continued as if the bank had not been dissolved;a civil, criminal or administrative action or proceeding may be brought against the bank within two years after its dissolution as if the bank had not been dissolved; andany property that would have been available to satisfy any judgment or order if the bank had not been dissolved remains available for that purpose.Service on bankService of a document on a bank after its dissolution may be effected by serving the document on a person shown as a director in the incorporating instrument of the bank or, if applicable, in the latest return sent to the Superintendent under section 632.1991, c. 46, s. 362; 1999, c. 28, s. 17
Limitations on liabilityDespite the dissolution of a bank, a shareholder, member or incorporator to whom any of its property has been distributed is liable to any person claiming under subsection 362(1) to the extent of the amount received by that shareholder, member or incorporator on the distribution.LimitationAn action to enforce liability under subsection (1) may not be commenced except within two years after the date of the dissolution of the bank.Action against classA court may order an action referred to in subsections (1) and (2) to be brought against the persons who were shareholders, members or incorporators as a class, subject to any conditions that the court thinks fit.ReferenceIf the plaintiff establishes a claim in an action under subsection (3), the court may refer the proceedings to a referee or other officer of the court who mayadd as a party to the proceedings each person found by the plaintiff to have been a shareholder, member or incorporator;determine, subject to subsection (1), the amount that each person who was a shareholder, member or incorporator must contribute towards satisfaction of the plaintiff’s claim; anddirect payment of the amounts so determined.1991, c. 46, s. 363; 2010, c. 12, s. 2047
Persons who cannot be foundIf a creditor, shareholder, member or incorporator to whom property is to be distributed on the dissolution of a bank cannot be found, the portion of the property to be distributed to that creditor, shareholder, member or incorporator is to be converted into money and paid in accordance with section 366.1991, c. 46, s. 364; 2010, c. 12, s. 2048
Vesting in CrownSubject to subsection 362(1) and sections 366 and 367, property of a bank that has not been disposed of at the date of the dissolution of the bank vests in Her Majesty in right of Canada.
Unclaimed money on winding-upDespite the Winding-up and Restructuring Act, if the business of a bank is being wound up, the liquidator or the bank must pay to the Minister on demand and in any event before the final winding-up of that business any amount that is payable by the liquidator or the bank to a creditor, shareholder, member or incorporator of the bank to whom payment of that amount has not, for any reason, been made.RecordsIf a liquidator or a bank makes a payment to the Minister under subsection (1) with respect to a creditor, shareholder, member or incorporator, the liquidator or bank must concurrently forward to the Minister all documents, records and registers in the possession of the liquidator or bank that relate to the entitlement of the creditor, shareholder, member or incorporator.Payment to Bank of CanadaThe Minister shall pay to the Bank of Canada all amounts paid to the Minister under subsection (1) and shall provide the Bank of Canada with any document, record or register received by the Minister under subsection (2).Liquidator and bank dischargedPayment by a liquidator or a bank to the Minister under subsection (1) discharges the liquidator and the bank in respect of which the payment is made from all liability for the amount so paid, and payment by the Minister to the Bank of Canada under subsection (3) discharges the Minister from all liability for the amount so paid.1991, c. 46, s. 366; 1996, c. 6, s. 167; 2010, c. 12, s. 2049
Liability of Bank of CanadaSubject to section 22 of the Bank of Canada Act, where payment has been made to the Bank of Canada of an amount under subsection 366(3), the Bank of Canada, if payment is demanded by a person who, but for subsection 366(4), would be entitled to receive payment of that amount from the liquidator, the bank or the Minister, is liable to pay to that person at its head office an amount equal to the amount so paid to it, with interest thereon for the period, not exceeding ten years, from the day on which the payment was received by the Bank of Canada until the date of payment to the person, at such rate and computed in such manner as the Minister determines.Enforcing liabilityThe liability of the Bank of Canada under subsection (1) may be enforced by action against the Bank of Canada in the court in the province in which the debt or instrument was payable.
Custody of records after dissolutionA person who has been granted custody of the documents, records and registers of a dissolved bank shall keep them available for production for six years following the date of the dissolution of the bank or until the expiration of such shorter period as may be ordered by the court when it orders the dissolution.
InsolvencyIn the case of the insolvency of a bank,the payment of any amount due to Her Majesty in right of Canada, in trust or otherwise, except indebtedness evidenced by subordinated indebtedness, shall be a first charge on the assets of the bank;the payment of any amount due to Her Majesty in right of a province, in trust or otherwise, except indebtedness evidenced by subordinated indebtedness, shall be a second charge on the assets of the bank;the payment of the deposit liabilities of the bank and all other liabilities of the bank, except the liabilities referred to in paragraphs (d) and (e), shall be a third charge on the assets of the bank;subordinated indebtedness of the bank and all other liabilities that by their terms rank equally with or subordinate to such subordinated indebtedness shall be a fourth charge on the assets of the bank; andthe payment of any fines and penalties for which the bank is liable shall be a last charge on the assets of the bank.Priority not affectedNothing in subsection (1) prejudices or affects the priority of any holder of any security interest in any property of a bank.PrioritiesPriorities within each of paragraphs (1)(a) to (e) shall be determined in accordance with the laws governing priorities and, where applicable, by the terms of the indebtedness and liabilities referred to therein.1991, c. 46, s. 369; 2001, c. 9, s. 95
OwnershipDefinitions and Interpretation
DefinitionsIn this Part,agent meansin relation to Her Majesty in right of Canada or of a province, any agent of Her Majesty in either of those rights and includes a municipal or public body empowered to perform a function of government in Canada or any entity empowered to perform a function or duty on behalf of Her Majesty in either of those rights, but does not includean official or entity performing a function or duty in connection with the administration or management of the estate or property of a natural person,an official or entity performing a function or duty in connection with the administration, management or investment of a fund established to provide compensation, hospitalization, medical care, annuities, pensions or similar benefits to natural persons, or moneys derived from such a fund, orthe trustee of any trust for the administration of a fund to which Her Majesty in either of those rights contributes and of which an official or entity that is an agent of Her Majesty in either of those rights is a trustee, andin relation to the government of a foreign country or any political subdivision thereof, a person empowered to perform a function or duty on behalf of the government of the foreign country or political subdivision, other than a function or duty in connection with the administration or management of the estate or property of a natural person; (mandataire)eligible agent means an agent or agency of Her Majesty in right of Canada or of a province or an agent or agency of a government of a foreign country or any political subdivision of a foreign countrywhose mandate is publicly available;that controls the assets of an investment fund in a manner intended to maximize long-term risk-adjusted returns and that fund isone to which, as the case may be, Her Majesty in right of Canada or of a province or the government of a foreign country or political subdivision contributes, orestablished to provide compensation, hospitalization, medical care, annuities, pensions or similar benefits to natural persons; andwhose decisions with respect to the assets of the fund referred to in paragraph (b) are not influenced in any significant way by, as the case may be, Her Majesty in right of Canada or of the province or the government of the foreign country or the political subdivision; (mandataire admissible)eligible Canadian financial institution means a Canadian financial institution that is a body corporate and that is widely held; (institution financière canadienne admissible)eligible financial institution means an eligible Canadian financial institution or an eligible foreign institution; (institution financière admissible)eligible foreign institution meansa foreign bank that, in the opinion of the Minister, after consultation with the Superintendent, is regulated as or like a bank, according to the jurisdiction under whose laws it was incorporated or in any jurisdiction in which it carries on business, ora foreign institution that, in the opinion of the Minister,is, with respect to its provision of financial services, regulated in the jurisdiction under whose laws it was incorporated or in any jurisdiction in which it carries on business, andis widely held; (institution étrangère admissible)foreign institution means an entity that isengaged in the trust, loan or insurance business, the business of a cooperative credit society or the business of dealing in securities, andincorporated or formed otherwise than by or under an Act of Parliament or the legislature of a province. (institution étrangère)[Repealed, 2001, c. 9, s. 96]1991, c. 46, s. 370, c. 48, s. 494; 2001, c. 9, s. 96; 2012, c. 19, s. 331
AssociatesFor the purpose of determining ownership of a bank, if two persons who each beneficially own shares or membership shares of a bank are associated with each other, those persons are deemed to be a single person who beneficially owns the aggregate number of shares and membership shares of the bank beneficially owned by them.AssociatesFor the purposes of subsection (1), a person who beneficially owns shares or membership shares of a bank is associated with another person who beneficially owns shares or membership shares of the bank ifone person is Her Majesty in right of Canada and the other person is Her Majesty in right of a province or one person is Her Majesty in right of a province and the other person is Her Majesty in right of another province;each person is an agent of Her Majesty in right of Canada or in right of a province;each person is an official, a trustee or an entity referred to in subparagraphs (a)(ii) and (iii) of the definition agent in subsection 370(1);each person is an entity owned or controlled by Her Majesty in right of Canada or in right of a province that is not an agent of Her Majesty and is not empowered to perform a function or duty on behalf of Her Majesty;both persons are trustees of any trusts for the administration of funds to which Her Majesty in right of Canada contributes and of which no official or entity that is an agent of Her Majesty in such right is a trustee;both persons are trustees of any trusts for the administration of funds to which Her Majesty in right of a particular province contributes and of which no official or entity that is an agent of Her Majesty in right of that province is a trustee;one person is a local cooperative credit society and the other person is a central cooperative credit society of which the first person is a member;both persons are local cooperative credit societies that are members of the same central cooperative credit society;one person is a central cooperative credit society, the other person is a federation of cooperative credit societies of which the first is a member, and both persons are incorporated or organized by or pursuant to legislation enacted by the same legislative body;both persons are central cooperative credit societies that are members of the same federation of cooperative credit societies, and both persons and the federation of cooperative credit societies are incorporated or organized by or pursuant to legislation enacted by the same legislative body; orboth persons are associated within the meaning of paragraphs (a) to (j) with the same person.1991, c. 46, s. 371; 2001, c. 9, s. 97; 2010, c. 12, s. 2050
AssociatesDespite section 371, for the purpose of determining ownership of a bank by an eligible agent, where two persons, at least one of whom is an eligible agent, are associated with each other, those persons are deemed to be a single eligible agent who beneficially owns the aggregate number of shares of the bank beneficially owned by them.AssociatesFor the purposes of subsection (1), a person is associated with another person ifeach person is an agent or agency of Her Majesty in right of Canada;each person is an agent or agency of Her Majesty in right of the same province;each person is an agent or agency of a government of the same foreign country or a political subdivision of the same foreign country;one person is Her Majesty in right of Canada and the other person is an agent or agency of Her Majesty in that right;one person is Her Majesty in right of a province and the other person is an agent or agency of Her Majesty in right of that province; orone person is a government of a foreign country or any political subdivision of a foreign country and the other person is its agent or agency.2012, c. 19, s. 332
Ownership of BanksConstraints on Ownership
Significant interestExcept as permitted by this Part, no person shall have a significant interest in any class of shares, or in membership shares, of a bank.1991, c. 46, s. 372; 2001, c. 9, s. 98; 2010, c. 12, s. 2051
[Repealed, 2001, c. 9, s. 98]
Acquisition of significant interestSubject to this Part, no person, or entity controlled by a person, shall, without the approval of the Minister, purchase or otherwise acquire any share or membership share of a bank or purchase or otherwise acquire control of any entity that holds any share or membership share of a bank ifthe acquisition would cause the person to have a significant interest in any class of shares or in membership shares of the bank, as the case may be; orwhere the person has a significant interest in a class of shares or in membership shares of the bank, the acquisition would increase the significant interest of the person in that class or in the membership shares, as the case may be.Amalgamation, etc., constitutes acquisitionIf the entity that would result from an amalgamation, a merger or a reorganization would have a significant interest in a class of shares or in membership shares of a bank, the entity is deemed to be acquiring a significant interest in that class of shares or in membership shares, as the case may be, through an acquisition for which the approval of the Minister is required under subsection (1).1991, c. 46, s. 373; 1994, c. 47, s. 17; 1997, c. 15, s. 37(E); 2001, c. 9, s. 98; 2007, c. 6, s. 19; 2010, c. 12, s. 2051
[Repealed, 1999, c. 28, s. 18]
Limitations on share holdingsNo person may be a major shareholder of a bank with equity of twelve billion dollars or more.Exception — federal credit unionSubsection (1) does not apply in respect of a person who is a major shareholder of a federal credit union.Exception — widely held bankSubsection (1) does not apply to a widely held bank that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank with equity of twelve billion dollars or more if it controlled, within the meaning of those paragraphs, the bank on the day the bank’s equity reached twelve billion dollars and it has controlled, within the meaning of those paragraphs, the bank since that day.Exception — widely held bank holding companySubsection (1) does not apply to a widely held bank holding company that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank with equity of twelve billion dollars or more ifthe bank holding company controlled, within the meaning of those paragraphs, the bank on the day the bank’s equity reached twelve billion dollars and it has controlled, within the meaning of those paragraphs, the bank since that day;the bank holding company acquired control, within the meaning of those paragraphs, of the bank under section 677 or 678 and the bank holding company has continued to control, within the meaning of those paragraphs, the bank since the day the bank holding company acquired control; orthe bank was a subsidiary of another bank that was continued under section 684 as the bank holding company and the bank holding company has continued to control, within the meaning of those paragraphs, the bank since the day it came into existence as a bank holding company.Exception — insurance holding companies and certain institutionsSubsection (1) does not apply to any of the following that controls, within the meaning of paragraph 3(1)(d), the bank with equity of twelve billion dollars or more if it controlled, within the meaning of that paragraph, the bank on the day the bank’s equity reached twelve billion dollars and it has controlled, within the meaning of that paragraph, the bank since that day:a widely held insurance holding company;an eligible Canadian financial institution, other than a bank; oran eligible foreign institution.Exception — other entitiesSubsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank with equity of twelve billion dollars or more if the entity is controlled, within the meaning of those paragraphs, by a widely held bank to which subsection (2) applies, or a widely held bank holding company to which subsection (3) applies, that controls the bank.Exception — other entitiesSubsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the bank with equity of twelve billion dollars or more if the entity is controlled, within the meaning of that paragraph, bya widely held insurance holding company to which subsection (4) applies that controls the bank;an eligible Canadian financial institution to which subsection (4) applies, other than a bank, that controls the bank; oran eligible foreign institution to which subsection (4) applies that controls the bank.1991, c. 46, s. 374, c. 48, s. 494; 2001, c. 9, s. 98; 2007, c. 6, s. 132; 2010, c. 12, s. 2052; 2012, c. 5, s. 12
ExceptionDespite section 374, if a bank with equity of twelve billion dollars or more was formed as the result of an amalgamation, a person who is a major shareholder of the bank on the effective date of the letters patent of amalgamation shall do all things necessary to ensure that the person is no longer a major shareholder of the bank on the day that is one year after that day or on the day that is after any shorter period specified by the Minister.Exception — federal credit unionSubsection (1) does not apply in respect of a person who is a major shareholder of a federal credit union.Exception — widely held banks and bank holding companiesSubsection (1) does not apply to a widely held bank or a widely held bank holding company that controlled, within the meaning of paragraphs 3(1)(a) and (d), one of the applicants for the letters patent of amalgamation and that has controlled, within the meaning of those paragraphs, the amalgamated bank since the effective date of those letters patent.Exception — insurance holding companies and certain institutionsSubsection (1) does not apply to any of the following that controlled, within the meaning of paragraph 3(1)(d), one of the applicants for the letters patent of amalgamation if it has controlled, within the meaning of that paragraph, the amalgamated bank since the effective date of those letters patent:a widely held insurance holding company;an eligible Canadian financial institution, other than a bank; oran eligible foreign institution.Exception — other entitiesSubsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(a) and (d), the amalgamated bank if the entity is controlled, within the meaning of those paragraphs, by a widely held bank or widely held bank holding company to which subsection (2) applies that controls the amalgamated bank.Exception — other entitiesSubsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the amalgamated bank if the entity is controlled, within the meaning of that paragraph, by any of the following:a widely held insurance holding company to which subsection (3) applies that controls the amalgamated bank;an eligible Canadian financial institution to which subsection (3) applies, other than a bank, that controls the amalgamated bank; oran eligible foreign institution to which subsection (3) applies that controls the amalgamated bank.ExtensionIf general market conditions so warrant and the Minister is satisfied that the person has used the person’s best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which the person must comply with that subsection.2001, c. 9, s. 98; 2007, c. 6, s. 132; 2010, c. 12, s. 2053; 2012, c. 5, s. 13
Limitation on share holdingsIf a person is a major shareholder of a bank with equity of less than twelve billion dollars and the bank’s equity reaches twelve billion dollars or more, the person shall do all things necessary to ensure that the person is not a major shareholder of the bank on the day that is three years after the day the bank’s equity reached twelve billion dollars.Exception — federal credit unionSubsection (1) does not apply in respect of a person who is a major shareholder of a federal credit union.ExceptionSubsection (1) does not apply if any of subsections 374(2) to (6) applies to the person in respect of the bank.ExtensionIf general market conditions so warrant and the Minister is satisfied that the person has used the person’s best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which the person must comply with that subsection.1991, c. 46, s. 375; 2001, c. 9, s. 98; 2007, c. 6, s. 132; 2010, c. 12, s. 2054; 2012, c. 5, s. 14
Obligation of widely held bankIf a widely held bank with equity of twelve billion dollars or more controls another bank and a person becomes a major shareholder of the other bank or of any entity that also controls the other bank, the widely held bank must do all things necessary to ensure that, on the day that is one year after the person became a major shareholder of the other bank or entity that controls the other bank,the widely held bank no longer controls the other bank; orthe other bank or the entity that controls the other bank does not have any major shareholder other than the widely held bank or any entity that the widely held bank controls.Exception — federal credit unionSubsection (1) does not apply in respect of a federal credit union that controls a bank.ExceptionSubsection (1) does not apply in respect of a bank with equity of less than two hundred and fifty million dollars or any other amount that is prescribed.ExtensionIf general market conditions so warrant and the Minister is satisfied that the widely held bank has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.1991, c. 46, s. 376; 2001, c. 9, s. 98; 2007, c. 6, s. 132; 2010, c. 12, s. 2055; 2012, c. 5, s. 15
Obligation of widely held bankDespite subsection 376(1), if a widely held bank with equity of twelve billion dollars or more controls a bank (in this subsection referred to as the “other bank”) in respect of which that subsection does not apply by reason of subsection 376(2) and the equity of the other bank reaches two hundred and fifty million dollars or more or any other amount that is prescribed and on the day the equity of the other bank reaches two hundred and fifty million dollars or more, or the prescribed amount, as the case may be, a person is a major shareholder of the other bank or of any entity that also controls the other bank, the widely held bank must do all things necessary to ensure that, on the day that is three years after that day,the widely held bank no longer controls the other bank; orthe other bank or the entity that controls the other bank does not have any major shareholder other than the widely held bank or any entity that the widely held bank controls.Exception — federal credit unionSubsection (1) does not apply in respect of a federal credit union that controls a bank.ExtensionIf general market conditions so warrant and the Minister is satisfied that the widely held bank has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.2001, c. 9, s. 98; 2007, c. 6, s. 132; 2010, c. 12, s. 2056; 2012, c. 5, s. 16
Prohibition against significant interestNo person who has a significant interest in any class of shares of a widely held bank with equity of twelve billion dollars or more may have a significant interest in any class of shares of a subsidiary of the widely held bank that is a bank or a bank holding company.Exception — federal credit unionSubsection (1) does not apply in respect of a person who has a significant interest in any class of shares of a federal credit union.1991, c. 46, s. 578; 1997, c. 15, s. 39; 1999, c. 28, s. 19; 2001, c. 9, s. 98; 2007, c. 6, s. 132; 2010, c. 12, s. 2057; 2012, c. 5, s. 17
Prohibition against significant interestNo person who has a significant interest in any class of shares of a bank may have a significant interest in any class of shares of any widely held bank with equity of twelve billion dollars or more, or of any widely held bank holding company with equity of twelve billion dollars or more, that controls the bank.Exception — federal credit unionSubsection (1) does not apply in respect of a person who has a significant interest in any class of shares of a federal credit union.2001, c. 9, s. 98; 2007, c. 6, s. 132; 2010, c. 12, s. 2058; 2012, c. 5, s. 18
Prohibition against controlNo person shall control, within the meaning of paragraph 3(1)(d), a bank with equity of twelve billion dollars or more.Exception — federal credit unionSubsection (1) does not apply in respect of a person who controls a federal credit union.ExceptionSubsection (1) does not apply if any of subsections 374(2) to (6) applies to the person in respect of the bank.1991, c. 46, s. 377; 2001, c. 9, s. 98; 2007, c. 6, s. 132; 2010, c. 12, s. 2059; 2012, c. 5, s. 19
Restriction on controlNo person shall, without the approval of the Minister, acquire control, within the meaning of paragraph 3(1)(d), of a bank with equity of less than twelve billion dollars.Exception — federal credit unionSubsection (1) does not apply in respect of a person who acquires control of a federal credit union.Amalgamation, etc., constitutes acquisitionIf the entity that would result from an amalgamation, a merger or a reorganization would control, within the meaning of paragraph 3(1)(d), a bank with equity of less than twelve billion dollars, the entity is deemed to be acquiring control, within the meaning of that paragraph, of the bank through an acquisition for which the approval of the Minister is required under subsection (1).2001, c. 9, s. 98; 2007, c. 6, s. 20; 2010, c. 12, s. 2060; 2012, c. 5, s. 20
Prohibition against control — federal credit unionNo person shall, without the approval of the Minister, control, within the meaning of paragraph 3(1)(a.1) or (d), a federal credit union.ApprovalThe Minister may grant the approval only ifthe control is in relation to a federal credit union that is being incorporated or a body corporate that is being continued as a federal credit union; andthe applicant for the approval has given an undertaking under subsection 973.02(1) to cease to control the federal credit union on a date specified by the Minister.2010, c. 12, s. 2061
Former Schedule I banks with equity of less than five billion dollarsA bank that was named in Schedule I as that Schedule read immediately before October 24, 2001 and that had equity of less than five billion dollars on that day is deemed, for the purposes of sections 138, 156.09, 374, 376, 376.01, 376.1, 376.2, 377, 380 and 382, subsection 383(2), section 385 and subsection 396(2), to be a bank with equity of twelve billion dollars or more.Application — amalgamationIf a bank to which subsection (1) applies is an applicant for letters patent of amalgamation and the letters patent are issued in respect of the application, the amalgamated bank is deemed to be a bank to which that subsection applies.Non-application of subsection (1)Subsection (1) ceases to apply to a bank with equity of less than twelve billion dollars if the Minister specifies that it no longer applies to the bank.1991, c. 46, s. 378; 2001, c. 9, s. 98; 2007, c. 6, s. 20; 2012, c. 5, s. 21
ProhibitionNo person may control or be a major shareholder of a bank if the person or an entity affiliated with the personhas control of or has a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in; orengages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.1994, c. 47, s. 18; 2001, c. 9, s. 98
ProhibitionNo person who controls a bank or who is a major shareholder of a bank, and no entity affiliated with that person, maycontrol or have a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in; orengage in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.2001, c. 9, s. 98
Constraint on registrationA bank must not, unless the acquisition of the share or membership share has been approved by the Minister, record in its securities register or members register, as the case may be, a transfer or issue of any share or membership share of the bank to any person or to any entity controlled by a person ifthe transfer or issue of the share or membership share would cause the person to have a significant interest in any class of shares or in membership shares of the bank; orthe person has a significant interest in a class of shares or in membership shares of the bank and the transfer or issue of the share or membership share would increase the significant interest of the person in that class of shares or in membership shares.1991, c. 46, s. 379; 1997, c. 15, s. 40; 2001, c. 9, s. 98; 2010, c. 12, s. 2062
ExemptionOn application by a bank, other than a bank with equity of twelve billion dollars or more, the Superintendent may exempt any class of non-voting shares of the bank the aggregate book value of which is not more than 30 per cent of the aggregate book value of all the outstanding shares of the bank from the application of sections 373 and 379.Exception — federal credit unionSubsection (1) does not apply in respect of a federal credit union.1991, c. 46, s. 380; 2001, c. 9, s. 98; 2007, c. 6, s. 132; 2010, c. 12, s. 2062; 2012, c. 5, ss. 22, 223
Exemption — federal credit unionsOn application by a federal credit union, the Superintendent may exempt any class of shares of the federal credit union the aggregate book value of which is not more than 30 per cent of the aggregate book value of all the outstanding shares and membership shares of the federal credit union from the application of sections 373 and 379.2010, c. 12, s. 2062
Exception — small holdingsDespite section 379, if, as a result of a transfer or issue of shares of a class of shares, or of membership shares, of a bank to a person, other than an eligible agent, the total number of shares of that class registered in the securities register of the bank, or the total number of membership shares registered in the members register of the bank, as the case may be, in the name of that person would not exceed 5,000 and would not exceed 0.1% of the outstanding shares of that class or of the outstanding membership shares, as the case may be, the bank is entitled to assume that no person is acquiring or increasing a significant interest in that class of shares or in membership shares of the bank as a result of that issue or transfer of shares or membership shares.1991, c. 46, s. 381; 2001, c. 9, s. 98; 2010, c. 12, s. 2062; 2012, c. 31, ss. 110, 154
When approval not requiredDespite sections 373 and 379, the approval of the Minister is not required in respect of a bank with equity of less than twelve billion dollars if a person with a significant interest in a class of shares of the bank, or an entity controlled by a person with a significant interest in a class of shares of the bank, purchases or otherwise acquires shares of that class, or acquires control of any entity that holds any share of that class, and the number of shares of that class purchased or otherwise acquired, or the acquisition of control of the entity, as the case may be, would not increase the significant interest of the person in that class of shares of the bank to a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever is applicable.Exception — federal credit unionSubsection (1) does not apply in respect of a person who has a significant interest in any class of shares of a federal credit union.PercentageSubject to subsection (3) and for the purpose of subsection (1), the percentage is 5 percentage points in excess of the significant interest of the person in that class of shares of the bank on the later of June 1, 1992 and the day of the most recent purchase or acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister.PercentageIf a person has a significant interest in a class of shares of a bank and the person’s percentage of that class has decreased after the date of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister, the percentage for the purposes of subsection (1) is the percentage that is the lesser of5 percentage points in excess of the significant interest of the person in that class of shares of the bank on the later of June 1, 1992 and the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister, and10 percentage points in excess of the lowest significant interest of the person in that class of shares of the bank at any time after the later of June 1, 1992 and the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister.Exception — eligible agentIf the person referred to in subsection (1) is an eligible agent or an entity controlled by an eligible agent, then the Minister may reduce the percentage referred to in subsection (2) or (3).ExceptionSubsection (1) does not apply if the purchase or other acquisition of shares or the acquisition of control referred to in that subsection wouldresult in the acquisition of control of the bank by the person referred to in that subsection;if the person controls the bank but the voting rights attached to the aggregate of any voting shares of the bank beneficially owned by the person and by entities controlled by the person do not exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the bank, cause the voting rights attached to that aggregate to exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the bank;result in the acquisition of a significant interest in a class of shares of the bank by an entity controlled by the person and the acquisition of that investment is not exempted by the regulations; orresult in an increase in a significant interest in a class of shares of the bank by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies, and the increase is not exempted by the regulations.RegulationsThe Governor in Council may make regulationsexempting from the application of paragraph (4)(c) the acquisition of a significant interest in a class of shares of the bank by an entity controlled by the person; andexempting from the application of paragraph (4)(d) an increase in a significant interest in a class of shares of the bank by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies.1991, c. 46, s. 382; 2001, c. 9, s. 98; 2007, c. 6, s. 132; 2010, c. 12, s. 2063; 2012, c. 5, s. 23, c. 31, s. 111
When approval not required — federal credit unionDespite sections 373 and 379, the approval of the Minister is not required in respect of a federal credit union if a person with a significant interest in a class of shares, or in membership shares, of the federal credit union, or an entity controlled by a person with a significant interest in a class of shares, or in membership shares, of the federal credit union, purchases or otherwise acquires shares of that class, or membership shares, or acquires control of any entity that holds any share of that class, or any membership share, and the number of shares of that class, or the number of membership shares, purchased or otherwise acquired, or the acquisition of control of the entity, as the case may be, would not increase the significant interest of the person in that class of shares or in the membership shares of the federal credit union to a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever is applicable.PercentageSubject to subsection (3) and for the purpose of subsection (1), the percentage is 5 percentage points in excess of the significant interest of the person in that class of shares or in the membership shares of the federal credit union on the day of the most recent purchase or acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares, or of membership shares, of the federal credit union, or of control of an entity that held shares of that class of shares, or membership shares, of the federal credit union, for which approval was given by the Minister.PercentageIf a person has a significant interest in a class of shares or in membership shares of a federal credit union and the person’s percentage of that class of shares, or of membership shares, has decreased after the date of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares, or of membership shares, of the federal credit union, or of control of an entity that held shares of that class of shares, or membership shares, as the case may be, of the federal credit union, for which approval was given by the Minister, the percentage for the purposes of subsection (1) is the percentage that is the lesser of5 percentage points in excess of the significant interest of the person in that class of shares or in membership shares of the federal credit union on the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares, or of membership shares, of the federal credit union, or of control of an entity that held shares of that class of shares, or membership shares, of the federal credit union, for which approval was given by the Minister, and10 percentage points in excess of the lowest significant interest of the person in that class of shares or in membership shares of the federal credit union at any time after the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares, or of membership shares, of the federal credit union, or of control of an entity that held shares of that class of shares, or membership shares, of the federal credit union, for which approval was given by the Minister.ExceptionSubsection (1) does not apply if the purchase or other acquisition of shares or membership shares or the acquisition of control referred to in that subsection wouldresult in the acquisition of control of the federal credit union by the person referred to in that subsection;result in the acquisition of a significant interest in a class of shares, or in membership shares, of the federal credit union by an entity controlled by the person and the acquisition of that investment is not exempted by the regulations; orresult in an increase in a significant interest in a class of shares, or in membership shares, of the federal credit union by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies, and the increase is not exempted by the regulations.RegulationsThe Governor in Council may make regulationsexempting from the application of paragraph (4)(b) the acquisition of a significant interest in a class of shares, or in membership shares, of the federal credit union by an entity controlled by the person; andexempting from the application of paragraph (4)(c) an increase in a significant interest in a class of shares, or in membership shares, of the federal credit union by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies.2010, c. 12, s. 2064
When approval not requiredDespite sections 373 and 379, the approval of the Minister is not required ifthe Superintendent has, by order, directed the bank to increase its capital and shares or membership shares of the bank are issued and acquired in accordance with the terms and conditions, if any, that may be specified in the order; ora person, other than an eligible agent, who controls, within the meaning of paragraph 3(1)(a), the bank acquires additional shares of the bank.ExceptionParagraph (1)(a) does not apply in respect of a bank with equity of twelve billion dollars or more.1991, c. 46, s. 383; 2001, c. 9, s. 98; 2007, c. 6, s. 132; 2010, c. 12, s. 2065; 2012, c. 5, s. 24, c. 31, s. 112
Pre-approvalFor the purposes of sections 373 and 379, the Minister may approvethe purchase or other acquisition of any number or percentage of shares or membership shares of a bank that may be required in a particular transaction or series of transactions; orthe purchase or other acquisition of up to a specified number or percentage of shares or membership shares of a bank within a specified period.1991, c. 46, s. 384; 2001, c. 9, s. 98; 2010, c. 12, s. 2066
Public holding requirementEvery bank with equity of two billion dollars or more but less than twelve billion dollars shall, from and after the day determined under this section in respect of that bank, have, and continue to have, voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the bank and that areshares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; andshares none of which is beneficially owned by a person who is a major shareholder of the bank in respect of the voting shares of the bank or by any entity that is controlled by a person who is a major shareholder of the bank in respect of such shares.Exception — federal credit unionSubsection (1) does not apply in respect of a federal credit union.Determination of dayThe day referred to in subsection (1) isif the bank had equity of two billion dollars or more but less than twelve billion dollars on the day the bank came into existence, the day that is three years after that day; andin any other case, the day that is three years after the day of the first annual meeting of the shareholders of the bank held after the equity of the bank first reaches two billion dollars.ExtensionIf general market conditions so warrant and the Minister is satisfied that a bank has used its best efforts to be in compliance with this section on the day determined under subsection (2), the Minister may specify a later day as the day from and after which the bank must comply with subsection (1).1991, c. 46, s. 385; 2001, c. 9, s. 98; 2007, c. 6, ss. 132, 133; 2010, c. 12, s. 2067; 2012, c. 5, s. 25
Public holding requirementIf a bank to which section 385 applies becomes a bank with equity of twelve billion dollars or more, that section continues to apply to the bank until no person is a major shareholder of the bank, other than a person to whom subsections 374(2) to (6) apply.2001, c. 9, s. 98; 2007, c. 6, s. 132; 2012, c. 5, s. 26
Limit on assetsUnless an exemption order with respect to the bank is granted under section 388, if a bank fails to comply with section 385 in any month, the Minister may, by order, require the bank not to have, until it complies with that section, average total assets in any three month period ending on the last day of a subsequent month exceeding the bank’s average total assets in the three month period ending on the last day of the month immediately before the month specified in the order.Average total assetsFor the purposes of subsection (1), the average total assets of a bank in a three month period is to be computed by adding the total assets of the bank as calculated for the month end of each of the three months in the period and by dividing the sum by three.Definition of total assetsFor the purposes of subsections (1) and (2), total assets, in respect of a bank, has the meaning given that expression by the regulations.1991, c. 46, s. 386; 2001, c. 9, s. 98
Increase of capitalIf the Superintendent has, by order, directed a bank with equity of two billion dollars or more but less than twelve billion dollars to increase its capital and shares of the bank are issued and acquired in accordance with any terms and conditions that may be specified in the order, section 385 does not apply in respect of the bank until the time that the Superintendent may, by order, specify.1991, c. 46, s. 387; 2001, c. 9, s. 98; 2007, c. 6, ss. 132, 133; 2012, c. 5, s. 27
Exemption by order of the MinisterOn application by a bank, the Minister may, if the Minister considers it appropriate to do so, by order exempt the bank from the requirements of section 385, subject to any terms and conditions that the Minister considers appropriate.Compliance with section 385If an exemption order granted under this section in respect of a bank expires, the bank shall comply with section 385 as of the day the exemption order expires.Limit on assetsIf a bank fails to comply with section 385 on the day referred to in subsection (2), the bank shall not, until it complies with that section, have average total assets in any three month period ending on the last day of a subsequent month exceeding the bank’s average total assets in the three month period ending on the last day of the month immediately before the day referred to in subsection (2) or any later day that the Minister may, by order, specify.Application of ss. 386(2) and (3)Subsections 386(2) and (3) apply for the purposes of subsection (3).1991, c. 46, s. 388; 1997, c. 15, s. 41; 2001, c. 9, s. 98
ExceptionIf a bank fails to comply with section 385 as the result of any of the following, section 386 does not apply in respect of the bank until the expiration of six months after the day it failed to comply with section 385:a distribution to the public of voting shares of the bank;a redemption or purchase of voting shares of the bank;the exercise of any option to acquire voting shares of the bank; orthe conversion of any convertible securities into voting shares of the bank.Shares acquiring voting rightsIf, as the result of an event that has occurred and is continuing, shares of a bank acquire voting rights in such number as to cause the bank to no longer be in compliance with section 385, section 386 does not apply in respect of that bank until the expiration of six months after the day the bank ceased to be in compliance with section 385 or any later day that the Minister may, by order, specify.1991, c. 46, s. 389; 2001, c. 9, s. 98
Acquisition of control permittedSubject to subsection (2) and sections 379 and 391, section 385 does not apply in respect of a bank if a person acquires control of the bank through the purchase or other acquisition of all or any number of the shares of the bank by the person or by any entity controlled by the person.Undertaking requiredSubsection (1) applies only if the person referred to in that subsection provides the Minister with an undertaking satisfactory to the Minister to do all things necessary so that, within three years after the acquisition, or any other period that the Minister may specify, the bank has voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the bank and that areshares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; andshares none of which is beneficially owned by a person who is a major shareholder of the bank in respect of the voting shares of the bank or by any entity that is controlled by a person who is a major shareholder of the bank in respect of such shares.1991, c. 46, s. 390; 1999, c. 28, s. 20; 2001, c. 9, s. 98
Application of section 385At the expiration of the period for compliance with an undertaking referred to in subsection 390(2), section 385 shall apply in respect of the bank to which the undertaking relates.1991, c. 46, s. 391; 2001, c. 9, s. 98
Restriction on voting rightsIf, with respect to any bank, a particular person contravenes section 372, subsection 373(1), 374(1) or 375(1), section 376.1 or 376.2, subsection 377(1) or section 377.1 or 377.2 or fails to comply with an undertaking referred to in subsection 390(2) or with any term or condition imposed under section 397, no person, and no entity controlled by the particular person, shall, in person, by proxy or by delegate, exercise any voting rightsthat are attached to shares of the bank beneficially owned by the particular person or any entity controlled by the particular person;that may be exercised by a member of a federal credit union if the bank is a federal credit union; orthat are subject to an agreement entered into by the particular person, or any entity controlled by the particular person, pertaining to the exercise of the voting rights.Subsection (1) ceases to applySubsection (1) ceases to apply in respect of a person when, as the case may be,the shares or membership shares to which the contravention relates have been disposed of;the person ceases to control the bank within the meaning of paragraph 3(1)(d);if the person failed to comply with an undertaking referred to in subsection 390(2), the bank complies with section 385; orif the person failed to comply with a term or condition imposed under section 397, the person complies with the term or condition.SavingDespite subsection (1), if a person contravenes subsection 374(1) by reason only that, as a result of an event that has occurred and is continuing and is not within the control of the person, shares of the bank beneficially owned by the person or by any entity controlled by the person acquire voting rights in such number so as to cause the person to be a major shareholder of the bank, the Minister may, after consideration of the circumstances, permit the person and any entity controlled by the person to exercise voting rights, in person or by proxy, in respect of any class of voting shares of the bank beneficially owned by them that do not in aggregate exceed 20 per cent of the voting rights attached to that class of voting shares.1991, c. 46, s. 392; 2001, c. 9, s. 98; 2010, c. 12, s. 2068
Loss of control — banks and bank holding companiesDespite sections 374 and 377, a widely held bank or a widely held bank holding company may be a major shareholder of a bank with equity of twelve billion dollars or more and cease to control, within the meaning of paragraphs 3(1)(a) and (d), the bank if it has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the bank on the expiration of the day specified in the agreement.ExtensionIf general market conditions so warrant and the Minister is satisfied that the bank or the bank holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.1991, c. 46, s. 393; 2001, c. 9, s. 98; 2007, c. 6, s. 132; 2012, c. 5, s. 28
Loss of control — other entitiesDespite sections 374 and 377, an eligible foreign institution, an eligible Canadian financial institution, other than a bank, or a widely held insurance holding company may be a major shareholder of a bank with equity of twelve billion dollars or more and cease to control, within the meaning of paragraph 3(1)(d), the bank if it has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the bank on the expiration of the day specified in the agreement.ExtensionIf general market conditions so warrant and the Minister is satisfied that the institution or insurance holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.2001, c. 9, s. 98; 2007, c. 6, s. 132; 2012, c. 5, s. 29
Change in statusIf a body corporate that is an eligible financial institution other than a bank controls, within the meaning of paragraph 3(1)(d), a bank with equity of twelve billion dollars or more and the body corporate subsequently ceases to be an eligible financial institution, the body corporate must do all things necessary to ensure that, on the day that is one year after the day it ceased to be an eligible financial institution,it does not control, within the meaning of paragraph 3(1)(d), the bank; andit is not a major shareholder of the bank.ExtensionIf general market conditions so warrant and the Minister is satisfied that the body corporate has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.1991, c. 46, s. 394; 2001, c. 9, s. 98; 2007, c. 6, s. 132; 2012, c. 5, s. 30
Approval Process
Application for approvalAn application for an approval of the Minister required under this Part must be filed with the Superintendent and contain the information, material and evidence that the Superintendent may require.ApplicantIf, with respect to any particular transaction, this Part applies to more than one person, any one of those persons may make the application to the Minister for approval on behalf of all of those persons.1991, c. 46, s. 395; 2001, c. 9, s. 98
Matters for considerationSubject to subsection (2), if an application for an approval under section 373 is made, the Minister, in determining whether or not to approve the transaction, shall take into account all matters that the Minister considers relevant to the application, includingthe nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the bank;the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the bank;the business record and experience of the applicant or applicants;the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;whether the bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;the impact of any integration of the businesses and operations of the applicant or applicants with those of the bank on the conduct of those businesses and operations;the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the applicant or applicants and their affiliates may affect the supervision and regulation of the bank, having regard tothe nature and extent of the proposed financial services activities to be carried out by the bank and its affiliates, andthe nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the bank; andthe best interests of the financial system in Canada, including, if the bank is a federal credit union, the best interests of the cooperative financial system in Canada.ExceptionExcept for an application by an eligible agent for an approval under section 373, and subject to subsection 377(1), the Minister shall take into account only paragraph (1)(d) if the application is in respect of a transaction that would result in the applicant or applicants holdingmore than 10 per cent but no more than 20 per cent of any class of the outstanding voting shares of a widely held bank with equity of twelve billion dollars or more that is not a federal credit union; ormore than 10 per cent but no more than 30 per cent of any class of the outstanding non-voting shares of such a bank.ExceptionSubject to subsection 377.2(1), the Minister is to take into account only paragraph (1)(d) if the application is in respect of a transaction that would result in the applicant or applicants holding more than 10 per cent but no more than 30 per cent of any class of the outstanding shares, or of membership shares, of a federal credit union.Favourable treatmentThe Minister shall not approve a transaction that would cause a bank to become a subsidiary of a foreign bank within the meaning of any of paragraphs (a) to (f) of the definition foreign bank in section 2 that is a non-WTO Member foreign bank unless the Minister is satisfied that treatment as favourable for banks to which this Act applies exists or will be provided in the jurisdiction in which the foreign bank principally carries on business, either directly or through a subsidiary.1991, c. 46, s. 396; 2001, c. 9, s. 98; 2007, c. 6, s. 132; 2010, c. 12, s. 2069; 2012, c. 5, ss. 31, 223, c. 31, s. 113
[Repealed, 1994, c. 47, s. 19]
Terms and conditionsThe Minister may impose any terms and conditions in respect of an approval given under this Part that the Minister considers necessary to ensure compliance with any provision of this Act.1991, c. 46, s. 397, c. 47, s. 757; 1993, c. 44, s. 26; 1994, c. 47, s. 19; 2001, c. 9, s. 98
Certifying receipt of applicationIf, in the opinion of the Superintendent, an application filed under this Part contains all the required information, the Superintendent shall without delay refer the application to the Minister and send a receipt to the applicant certifying the date on which the completed application was received by the Superintendent.Incomplete applicationIf, in the opinion of the Superintendent, an application filed under this Part is incomplete, the Superintendent shall send a notice to the applicant specifying the information required by the Superintendent to complete the application.1991, c. 46, s. 398; 2001, c. 9, s. 98; 2007, c. 6, s. 21(F)
Notice of decisionSubject to subsections (2) and (3) and 400(1), the Minister shall, within a period of thirty days after the certified date referred to in subsection 398(1), send to the applicanta notice approving the transaction to which the application relates; orif the Minister is not satisfied that the transaction to which the application relates should be approved, a notice to that effect, advising the applicant of the right to make representations to the Minister in respect of the matter.Notice of decisionSubject to subsections (4) and 400(2), the notice referred to in paragraph (1)(a) or (b) shall be sent by the Minister within a period of 45 days after the certified date referred to in subsection 398(1) in the following cases:the application involves the acquisition of control of a bank;the application is made by an eligible agent or an entity controlled by an eligible agent; oran application is made for the approval referred to in subsection 401.2(3).Extension of period for noticeIf the Minister is unable to complete the consideration of an application within the period referred to in subsection (1), the Minister shallwithin that period, send a notice to that effect to the applicant; andwithin a further period of thirty days after the date of the sending of the notice referred to in paragraph (a) or within any other further period that may be agreed on by the applicant and the Minister, send a notice referred to in paragraph (1)(a) or (b) to the applicant.Further extensionsIf the Minister considers it appropriate to do so, the Minister may extend the period referred to in subsection (2) for one or more periods of forty-five days.1991, c. 46, s. 399; 1994, c. 47, s. 20; 2001, c. 9, s. 98; 2012, c. 31, s. 114
Reasonable opportunity to make representationsIf, after receipt of the notice referred to in paragraph 399(1)(b), the applicant advises the Minister that the applicant wishes to make representations, the Minister must provide the applicant with a reasonable opportunity within a period of thirty days after the date of the notice, or within any further period that may be agreed on by the applicant and the Minister, to make representations in respect of the matter.Reasonable opportunity to make representationsIf, after receipt of the notice sent in accordance with subsection 399(2) that the Minister is not satisfied that the transaction to which the application relates should be approved, the applicant advises the Minister that the applicant wishes to make representations, the Minister must provide the applicant with a reasonable opportunity within a period of 45 days after the date of the notice, or within any further period that may be agreed on by the applicant and the Minister, to make representations in respect of the matter.1991, c. 46, s. 400; 1994, c. 47, s. 21; 2001, c. 9, s. 98; 2012, c. 31, s. 115(E)
Notice of decisionWithin a period of thirty days after the expiration of the period for making representations referred to in subsection 400(1), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.Notice of decisionWithin a period of forty-five days after the expiration of the period for making representations referred to in subsection 400(2), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.1991, c. 46, s. 401; 1994, c. 47, s. 22; 2001, c. 9, s. 98
Deemed approvalIf the Minister does not send a notice under subsection 399(1) or (3) or 401(1) within the period provided for in those subsections, the Minister is deemed to have approved the transaction to which the application relates.2001, c. 9, s. 98
Federal credit union constraintsSubject to this Act, a federal credit union may by by-law impose, change or remove restrictions on the issue, transfer or ownership of its membership shares, or shares of any class of the shares of the federal credit union, in order to prevent a person from having a significant interest in the membership shares or shares of that class.2010, c. 12, s. 2070
Constraining registration: Crown and foreign governmentsNo bank is to record in its securities register or members register a transfer or issue of any share or membership share of the bank toHer Majesty in right of Canada or of a province or any agent or agency of Her Majesty in either of those rights; orthe government of a foreign country or any political subdivision of a foreign country, or any agent or agency of a foreign government.ExceptionDespite subsection (1), a bank may record in its securities register or members register a transfer or issue of any share or membership share of the bank to a foreign bank, or to a foreign institution, that is controlled by the government of a foreign country or any political subdivision of a foreign country, or by any agent or agency of a foreign government, if the share or membership share that is transferred or issued is beneficially owned by the foreign bank or foreign institution or by an entity controlled by the foreign bank or foreign institution.Certain foreign banks excludedSubsection (2) does not permit a bank to record in its securities register or members register a transfer or issue of any share or membership share of the bank to a foreign bank that is a foreign bank by reason only of paragraph (f) of the definition foreign bank in section 2.ExceptionDespite subsection (1), a bank may, with the Minister’s approval, record in its securities register the issue of any share of the bank to an eligible agent.Application made jointlyThe application for the approval referred to in subsection (3) must be made jointly by the bank and the eligible agent.Matters for considerationThe Minister, in determining whether to grant the approval referred to in subsection (3), shall take into account all matters that he or she considers relevant, including those set out in paragraphs 396(1)(a) to (h).Consequence of revocation of approvalIf an approval referred to in subsection (3) is revoked, the bank shall delete any entry in its securities register in respect of the recording of the issuance of shares to the eligible agent.Disposition of shareholdingsIf a bank or an eligible agent fails to comply with any undertaking or term or condition in relation to an approval referred to in subsection (3), or if an eligible agent ceases to be an eligible agent, the Minister may, if the Minister considers it to be in the public interest to do so, by order, direct the eligible agent or former eligible agent and any person controlled by the eligible agent or former eligible agent to dispose of any number of shares of the bank beneficially owned by the eligible agent or former eligible agent or the persons controlled by the eligible agent or former eligible agent that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the eligible agent or former eligible agent and the persons controlled by the eligible agent or former eligible agent that is specified in the order.RepresentationsNo direction shall be made under subsection (7) unless the Minister has provided each person to whom the direction relates and the bank concerned with a reasonable opportunity to make representations in respect of the subject-matter of the direction.AppealAny person with respect to whom a direction has been made under subsection (7) may, within 30 days after the date of the direction, appeal the matter in accordance with section 977.2001, c. 9, s. 98; 2010, c. 12, s. 2071; 2012, c. 5, ss. 32, 223, c. 19, s. 333, c. 31, ss. 116, 154
Suspension of voting rights held by governmentsDespite section 148, no person shall, in person or by proxy, exercise any voting rights attached to any share of a bank that is beneficially owned byHer Majesty in right of Canada or of a province or any agency of Her Majesty in either of those rights; orthe government of a foreign country or any political subdivision thereof, or any agency thereof.Suspension of voting rights held by governmentsDespite subsection 79.2(2), a member of a federal credit union must not, in person or by delegate, vote as a member of the federal credit union if the member is, or is an entity controlled by,Her Majesty in right of Canada or of a province or any agency of Her Majesty in either of those rights; orthe government of a foreign country or any political subdivision thereof, or any agency thereof.ExceptionSubsections (1) and (2) do not apply to a foreign bank, or to a foreign institution, that is controlled by the government of a foreign country or any political subdivision of a foreign country, or by any agent or agency of a foreign government, if the share referred to in subsection (1), or, in the case of a federal credit union, a membership share, is beneficially owned by the foreign bank or foreign institution or by an entity controlled by the foreign bank or foreign institution.Exception — eligible agentSubsection (1) does not apply in respect of the exercise of voting rights attached to any share referred to in subsection 401.2(3).Consequence of suspension of approvalIf an approval referred to in subsection 401.2(3) is suspended, the eligible agent shall not exercise, in person or by proxy, any voting rights attached to any share of the bank that is beneficially owned by the eligible agent.2001, c. 9, s. 98; 2010, c. 12, s. 2072; 2012, c. 5, ss. 33, 223, c. 19, ss. 334, 348, c. 31, ss. 117, 155
Directions
DispositionIf, with respect to any bank, a person contravenes section 372 or subsection 373(1), 374(1) or 375(1) or section 376.1 or 376.2, subsection 377(1) or section 377.1 or 377.2 or fails to comply with an undertaking referred to in subsection 390(2) or with any terms and conditions imposed under section 397, the Minister may, if the Minister considers it in the public interest to do so, by order, direct that person and any person controlled by that person todispose of any number of shares of the bank beneficially owned by any of those persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the person and the persons controlled by that person that is specified in the order;dispose of any number of membership shares of the bank beneficially owned by any of those persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the person and the persons controlled by that person that is specified in the order; ortake any other action that is necessary for any of those persons to cease controlling, within the meaning of paragraph 3(1)(a.1), the federal credit union.RepresentationsNo direction shall be made under subsection (1) unless the Minister has provided each person to whom the direction relates and the bank concerned with a reasonable opportunity to make representations in respect of the subject-matter of the direction.AppealAny person with respect to whom a direction has been made under subsection (1) may, within thirty days after the date of the direction, appeal the matter in accordance with section 977.[Repealed, 2001, c. 9, s. 99]1991, c. 46, s. 402; 1999, c. 28, s. 21; 2001, c. 9, s. 99; 2010, c. 12, s. 2073; 2012, c. 31, s. 153(E)
Permission to become another body corporateIf subsection 402(1) applies, the Minister may, on application by the bank, permit the bank to apply to be continued as a body corporate under any Act of Parliament referred to in subsection 39.1(1) or 39.2(1) instead of, or in addition to, issuing an order under subsection 402(1).1991, c. 46, s. 579; 2007, c. 6, s. 22; 2010, c. 12, s. 2074
Disposition — threat to integrity or securityIf the Minister is of the opinion that a person’s holding or beneficial ownership of shares or membership shares of a bank poses a threat to the integrity or security of the bank or the financial system in Canada or a threat to national security, the Minister may, by order, direct that person and any person controlled by that person todispose of any number of shares of the bank held or beneficially owned by any of the persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the person and the persons controlled by the person that is specified in the order; ordispose of any number of membership shares of the bank held or beneficially owned by any of the persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the person and the persons controlled by the person that is specified in the order.Suspension of rightsA direction made under subsection (1) may also suspend any of the rights under Part VI attached to the shares referred to in paragraph (1)(a) or the membership shares referred to in paragraph (1)(b) until the shares or membership shares are disposed of in accordance with the direction.RepresentationsNo direction shall be made under subsection (1) unless the Minister has provided each person to whom the direction relates and the bank concerned with a reasonable opportunity to make representations.Temporary directionIf, in the Minister’s opinion, the length of time required for representations to be made under subsection (3) might be prejudicial to the public interest, the Minister may make a temporary direction to suspend any of the rights under Part VI attached to any of the shares referred to in paragraph (1)(a) or the membership shares referred to in paragraph (1)(b).Cessation of effectA temporary direction ceases to have effect on the earlier ofthe expiry of 30 days after the day on which it takes effect or of a shorter period that is specified in the temporary direction, andif a direction is made under subsection (1) in respect of the shares or membership shares, the day on which that direction takes effect.AppealAny person with respect to whom a direction has been made under subsection (1) may, within 30 days after the day on which the direction was made, appeal the matter in accordance with section 977.Notice — Committee and Review AgencyIf a direction has been made under subsection (1) or (4) for reasons related to national security, the Minister shall, within 30 days after the day on which the direction was made, notifythe Committee, as defined in section 2 of the National Security and Intelligence Committee of Parliamentarians Act; andthe Review Agency, as defined in section 2 of the National Security and Intelligence Review Agency Act.2023, c. 26, s. 541
Application to courtIf a person fails to comply with a direction made under subsection 401.2(7), 402(1) or 402.2(1), an application on behalf of the Minister may be made to a court for an order to enforce the direction.Court orderA court may, on an application under subsection (1), make any order that the circumstances require to give effect to the terms of the direction, including requiring the bank concerned to sell the shares, or to redeem, purchase or transfer to another member the membership shares, that are the subject-matter of the direction.AppealAn appeal from an order of a court under this section lies in the same manner as, and to the same court to which, an appeal may be taken from any other order of the court.1991, c. 46, s. 403; 2010, c. 12, s. 2075; 2012, c. 31, s. 1182023, c. 26, s. 542
General Provisions
Interest of securities underwriterThis Part does not apply to a securities underwriter in respect of shares of a body corporate or ownership interests in an unincorporated entity that are acquired by the underwriter in the course of a distribution to the public of those shares or ownership interests and that are held by the underwriter for a period of not more than six months.
Arrangements to effect complianceThe directors of a bank may make such arrangements as they deem necessary to carry out the intent of this Part and, in particular, but without limiting the generality of the foregoing, mayrequire any person in whose name a share or membership share of the bank is held to submit a declaration setting outthe beneficial ownership of the share or membership share, andany other information that the directors consider relevant for the purposes of this Part;require any person who wishes to have a transfer of a share or membership share registered in the name of, or to have a share or membership share issued to, that person to submit a declaration referred to in paragraph (a) as though the person were the holder of that share or membership share; anddetermine the circumstances in which a declaration referred to in paragraph (a) is to be required, the form of the declaration and the times at which it is to be submitted.Order of SuperintendentThe Superintendent may, by order, direct a bank to obtain from any person in whose name a share or membership share of the bank is held a declaration setting out the name of every entity controlled by that person and containing information concerningthe ownership or beneficial ownership of the share or membership share; andsuch other related matters as are specified by the Superintendent.Compliance requiredAs soon as possible after receipt by a bank of a direction under subsection (2),the bank shall comply with the direction; andevery person who is requested by the bank to provide a declaration containing information referred to in subsection (1) or (2) shall comply with the request.Outstanding declaration: effectIf, under this section, a declaration is required to be submitted by a shareholder, member or other person in respect of the issue or transfer of any share or membership share, a bank may refuse to issue the share or membership share or register the transfer unless the required declaration is submitted.1991, c. 46, s. 405; 2010, c. 12, s. 2076
Reliance on informationA bank and any person who is a director or an officer, employee or agent of the bank may rely on any information contained in a declaration required by the directors pursuant to section 405 or on any information otherwise acquired in respect of any matter that might be the subject of such a declaration, and no action lies against the bank or any such person for anything done or omitted to be done in good faith in reliance on any such information.
[Repealed, 1994, c. 47, s. 23]
Competition ActNothing in, or done under the authority of, this Act affects the operation of the Competition Act.
Business and PowersGeneral Business
Main businessSubject to this Act, a bank shall not engage in or carry on any business other than the business of banking and such business generally as appertains thereto.IdemFor greater certainty, the business of banking includesproviding any financial service;acting as a financial agent;providing investment counselling services and portfolio management services; andissuing payment, credit or charge cards and, in cooperation with others including other financial institutions, operating a payment, credit or charge card plan.1991, c. 46, s. 409; 2009, c. 2, s. 269(F)
Additional activitiesIn addition, a bank mayhold, manage and otherwise deal with real property;provide prescribed bank-related data processing services;outside Canada or, with the prior written approval of the Minister, in Canada, engage in any of the following activities, namely,collecting, manipulating and transmittinginformation that is primarily financial or economic in nature,information that relates to the business of a permitted entity, as defined in subsection 464(1), orany other information that the Minister may, by order, specify,providing advisory or other services in the design, development or implementation of information management systems,designing, developing or marketing computer software, anddesigning, developing, manufacturing or selling, as an ancillary activity to any activity referred to in any of subparagraphs (i) to (iii) that the bank is engaging in, computer equipment integral to the provision of information services related to the business of financial institutions or to the provision of financial services;with the prior written approval of the Minister, develop, design, hold, manage, manufacture, sell or otherwise deal with data transmission systems, information sites, communication devices or information platforms or portals that are usedto provide information that is primarily financial or economic in nature,to provide information that relates to the business of a permitted entity, as defined in subsection 464(1), orfor a prescribed purpose or in prescribed circumstances;engage, under prescribed terms and conditions, if any are prescribed, in specialized business management or advisory services;promote merchandise and services to the holders of any payment, credit or charge card issued by the bank;engage in the sale oftickets, including lottery tickets, on a non-profit public service basis in connection with special, temporary and infrequent non-commercial celebrations or projects that are of local, municipal, provincial or national interest,urban transit tickets, andtickets in respect of a lottery sponsored by the federal government or a provincial or municipal government or an agency of any such government or governments;act as a custodian of property;act as receiver, liquidator or sequestrator; andprovide identification, authentication or verification services.RestrictionExcept as authorized by or under this Act, a bank shall not deal in goods, wares or merchandise or engage in any trade or other business.RegulationsThe Governor in Council may make regulationsrespecting what a bank may or may not do with respect to the carrying on of the activities referred to in paragraphs (1)(c) to (c.2);imposing terms and conditions in respect ofthe provision of financial services referred to in paragraph 409(2)(a) that are financial planning services,the provision of services referred to in paragraph 409(2)(c), andthe carrying on of the activities referred to in any of paragraphs (1)(c) to (c.2); andrespecting the circumstances in which banks may be exempted from the requirement to obtain the approval of the Minister before carrying on a particular activity referred to in paragraph (1)(c) or (c.1).1991, c. 46, s. 410; 1993, c. 34, s. 8(F); 1997, c. 15, s. 42; 2001, c. 9, s. 100; 2018, c. 12, s. 316
NetworkingSubject to section 416, a bank mayact as agent for any person in respect of the provision of any service that is provided by a financial institution, a permitted entity as defined in subsection 464(1) or a prescribed entity and may enter into an arrangement with any person in respect of the provision of that service; orrefer any person to any such financial institution or entity.RegulationsThe Governor in Council may make regulations respecting the disclosure ofthe name of the principal for whom a bank is acting as agent pursuant to subsection (1); andwhether any commission is being earned by a bank when acting as agent pursuant to subsection (1).1991, c. 46, s. 411; 2001, c. 9, s. 101
Restriction on fiduciary activitiesNo bank shall act in Canada asan executor, administrator or official guardian or a guardian, tutor, curator, judicial adviser or committee of a mentally incompetent person; ora trustee for a trust.
Restriction on deposit takingA bank shall not accept deposits in Canada unlessit is a member institution, as defined in section 2 of the Canada Deposit Insurance Corporation Act;it has been authorized under subsection 26.03(1) of that Act to accept deposits without being a member institution, as defined in section 2 of that Act; orthe order approving the commencement and carrying on of business by the bank authorizes it to accept deposits solely in accordance with subsection (3).[Repealed, 2001, c. 9, s. 102]Deposits that fall below $150,000A bank referred to in paragraph (1)(b) or (c) shall ensure that, on each day that is at least 30 days after the bank receives the authorization referred to in that paragraph,A/B ≤ 0.01whereAis the sum of all amounts each of which is the sum of all the deposits held by the bank at the end of a day in the preceding 30 days each of which deposits is less than $150,000 and payable in Canada; andBis the sum of all amounts each of which is the sum of all deposits held by the bank at the end of a day in those preceding 30 days and payable in Canada.Exchange rateFor the purpose of subsection (3), the rate of exchange that shall be applied on any day in determining the amount in Canadian dollars of a deposit in a currency of a country other than Canada shall be determined in accordance with rules prescribed under subsection 26.03(2) of the Canada Deposit Insurance Corporation Act.Definition of depositFor the purpose of subsection (3), deposit has the meaning that would be given to it by the schedule to the Canada Deposit Insurance Corporation Act for the purposes of deposit insurance if that schedule were read without reference to subsections 2(2), (5) and (6) of that schedule, but does not include prescribed deposits.RegulationsThe Governor in Council may make regulationsprescribing the deposits referred to in subsection (5); andprescribing terms and conditions with respect to the acceptance of those deposits.1991, c. 46, s. 413; 1997, c. 15, s. 43; 1999, c. 28, s. 21.1; 2001, c. 9, s. 102; 2007, c. 6, s. 23
[Repealed, 2018, c. 27, s. 319]
Deposits less than $150,000Subject to the regulations, a bank referred to in paragraph 413(1)(b) or (c) may not, in respect of its business in Canada, act as agent for any person in the taking of a deposit that is less than $150,000 and payable in Canada.Meaning of depositIn this section, deposit has the meaning assigned to that term by subsection 413(5).RegulationsThe Governor in Council may make regulations respecting the circumstances in which, and the conditions under which, a bank referred to in subsection (1) may act as agent for any person in the taking of a deposit that is less than $150,000 and payable in Canada.2001, c. 9, s. 104; 2007, c. 6, s. 25
Shared premisesSubject to the regulations, no bank referred to in paragraph 413(1)(b) or (c) shall carry on business in Canada on premises that are shared with those of a member institution, within the meaning of section 2 of the Canada Deposit Insurance Corporation Act, that is affiliated with the bank.LimitationSubsection (1) only applies in respect of premises or any portion of premises on which both the bank and the member institution carry on business with the public and to which the public has access.Adjacent premisesSubject to the regulations, no bank referred to in paragraph 413(1)(b) or (c) shall carry on business in Canada on premises that are adjacent to a branch or office of a member institution, within the meaning of section 2 of the Canada Deposit Insurance Corporation Act, that is affiliated with the bank, unless the bank clearly indicates to its customers that its business and the premises on which it is carried on are separate and distinct from the business and premises of the affiliated member institution.RegulationsThe Governor in Council may make regulationsrespecting the circumstances in which, and the conditions under which, a bank referred to in paragraph 413(1)(b) or (c) may carry on business in Canada on premises that are shared with those of a member institution referred to in subsection (1); andrespecting the circumstances in which, and the conditions under which, a bank referred to in paragraph 413(1)(b) or (c) may carry on business in Canada on premises that are adjacent to a branch or office of a member institution referred to in subsection (3).2001, c. 9, s. 104; 2007, c. 6, s. 26
Restriction on guaranteesA bank shall not guarantee on behalf of any person the payment or repayment of any sum of money unlessthe sum of money is a fixed sum of money with or without interest thereon; andthe person on whose behalf the bank has undertaken to guarantee the payment or repayment has an unqualified obligation to reimburse the bank for the full amount of the payment or repayment to be guaranteed.ExceptionParagraph (1)(a) does not apply where the person on whose behalf the bank has undertaken to guarantee the payment or repayment is a subsidiary of the bank.RegulationsThe Governor in Council may make regulations imposing terms and conditions in respect of guarantees permitted by this section.1991, c. 46, s. 414; 1997, c. 15, s. 44; 2001, c. 9, s. 105
Restriction on securities activitiesA bank shall not deal in Canada in securities to the extent prohibited or restricted by such regulations as the Governor in Council may make for the purposes of this section.
ProhibitionIt is prohibited for a bank to issue a debt obligation in relation to which the amounts of principal and interest owing are guaranteed to be paid from loans or other assets held by an entity that is created and organized for the principal purpose of holding those loans or other assets and with the intention of legally isolating those loans or other assets from the bank, unlessthe debt obligation is a covered bond as defined in section 21.5 of the National Housing Act;the bank is a registered issuer as defined in section 21.5 of that Act other than one whose right to issue covered bonds has been suspended; andthe debt obligation is issued under a registered program as defined in section 21.5 of that Act.ExceptionThe Governor in Council may make regulations exempting any type of debt obligation from the application of subsection (1).2012, c. 19, s. 362
Derivatives and eligible financial contracts — regulationsThe Governor in Council may make regulations respecting a bank’s activities in relation to derivatives and eligible financial contracts.Definition of derivativeIn this section, derivative means an option, swap, futures contract, forward contract or other financial or commodity contract or instrument whose market price, value, delivery obligations, payment obligations or settlement obligations are derived from, referenced to or based on an underlying interest, including a price, rate, index, value, variable, event, probability or thing.Definition of eligible financial contractIn this section, eligible financial contract has the same meaning as in subsection 39.15(9) of the Canada Deposit Insurance Corporation Act.2014, c. 20, s. 210; 2016, c. 7, s. 157
Benchmarks  — regulationsThe Governor in Council may make regulations respecting a bank’s activities in relation to benchmarks.Definition of benchmarkIn this section, benchmark means a price, estimate, rate, index or value that isdetermined from time to time by reference to an assessment of one or more underlying interests;made available to the public, either free of charge or on payment; andused for reference for any purpose, includingdetermining the interest payable, or other sums that are due, under loan agreements or other financial contracts or instruments,determining the value of financial instruments or the price at which they may be bought or sold, andmeasuring the performance of financial instruments.2014, c. 20, s. 210
Restriction on insurance businessA bank shall not undertake the business of insurance except to the extent permitted by this Act or the regulations.Restriction on acting as agentA bank shall not act in Canada as agent for any person in the placing of insurance and shall not lease or provide space in any branch in Canada of the bank to any person engaged in the placing of insurance.RegulationsThe Governor in Council may make regulations respecting the matters referred to in subsection (1) and regulations respecting relations between banks andentities that undertake the business of insurance; orinsurance agents or insurance brokers.SavingNothing in this section precludes a bank fromrequiring insurance to be placed by a borrower for the security of the bank; orobtaining group insurance for its employees or the employees of any bodies corporate in which it has a substantial investment pursuant to section 468.[Repealed, 1997, c. 15, s. 45]Definition of business of insuranceIn this section, business of insurance includesthe issuance of any annuity if the liability in respect of the annuity is contingent on the death of a person; andthe issuance of any debt obligation, any of whose terms and conditions are established on the basis of mortality considerations, under which the issuer is obliged to make periodic payments.1991, c. 46, s. 416; 1997, c. 15, s. 45; 2012, c. 19, s. 206
Restriction on leasingA bank shall not engage in Canada in any personal property leasing activity in which a financial leasing entity, as defined in subsection 464(1), is not permitted to engage.1991, c. 46, s. 417; 2001, c. 9, s. 106
Restriction on residential mortgagesA bank shall not make a loan in Canada on the security of residential property in Canada for the purpose of purchasing, renovating or improving that property, or refinance such a loan, if the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, would exceed 80 per cent of the value of the property at the time of the loan.ExceptionSubsection (1) does not apply in respect ofa loan made or guaranteed under the National Housing Act or any other Act of Parliament by or pursuant to which a different limit on the value of property on the security of which the bank may make a loan is established;a loan if repayment of the amount of the loan that exceeds the maximum amount set out in subsection (1) is guaranteed or insured by a government agency or a private insurer approved by the Superintendent;the acquisition by the bank from an entity of securities issued or guaranteed by the entity that are secured on any residential property, whether in favour of a trustee or otherwise, or the making of a loan by the bank to the entity against the issue of such securities; ora loan secured by a mortgage wherethe mortgage is taken back by the bank on a property disposed of by the bank, including where the disposition is by way of a realization of a security interest, andthe mortgage secures payment of an amount payable to the bank for the property.1991, c. 46, s. 418; 1997, c. 15, s. 46; 2007, c. 6, s. 27
Restriction on charges to borrowersSubject to any regulations made under subsection (2), a bank that has obtained insurance or a guarantee against default on a loan made in Canada on the security of residential property shall not charge a borrower an amount for the insurance or guarantee that exceeds the actual cost to the bank of the insurance or guarantee.RegulationsThe Governor in Council may make regulationsrespecting the determination of the actual cost to a bank for the purposes of subsection (1);respecting the circumstances in which a bank is exempt from the application of subsection (1);respecting, in relation to insurance or a guarantee against default on a loan made by a bank in Canada on the security of residential property,the arrangements into which the bank and any affiliates that it controls, and the representatives and the employees of each, may or may not enter, andthe payments or benefits that the bank and any affiliates that it controls, and the representatives and the employees of each, may or may not accept from an insurer or the insurer’s affiliates; andrespecting any other matters necessary to carry out the purposes of subsection (1).[Repealed, 2018, c. 27, s. 320]2009, c. 2, s. 270; 2012, c. 5, s. 35(E)2018, c. 27, s. 320
Policies re security interestsThe directors of a bank shall establish and the bank shall adhere to policies regarding the creation of security interests in property of the bank to secure obligations of the bank and the acquisition by the bank of beneficial interests in property that is subject to security interests.Order to amend policiesThe Superintendent may, by order, direct a bank to amend its policies as specified in the order.ComplianceA bank shall comply with an order made under subsection (2) within the time specified in the order.1991, c. 46, s. 419; 2001, c. 9, s. 107
Regulations and guidelinesThe Governor in Council may make regulations and the Superintendent may make guidelines respecting the creation by a bank of security interests in its property to secure obligations of the bank and the acquisition by the bank of beneficial interests in property that is subject to security interests.2001, c. 9, s. 107
ExceptionSections 419 and 419.1 do not apply in respect of a security interest created by a bank to secure an obligation of the bank to the Bank of Canada or the Canada Deposit Insurance Corporation.2001, c. 9, s. 107
Restriction on receiversA bank shall not grant to a person the right to appoint a receiver or a receiver and manager of the property or business of the bank.
Restriction on partnershipsExcept with the approval of the Superintendent, a bank may not be a general partner in a limited partnership or a partner in a general partnership.Meaning of general partnershipFor the purposes of subsection (1), general partnership means any partnership other than a limited partnership.1991, c. 46, s. 421; 2001, c. 9, s. 108
[Repealed, 2001, c. 9, s. 109][Repealed, 1993, c. 44, s. 27]
Definition of non-WTO Member bank subsidiaryIn section 422.2, non-WTO Member bank subsidiary means a bank that is a subsidiary of a foreign bank and that is not controlled by a WTO Member resident.1993, c. 44, s. 28; 1994, c. 47, s. 24; 1999, c. 28, s. 22; 2001, c. 9, s. 110
Limitation on branches in Canada of non-WTO Member bank subsidiariesNo non-WTO Member bank subsidiary shall have any branch in Canada, other than its head office and one branch, without the approval of the Minister.1993, c. 44, s. 28; 1999, c. 28, s. 22
[Repealed, 1994, c. 47, s. 25]
Special Security
DefinitionsFor the purposes of sections 426 to 436,agricultural equipment means implements, apparatus, appliances and machinery of any kind usually affixed to real property, for use on a farm, but does not include a farm electric system; (installations agricoles ou matériel agricole immobilier)agricultural implements means tools, implements, apparatus, appliances and machines of any kind not usually affixed to real property, for use on or in connection with a farm, and vehicles for use in the business of farming and, without restricting the generality of the foregoing, includes plows, harrows, drills, seeders, cultivators, mowing machines, reapers, binders, threshing machines, combines, leaf tobacco tying machines, tractors, movable granaries, trucks for carrying products of agriculture, equipment for bee-keeping, cream separators, churns, washing machines, spraying apparatus, portable irrigation apparatus, incubators, milking machines, refrigerators and heating and cooking appliances for farming operations or use in the farm home of a kind not usually affixed to real property; (instruments agricoles ou matériel agricole mobilier)aquacultural electric system means all machinery, apparatus and appliances for the generation or distribution of electricity in an aquaculture operation, whether or not affixed to real property; (installation électrique aquicole)aquacultural equipment means implements, apparatus, appliances and machinery of any kind usually affixed to real property for use in an aquaculture operation, but does not include an aquacultural electric system; (installations aquicoles ou matériel aquicole immobilier)aquacultural implements means tools, implements, apparatus, appliances and machines of any kind not usually affixed to real property, for use in an aquaculture operation, and includes net pen systems, vehicles and boats for use in aquaculture; (instruments aquicoles ou matériel aquicole mobilier)aquacultural stock growing or produced in the aquaculture operation means all products of the aquaculture operation; (stock en croissance ou produits de l’exploitation aquicole)aquaculture means the cultivation of aquatic plants and animals; (aquiculture)aquaculture operation means any premises or site where aquaculture is carried out; (exploitation aquicole)aquaculturist includes the owner, occupier, landlord and tenant of an aquaculture operation; (aquiculteur)aquatic broodstock means any aquatic plants and animals used to produce aquatic seedstock; (stock géniteur aquicole)aquatic plants and animals means plants and animals that, at most stages of their development or life cycles, live in an aquatic environment; (organismes animaux et végétaux aquatiques)aquatic seedstock means aquatic plants and animals that at any stage of their development are purchased or collected by an aquaculturist for cultivation; (stock aquicole de départ)bill of lading includes all receipts for goods, wares and merchandise accompanied by an undertakingto move the goods, wares and merchandise from the place where they were received to some other place, by any means whatever, orto deliver to a place other than the place where the goods, wares and merchandise were received a like quantity of goods, wares and merchandise of the same or a similar grade or kind; (connaissement)crops growing or produced on the farm means all products of the farm; (récoltes sur pied ou produites à la ferme)farm means land in Canada used for the purpose of farming, which term includes livestock raising, dairying, bee-keeping, fruit growing, the growing of trees and all tillage of the soil; (ferme)farm electric system means all machinery, apparatus and appliances for the generation or distribution of electricity on a farm whether or not affixed to real property; (installation électrique de ferme)farmer includes the owner, occupier, landlord and tenant of a farm; (agriculteur)fish includes shellfish, crustaceans and marine animals; (poisson)fisherman means a person whose business consists in whole or in part of fishing; (pêcheur)fishing means fishing for or catching fish by any method; (pêche)fishing equipment and supplies means equipment, apparatus, appliances and supplies for use in the operation of a fishing vessel and not forming part thereof, or for use in fishing, and, without restricting the generality of the foregoing, includes detachable engines and machinery, lines, hooks, trawls, nets, anchors, traps, bait, salt, fuel and stores; (engins et fournitures de pêche)fishing vessel means any ship or boat or any other description of vessel for use in fishing and equipment, apparatus and appliances for use in the operation thereof and forming part thereof, or any share or part interest therein; (bateau de pêche)forest means land in Canada covered with timber stands or that, formerly so covered, is not put to any use inconsistent with forestry, and includes a sugar bush; (forêt)forestry means the conservation, cultivation, improvement, harvesting and rational utilization of timber stands and the resources contained therein and obtainable therefrom, and includes the operation of a sugar bush; (sylviculture)forestry equipment means implements, apparatus, appliances and machinery of any kind usually affixed to real property, for use in a forest; (matériel sylvicole immobilier)forestry implements means tools, implements, apparatus, appliances and machines of any kind not usually affixed to real property, for use in forestry, and includes vehicles for use in forestry; (matériel sylvicole mobilier)forestry producer means a person whose business consists in whole or in part of forestry and includes a producer of maple products; (sylviculteur)goods, wares and merchandise includes products of agriculture, products of aquaculture, products of the forest, products of the quarry and mine, products of the sea, lakes and rivers, and all other articles of commerce; (effets, denrées ou marchandises)grain includes wheat, oats, barley, rye, corn, buckwheat, flax, beans and all kinds of seeds; (grain)hydrocarbons means solid, liquid and gaseous hydrocarbons and any natural gas whether consisting of a single element or of two or more elements in chemical combination or uncombined and, without restricting the generality of the foregoing, includes oil-bearing shale, tar sands, crude oil, petroleum, helium and hydrogen sulphide; (hydrocarbures)livestock includeshorses and other equines,cattle, sheep, goats and other ruminants, andswine, poultry, bees and fur-bearing animals; (bétail)manufacturer means any person who manufactures or produces by hand, art, process or mechanical means any goods, wares and merchandise and, without restricting the generality of the foregoing, includes a manufacturer of logs, timber or lumber, maltster, distiller, brewer, refiner and producer of petroleum, tanner, curer, packer, canner, bottler and a person who packs, freezes or dehydrates any goods, wares and merchandise; (fabricant)minerals includes base and precious metals, coal, salt and every other substance that is an article of commerce obtained from the earth by any method of extraction, but does not include hydrocarbons or any animal or vegetable substance other than coal; (substances minérales)products of agriculture includesgrain, hay, roots, vegetables, fruits, other crops and all other direct products of the soil, andhoney, livestock (whether alive or dead), dairy products, eggs and all other indirect products of the soil; (produits agricoles)products of aquaculture includes all cultivated aquatic plants and animals; (produits aquicoles)products of the forest includeslogs, pulpwood, piling, spars, railway ties, poles, pit props and all other timber,boards, laths, shingles, deals, staves and all other lumber, bark, wood chips and sawdust and Christmas trees,skins and furs of wild animals, andmaple products; (produits de la forêt)products of the quarry and mine includes stone, clay, sand, gravel, metals, ores, coal, salt, precious stones, metalliferous and non-metallic minerals and hydrocarbons, whether obtained by excavation, drilling or otherwise; (produits des carrières et des mines)products of the sea, lakes and rivers includes fish of all kinds, marine and freshwater organic and inorganic life and any substances extracted or derived from any water, but does not include products of aquaculture; (produits aquatiques)unperfected, in relation to a security interest, means that the security interest has not been registered in a public register maintained under the law under which the security interest is created, or has not been perfected or published by any other means recognized by that law, where the registration or other means of perfection or publication would have made the security interest effective against third parties or would have determined priorities in rank in respect of rights in, on or in respect of the property that is subject to the security interest; (non parfaite)warehouse receipt includesany receipt given by any person for goods, wares and merchandise in the person’s actual, visible and continued possession as bailee thereof in good faith and not as the owner thereof,receipts given by any person who is the owner or keeper of a harbour, cove, pond, wharf, yard, warehouse, shed, storehouse or other place for the storage of goods, wares and merchandise, for goods, wares and merchandise delivered to the person as bailee, and actually in the place or in one or more of the places owned or kept by the person, whether or not that person is engaged in other business,receipts given by any person in charge of logs or timber in transit from timber limits or other lands to the place of destination of the logs or timber,Lake Shippers’ Clearance Association receipts and transfer certificates, British Columbia Grain Shippers’ Clearance Association receipts and transfer certificates, and all documents recognized by the Canada Grain Act as elevator receipts, andreceipts given by any person for any hydrocarbons received by the person as bailee, whether the person’s obligation to restore requires delivery of the same hydrocarbons or may be satisfied by delivery of a like quantity of hydrocarbons of the same or a similar grade or kind. (récépissé d’entrepôt)Interpretation — products and by-productsFor the purposes of sections 426 to 436, each thing included in the following terms as defined in subsection (1), namely,aquacultural stock growing or produced in the aquaculture operation,crops growing or produced on the farm,livestock,products of agriculture,products of aquaculture,products of the forest,products of the quarry and mine, andproducts of the sea, lakes and rivers,comprises that thing in any form or state and any part thereof and any product or by-product thereof or derived therefrom.1991, c. 46, s. 425; 2012, c. 5, s. 36
Loans on hydrocarbons and mineralsA bank may lend money and make advances on the security of any or all of the following, namely,hydrocarbons or minerals in, under or on the ground, in place or in storage,the rights, licences or permits of any person to obtain and remove any such hydrocarbons or minerals and to enter on, occupy and use lands from or on which any of such hydrocarbons or minerals are or may be extracted, mined or produced,the estate or interest of any person in or to any such hydrocarbons or minerals, rights, licences, permits and lands whether the estate or interest is entire or partial, andthe equipment and casing used or to be used in extracting, mining or producing or seeking to extract, mine or produce, and storing any such, hydrocarbons or minerals,or of any rights or interests in or to any of the foregoing whether the security be taken from the borrower or from a guarantor of the liability of the borrower or from any other person.SecuritySecurity under this section may be given by signature and delivery to the bank, by or on behalf of the person giving the security, of an instrument in the prescribed form or in a form to the like effect, and shall affect the property described in the instrument giving the securityof which the person giving the security is the owner at the time of the delivery of the instrument, orof which that person becomes the owner at any time thereafter before the release of the security by the bank, whether or not the property is in existence at the time of the delivery,all of which property is for the purposes of this Act property covered by the security.Rights under securityAny security given under this section vests in the bank, in addition to and without limitation of any other rights or powers vested in or conferred on it, full power, right and authority, through its officers, employees or agents, in the event ofnon-payment of any loan or advance as security for the payment of which the bank has taken the security, orfailure to care for, maintain, protect or preserve the property covered by the security,to do all or any of the following, namely, take possession of, seize, care for, maintain, use, operate and, subject to the provisions of any other Act and any regulations made under any other Act governing the ownership and disposition of the property that is the subject of the security, sell the property covered by the security or part thereof as it sees fit.Liability to account for surplusWhere a bank exercises any right conferred on it by subsection (3) in relation to property given to it as security, the bank shall provide to the person entitled thereto any surplus proceeds resulting from the exercise of the right that remain after payment of all loans and advances, together with interest and expenses, in relation to which the property was given as security.Effect of saleA sale pursuant to subsection (3) of any property given to a bank as security vests in the purchaser all the right and title in and to such property that the person giving the security had when the security was given and that that person thereafter acquired.Sale to be by public auctionUnless a person by whom property was given to a bank as security has agreed otherwise, a sale pursuant to subsection (3) shall be made by public auction afternotice of the time and place of the sale has been sent by registered mail to the recorded address of the person by whom the property was given as security at least ten days prior to the sale; andpublication of an advertisement of the sale, at least two days prior to the sale, in at least two newspapers published in or nearest to the place where the sale is to be made.Priority of bank’s rightsSubject to subsections (8), (9) and (10), all the rights and powers of a bank in respect of the property covered by security given under this section have priority over all rights subsequently acquired in, on or in respect of the property and also over the claim of any mechanics’ lien holder, of any unpaid vendor of equipment or casing or of any person who had a security interest in that property that was unperfected at the time the bank acquired its security in the property.ExceptionThe priority referred to in subsection (7) does not extend over the claim of any unpaid vendor who had a lien on the equipment or casing, or of any person who has a security interest in the property that was unperfected at the time the bank acquired its security in the property, if the bank acquired its security with knowledge of that unpaid vendor’s lien or that other person’s security interest.IdemThe rights and powers of a bank in respect of the property covered by security given under this section do not have priority over an interest or a right acquired in, on or in respect of the property unless, prior tothe registration of such interest or right, orthe registration or filing of the deed or other instrument evidencing such interest or right, or of a caution, caveat or memorial in respect thereof,there has been registered or filed in the proper land registry or land titles office or office in which are recorded the rights, licences or permits referred to in this section,an original of the instrument giving the security,a copy of the instrument giving the security, certified by an officer or employee of the bank to be a true copy, ora caution, caveat or memorial in respect of the rights of the bank.Procedure for registeringEvery registrar or officer in charge of the proper land registry or land titles or other office to whom a document mentioned in paragraph (8)(c), (d) or (e) is tendered shall register or file the document according to the ordinary procedure for registering or filing within that office documents that evidence liens or charges against, or cautions, caveats or memorials in respect of claims to, interests in or rights in respect of any such property and subject to payment of the like fees.ExceptionSubsections (8) and (9) do not apply if the law of the appropriate province does not permit the registration or filing of the tendered document or if any law enacted by or under the authority of Parliament, governing the ownership and disposal of the property that is the subject of security given under this section, does not provide by specific reference to this section for the registration or filing of the tendered document.Further securityWhen making a loan or an advance on the security provided for by this section, a bank may take, on any property covered by the security, any further security it sees fit.Substitution of securityNotwithstanding anything in this Act, where the bank holds any security covering hydrocarbons or minerals, it may take in lieu of that security, to the extent of the quantity covered by the security taken, any security covering or entitling it to the delivery of the same hydrocarbons or minerals or hydrocarbons or minerals of the same or a similar grade or kind.1991, c. 46, s. 426; 2012, c. 5, s. 37
Loans to certain borrowers and securityA bank may lend money and make advancesto any wholesale or retail purchaser or shipper of, or dealer in, products of agriculture, products of aquaculture, products of the forest, products of the quarry and mine, products of the sea, lakes and rivers or goods, wares and merchandise, manufactured or otherwise, on the security of such products or goods, wares and merchandise and of goods, wares and merchandise used in or procured for the packing of such products or goods, wares and merchandise,to any person engaged in business as a manufacturer, on the security of goods, wares and merchandise manufactured or produced by that person or procured for such manufacture or production and of goods, wares and merchandise used in or procured for the packing of goods, wares and merchandise so manufactured or produced,to any aquaculturist, on the security of aquacultural stock growing or produced in the aquaculture operation or on the security of aquacultural equipment or aquacultural implements,to any farmer, on the security of crops growing or produced on the farm or on the security of agricultural equipment or agricultural implements,to any aquaculturistfor the purchase of aquatic broodstock or aquatic seedstock, on the security of the aquatic broodstock or aquatic seedstock and any aquatic stock to be grown therefrom,for the purchase of pesticide, on the security of the pesticide and any aquatic stock to be grown from the site on which the pesticide is to be used, andfor the purchase of feed, veterinary drugs, biologicals or vaccines, on the security of the feed, veterinary drugs, biologicals or vaccines and any aquatic stock to be grown in the aquaculture operation on which the feed, veterinary drugs, biologicals or vaccines are to be used,to any farmerfor the purchase of seed grain or seed potatoes, on the security of the seed grain or seed potatoes and any crop to be grown therefrom, andfor the purchase of fertilizer or pesticide, on the security of the fertilizer or pesticide and any crop to be grown from land on which, in the same season, the fertilizer or pesticide is to be used,to any aquaculturist on the security of aquatic plants and animals, but security taken under this paragraph is not effective in respect of any aquatic plants and animals that, at the time the security is taken, by any statutory law that is then in force, are exempt from seizure under writs of execution and the aquaculturist is prevented from giving as security for money lent to the aquaculturist,to any farmer or to any person engaged in livestock raising, on the security of feed or livestock, but security taken under this paragraph is not effective in respect of any livestock that, at the time the security is taken, by any statutory law that is then in force, is exempt from seizure under writs of execution and the farmer or other person engaged in livestock raising is prevented from giving as security for money lent to the farmer or other person,to any aquaculturist for the purchase of aquacultural implements, on the security of those aquacultural implements,to any farmer for the purchase of agricultural implements, on the security of those agricultural implements,to any aquaculturist for the purchase or installation of aquacultural equipment or an aquacultural electric system, on the security of that aquacultural equipment or aquacultural electric system,to any farmer for the purchase or installation of agricultural equipment or a farm electric system, on the security of that agricultural equipment or farm electric system,to any aquaculturist forthe repair or overhaul of an aquacultural implement, aquacultural equipment or an aquaculture electric system,the alteration or improvement of an aquacultural electric system,the erection or construction of fencing or works for drainage in an aquaculture operation for the holding, rearing or protection of aquatic plants and animals or for the supply of water to such plants and animals or the disposal of effluent from them,the construction, repair or alteration of or making of additions to any building or structure in an aquaculture operation, andany works for the improvement or development of an aquaculture operation for which a loan, as defined in the Canada Small Business Financing Act, or a business improvement loan, as defined in the Small Business Loans Act, may be made,on the security of aquacultural equipment or aquacultural implements, but security taken under this paragraph is not effective in respect of aquacultural equipment or aquacultural implements that, at the time the security is taken, by any statutory law that is then in force, are exempt from seizure under writs of execution and the aquaculturist is prevented from giving as security for money lent to the aquaculturist,to any farmer forthe repair or overhaul of an agricultural implement, agricultural equipment or a farm electric system,the alteration or improvement of a farm electric system,the erection or construction of fencing or works for drainage on a farm,the construction, repair or alteration of or making of additions to any building or structure on a farm,[Repealed, 2009, c. 15, s. 13]any purpose for which a loan as defined in the Canadian Agricultural Loans Act may be made,on the security of agricultural equipment or agricultural implements, but security taken under this paragraph is not effective in respect of agricultural equipment or agricultural implements that, at the time the security is taken, by any statutory law that is then in force, are exempt from seizure under writs of execution and the farmer is prevented from giving as security for money lent to the farmer,to any fisherman, on the security of fishing vessels, fishing equipment and supplies or products of the sea, lakes and rivers, but security taken under this paragraph is not effective in respect of any such property that, at the time the security is taken, by any statutory law that is then in force, is exempt from seizure under writs of execution and the fisherman is prevented from giving as security for money lent to the fisherman, andto any forestry producer, on the security of fertilizer, pesticide, forestry equipment, forestry implements or products of the forest, but security taken under this paragraph is not effective in respect of any such property that, at the time the security is taken, by any statutory law that is then in force, is exempt from seizure under writs of execution and the forestry producer is prevented from giving as security for money lent to the forestry producer,and the security may be given by signature and delivery to the bank, by or on behalf of the person giving the security, of a document in the prescribed form or in a form to the like effect.Rights and powers vested by delivery of documentDelivery of a document giving security on property to a bank under the authority of this section vests in the bank in respect of the property therein describedof which the person giving security is the owner at the time of the delivery of the document, orof which that person becomes the owner at any time thereafter before the release of the security by the bank, whether or not the property is in existence at the time of the delivery,the following rights and powers, namely,if the property is property on which security is given under paragraph (1)(a), (b), (g), (h), (i), (j) or (o), under paragraph (1)(c) or (m) consisting of aquacultural implements, under paragraph (1)(d) or (n) consisting of agricultural implements or under paragraph (1)(p) consisting of forestry implements, the same rights and powers as if the bank had acquired a warehouse receipt or bill of lading in which that property was described, orif the propertyis property on which security is given under paragraph (1)(c) consisting of aquacultural stock growing or produced in the aquaculture operation or aquacultural equipment,is property on which security is given under paragraph (1)(d) consisting of crops or agricultural equipment,is property on which security is given under any of paragraphs (1)(e), (f), (k) and (l),is property on which security is given under paragraph (1)(m) consisting of aquacultural equipment,is property on which security is given under paragraph (1)(n) consisting of agricultural equipment, oris property on which security is given under paragraph (1)(p) consisting of forestry equipment,a first and preferential lien and claim thereon for the sum secured and interest thereon, and as regards a crop as well before as after the severance from the soil, harvesting or threshing thereof, and, in addition thereto, the same rights and powers in respect of the property as if the bank had acquired a warehouse receipt or bill of lading in which the property was described, and all rights and powers of the bank subsist notwithstanding that the property is affixed to real property and notwithstanding that the person giving the security is not the owner of that real property,and all such property in respect of which such rights and powers are vested in the bank under this section is for the purposes of this Act property covered by the security.Power of the bank to take possession, etc.Where security on any property is given to a bank under any of paragraphs (1)(c) to (p), the bank, in addition to and without limitation of any other rights or powers vested in or conferred on it, has full power, right and authority, through its officers, employees or agents, in the case ofnon-payment of any of the loans or advances for which the security was given,failure to care for or harvest any crop or to care for any livestock covered by the security,failure to care for or harvest any aquatic stock growing or produced in the aquaculture operation or to care for any aquatic plants and animals covered by the security,failure to care for any property on which security is given under any of paragraphs (1)(i) to (p),any attempt, without the consent of the bank, to dispose of any property covered by the security, orseizure of any property covered by the security,to take possession of or seize the property covered by the security, and in the case of aquacultural stock growing or produced in the aquaculture operation or a crop growing or produced on the farm to care for it and, where applicable, harvest it or thresh the grain therefrom, and in the case of livestock or aquatic plants and animals to care for them, and has the right and authority to enter on any land, premises or site whenever necessary for any such purpose and to detach and remove such property, exclusive of wiring, conduits or piping incorporated in a building, from any real property to which it is affixed.Notice of intentionThe following provisions apply where security on property is given to a bank under this section:the rights and powers of the bank in respect of property covered by the security are void as against creditors of the person giving the security and as against subsequent purchasers or mortgagees in good faith of the property covered by the security unless a notice of intention signed by or on behalf of the person giving the security was registered in the appropriate agency not more than three years immediately before the security was given;registration of a notice of intention may be cancelled by registration in the appropriate agency in which the notice of intention was registered of a certificate of release signed on behalf of the bank named in the notice of intention stating that every security to which the notice of intention relates has been released or that no security was given to the bank, as the case may be;every person, on payment of the fee prescribed pursuant to subsection (6), is entitled to have access through the agent to any system of registration, notice of intention or certificate of release kept by or in the custody of the agent;any person desiring to ascertain whether a notice of intention given by a person is registered in an agency may inquire by sending a prepaid telegram or written communication addressed to the agent, and it is the duty of the agent, in the case of a written inquiry, only if it is accompanied by the payment of the fee prescribed pursuant to subsection (6), to make the necessary examination of the information contained in the system of registration and of the relevant documents, if any, and to reply to the inquirer stating the name of the bank mentioned in any such notice of intention, which reply shall be sent by mail unless a telegraphic reply is requested, in which case it shall be sent at the expense of the inquirer; andevidence of registration in an agency of a notice of intention or a certificate of release and of the place, date, time and serial number, if any, of its registration may be given by the production of a copy of the notice of intention or certificate of release duly certified by the agent to be a true copy thereof without proof of the signature or of the official character of the agent.DefinitionsIn subsections (4) and (6),agency means, in a province, the office of the Bank of Canada or its authorized representative but does not include its Ottawa office, and in Yukon, the Northwest Territories and Nunavut means the office of the clerk of the court of each of those territories respectively; (agence)agent means the officer in charge of an agency, and includes any person acting for that officer; (agent)appropriate agency meansthe agency for the province in which is located the place of business of the person by whom or on whose behalf a notice of intention is signed,if that person has more than one place of business in Canada and the places of business are not in the same province, the agency for the province in which is located the principal place of business of that person, orif that person has no place of business, the agency for the province in which the person resides,and in respect of any notice of intention registered before the day this Part comes into force, means the office in which registration was required to be made by the law in force at the time of such registration; (agence appropriée)notice of intention means a notice of intention in the prescribed form or in a form to the like effect, and includes a notice of intention registered before the day this Part comes into force, in the form and registered in the manner required by the law in force at the time of the registration of the notice of intention; (préavis)principal place of business meansin the case of a body corporate incorporated by or under an Act of Parliament or the legislature of a province, the place where, according to the body corporate’s charter, memorandum of association or by-laws, the head office of the body corporate in Canada is situated, andin the case of any other body corporate, the place at which a civil process in the province in which the loans or advances will be made can be served on the body corporate; (principal établissement)system of registration means all registers and other records required by subsection (4) to be prepared and maintained and any such system may be in a bound or loose-leaf form or in a photographic film form, or may be entered or recorded by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time. (archives)RegulationsThe Governor in Council may, for the purposes of this section, make regulationsrespecting the practice and procedure for the operation of a system of registration, including registration of notices of intention, the cancellation of such registrations and access to the system of registration;requiring the payment of fees relating to the system of registration and prescribing the amounts thereof; andrespecting any other matter necessary for the maintenance and operation of a system of registration.Priority of wages and money owing for perishable agricultural productsDespite subsection (2) and despite the fact that a notice of intention by a person giving security on property under this section has been registered under this section, if, under the Bankruptcy and Insolvency Act, a bankruptcy order is made against, or an assignment is made by, that person,claims for wages, salaries or other remuneration owing in respect of the period of three months immediately preceding the making of the order or assignment, to employees of the person employed in connection with the business or farm in respect of which the property covered by the security was held or acquired by the person, andclaims of a grower or producer of products of agriculture for money owing by a manufacturer to the grower or producer for such products that were grown or produced by the grower or producer on land owned or leased by the grower or producer and that were delivered to the manufacturer during the period of six months immediately preceding the making of the order or assignment to the extent of the lesser ofthe total amount of the claims of the grower or producer therefor, andthe prescribed amounthave priority over the rights of the bank in a security given to the bank under this section, in the order in which they are mentioned in this subsection, and if the bank takes possession or in any way disposes of the property covered by the security, the bank is liable for those claims to the extent of the net amount realized on the disposition of the property, after deducting the cost of realization, and the bank is subrogated in and to all the rights of the claimants to the extent of the amounts paid to them by the bank.[Repealed, 1997, c. 15, s. 47]1991, c. 46, s. 427; 1992, c. 27, s. 90; 1993, c. 6, s. 6(E), c. 28, s. 78; 1997, c. 15, s. 47; 1998, c. 36, s. 21; 2002, c. 7, s. 82(E); 2004, c. 25, s. 185; 2009, c. 15, s. 13
Priority of bank’s rightsAll the rights and powers of a bank in respect of the property mentioned in or covered by a warehouse receipt or bill of lading acquired and held by the bank, and the rights and powers of the bank in respect of the property covered by security given to the bank under section 427 that are the same as if the bank had acquired a warehouse receipt or bill of lading in which that property was described, have, subject to subsection 427(4) and subsections (3) to (6) of this section, priority over all rights subsequently acquired in, on or in respect of that property, and also over the claim of any unpaid vendor or of any person who has a security interest in that property that was unperfected at the time the bank acquired its security in the property.Affixation to real propertyIf security is given to the bank under paragraph 427(1)(c) or (m) consisting of aquacultural equipment, under paragraph 427(1)(d) or (n) consisting of agricultural equipment, under paragraph 427(1)(k) consisting of aquacultural equipment or an aquacultural electric system, under paragraph 427(1)(l) consisting of agricultural equipment or a farm electric system or under paragraph 427(1)(p) consisting of forestry equipment, the priority referred to in subsection (1) exists even if the property is or becomes affixed to real property.ExceptionThe priority referred to in subsection (1) does not extend over the claim of any unpaid vendor who had a lien on the property, or of any person who has a security interest in the property that was unperfected at the time the bank acquired its warehouse receipt, bill of lading or security, if the bank acquired it with knowledge of that unpaid vendor’s lien or that other person’s security interest.Bank required to register against land in certain casesWhere security has been given to a bank under paragraph 427(1)(c) or (m) consisting of aquacultural equipment, under paragraph 427(1)(d) or (n) consisting of agricultural equipment, under paragraph 427(1)(k) consisting of aquacultural equipment or an aquacultural electric system, under paragraph 427(1)(l) consisting of agricultural equipment or a farm electric system or under paragraph 427(1)(p) consisting of forestry equipment that is or has become affixed to real property, the rights and powers of the bank do not have priority over any interest or right acquired in, on or in respect of the real property after that property has become affixed thereto unless, prior tothe registration of the interest or right, orthe registration or filing of the deed or other instrument evidencing the interest or right, or of a caution, caveat or memorial in respect thereof,there has been registered or filed in the proper land registry or land titles office,an original of the document giving the security,a copy of the document giving the security, certified by an officer or employee of the bank to be a true copy, ora caution, caveat or memorial in respect of the rights of the bank.Procedure for registeringEvery registrar or officer in charge of the proper land registry or land titles office to whom a document mentioned in paragraph (3)(c), (d) or (e) is tendered shall register or file the document according to the ordinary procedure for registering or filing within that office documents that evidence liens or charges against, or cautions, caveats or memorials in respect of claims to, or interests or rights in respect of, real property and subject to payment of the like fees, but subsection (3) and this subsection do not apply if the provincial law does not permit such registration or filing of the tendered document.Security on fishing vesselsIf security has been given to a bank under paragraph 427(1)(o) on a fishing vessel that is recorded or registered under the Canada Shipping Act, 2001, the rights and powers of the bank do not have priority over any rights that are subsequently acquired in the vessel and are recorded or registered under that Act unless a copy of the document giving the security, certified by an officer of the bank to be a true copy, has been recorded or registered under that Act in respect of the vessel before the recording or registration under that Act of those rights.Effect of registration of securityA copy of the document giving the security described in subsection (5), certified by an officer of the bank, may be recorded or registered under the Canada Shipping Act, 2001 as if it were a mortgage given under that Act and, on the recording or registration of the document, the bank, in addition to and without limitation of any other rights or powers vested in or conferred on it, has all the rights and powers in respect of the vessel that it would have if the security were a mortgage recorded or registered under that Act.Sale of goods on non-payment of debtIn the event of non-payment of any debt, liability, loan or advance, as security for the payment of which a bank has acquired and holds a warehouse receipt or bill of lading or has taken any security under section 427, the bank may sell all or any part of the property mentioned therein or covered thereby and apply the proceeds against that debt, liability, loan or advance, with interest and expenses, returning the surplus, if any, to the person by whom the security was given.IdemThe power of sale referred to in subsection (7) shall, unless the person by whom the security mentioned in that subsection was given has agreed to the sale of the property otherwise than as herein provided or unless the property is perishable and to comply with the following provisions might result in a substantial reduction in the value of the property, be exercised subject to the following provisions, namely,every sale of such property other than livestock shall be by public auction afternotice of the time and place of the sale has been sent by registered mail to the recorded address of the person by whom the security was given, at least ten days prior to the sale in the case of any such property other than products of the forest, and at least thirty days prior to the sale in the case of any such property consisting of products of the forest, andpublication of an advertisement of the sale, at least two days prior to the sale, in at least two newspapers published in or nearest to the place where the sale is to be made stating the time and place thereof; andevery sale of livestock shall be made by public auction not less than five days afterpublication of an advertisement of the time and place of the sale in a newspaper, published in or nearest to the place where the sale is to be made, andposting of a notice in writing of the time and place of the sale, in or at the post office nearest to the place where the sale is to be made,and the proceeds of such a sale of livestock, after deducting all expenses incurred by the bank and all expenses of seizure and sale, shall first be applied to satisfy privileges, liens or pledges having priority over the security given to the bank and for which claims have been filed with the person making the sale, and the balance shall be applied in payment of the debt, liability, loan or advance, with interest and the surplus, if any, returned to the person by whom the security was given.Right and title of purchaserAny sale of property by a bank under subsections (7) and (8) vests in the purchaser all the right and title in and to the property that the person from whom security was taken under section 435 had when the security was given or that the person from whom security was taken under section 427 had when the security was given and that the person acquired thereafter.Duty to act honestly and in good faithIn connection with any sale of property by a bank pursuant to subsections (7) and (8) or pursuant to any agreement between the bank and the person by whom the security was given, the bank shall act honestly and in good faith and shall deal with the property in a timely and appropriate manner having regard to the nature of the property and the interests of the person by whom the security was given and, in the case of a sale pursuant to an agreement, shall give the person by whom the security was given reasonable notice of the sale except where the property is perishable and to do so might result in a substantial reduction in the value of the property.Duty to act expeditiously in respect of seized propertySubject to section 427 and this section and any agreement between the bank and the person by whom the property was given as security, where, pursuant to subsection 427(3), a bank takes possession of or seizes property given as security to the bank, the bank shall, as soon as is reasonably practical having regard to the nature of the property, sell the property or so much thereof as will enable it to satisfy the debt, liability, loan or advance, with interest and expenses, in relation to which the property was given as security.Goods manufactured from articles pledgedWhere goods, wares and merchandise are manufactured or produced from goods, wares and merchandise, or any of them, mentioned in or covered by any warehouse receipt or bill of lading acquired and held by a bank or any security given to a bank under section 427, the bank has the same rights and powers in respect of the goods, wares and merchandise so manufactured or produced, as well during the process of manufacture or production as after the completion thereof, and for the same purposes and on the same conditions as it had with respect to the original goods, wares and merchandise.Subrogation of securityWhere payment or satisfaction of any debt, liability, loan or advance in respect of which a bank has taken security under section 426, 427 or 435 is guaranteed by a third person and the debt, liability, loan or advance is paid or satisfied by the guarantor, the guarantor is subrogated in and to all of the powers, rights and authority of the bank under the security that the bank holds in respect thereof under sections 426, 427 and 435 and this section.Bank may assign its rightsA bank may assign to any person all or any of its rights and powers in respect of any property on which security has been given to it under paragraph 427(1)(i), (j), (k), (l), (m), (n), (o) or (p), whereupon that person has all or any of the assigned rights and powers of the bank under that security.1991, c. 46, s. 428; 2001, c. 26, s. 275; 2012, c. 5, s. 38
Conditions under which bank may take securityA bank shall not acquire or hold any warehouse receipt or bill of lading, or any security under section 427, to secure the payment of any debt, liability, loan or advance unless the debt, liability, loan or advance is contracted or madeat the time of the acquisition thereof by the bank, oron the written promise or agreement that a warehouse receipt or bill of lading or security under section 427 would be given to the bank, in which case the debt, liability, loan or advance may be contracted or made before or at the time of or after that acquisition,and such debt, liability, loan or advance may be renewed, or the time for the payment thereof extended, without affecting any security so acquired or held.Exchange of one security for anotherA bank mayon the shipment of any property for which it holds a warehouse receipt or any security under section 427, surrender the receipt or security and receive a bill of lading in exchange therefor;on the receipt of any property for which it holds a bill of lading, or any security under section 427, surrender the bill of lading or security, store the property and take a warehouse receipt therefor, or ship the property, or part of it, and take another bill of lading therefor;surrender any bill of lading or warehouse receipt held by it and receive in exchange therefor any security that may be taken under this Act;when it holds any security under section 427 on grain in any elevator, take a bill of lading covering the same grain or grain of the same grade or kind shipped from that elevator, in lieu of that security, to the extent of the quantity shipped; andwhen it holds any security whatever covering grain, take in lieu of that security, to the extent of the quantity covered by the security taken, a bill of lading or warehouse receipt for, or any document entitling it under the Canada Grain Act to the delivery of, the same grain or grain of the same grade or kind.
Loans to receiver, liquidator, etc.A bank may lend money and make advances to a receiver, to a receiver and manager, to a liquidator appointed under any winding-up Act, or to a custodian, an interim receiver or a trustee under the Bankruptcy and Insolvency Act, if the receiver, receiver and manager, liquidator, custodian, interim receiver or trustee has been duly authorized or empowered to borrow, and, in making the loan or advance, and thereafter, the bank may take security, with or without personal liability, from the receiver, receiver and manager, liquidator, custodian, interim receiver or trustee to such an amount and on such property as may be directed or authorized by any court of competent jurisdiction.1991, c. 46, s. 430; 1992, c. 27, s. 90
Securities may be soldSecurities acquired and held by a bank as security may, in case of default in the payment of the loan, advance or debt or in the discharge of the liability for the securing of which they were so acquired and held, be dealt with, sold and conveyed, in like manner as and subject to the restrictions under which a private individual might in like circumstances deal with, sell and convey the same, and the right to deal with and dispose of securities as provided in this section may be waived or varied by any agreement between the bank and the person by whom the security was given.
Rights in respect of personal propertyThe rights, powers and privileges that a bank is by this Act declared to have, or to have had, in respect of real property on which it has taken security, shall be held and possessed by it in respect of any personal property on which it has taken security.
Purchase of realtyA bank may purchase any real property offered for saleunder execution, or in insolvency, or under the order or decree of a court, or at a sale for taxes, as belonging to any debtor to the bank,by a mortgagee or other encumbrancer, having priority over a mortgage or other encumbrance held by the bank, orby the bank under a power of sale given to it for that purpose, notice of the sale by auction to the highest bidder having been first given by advertisement for four weeks in a newspaper published in the county or electoral district in which the property is situated,in cases in which, under similar circumstances, an individual could so purchase, without any restriction as to the value of the property that it may so purchase, and may acquire title thereto as any individual, purchasing at a sheriff’s sale or sale for taxes or under a power of sale, in like circumstances could do, and may take, have, hold and dispose of the property so purchased.
Bank may acquire absolute titleA bank may acquire and hold an absolute title in or to real property affected by a mortgage or hypothec securing a loan or an advance made by the bank or a debt or liability to the bank, either by the obtaining of a release of the equity of redemption in the mortgaged property, or by procuring a foreclosure, or by other means whereby, as between individuals, an equity of redemption can, by law, be barred, or a transfer of title to real property can, by law, be effected, and may purchase and acquire any prior mortgage or charge on such property.No act or law to preventNothing in any charter, Act or law shall be construed as ever having been intended to prevent or as preventing a bank from acquiring and holding an absolute title to and in any mortgaged or hypothecated real property, whatever the value thereof, or from exercising or acting on any power of sale contained in any mortgage given to or held by the bank, authorizing or enabling it to sell or convey any property so mortgaged.
Warehouse receipts and bills of ladingA bank may acquire and hold any warehouse receipt or bill of lading as security for the payment of any debt incurred in its favour, or as security for any liability incurred by it for any person, in the course of its banking business.Effect of takingAny warehouse receipt or bill of lading acquired by a bank under subsection (1) vests in the bank, from the date of the acquisition thereof,all the right and title to the warehouse receipt or bill of lading and to the goods, wares and merchandise covered thereby of the previous holder or owner thereof; andall the right and title to the goods, wares and merchandise mentioned therein of the person from whom the goods, wares and merchandise were received or acquired by the bank, if the warehouse receipt or bill of lading is made directly in favour of the bank, instead of to the previous holder or owner of the goods, wares and merchandise.
When previous holder is agentWhere the previous holder of a warehouse receipt or bill of lading referred to in section 435 is a personentrusted with the possession of the goods, wares and merchandise mentioned therein, by or by the authority of the owner thereof,to whom the goods, wares and merchandise are, by or by the authority of the owner thereof, consigned, orwho, by or by the authority of the owner of the goods, wares and merchandise, is possessed of any bill of lading, receipt, order or other document covering the same, such as is used in the course of business as proof of the possession or control of goods, wares and merchandise, or as authorizing or purporting to authorize, either by endorsement or by delivery, the possessor of such a document to transfer or receive the goods, wares and merchandise thereby represented,a bank is, on the acquisition of that warehouse receipt or bill of lading, vested with all the right and title of the owner of the goods, wares and merchandise, subject to the right of the owner to have the same re-transferred to the owner if the debt or liability, as security for which the warehouse receipt or bill of lading is held by the bank, is paid.PossessorFor the purposes of this section, a person shall be deemed to be the possessor of goods, wares and merchandise, or a bill of lading, receipt, order or other document,who is in actual possession thereof; orfor whom, or subject to whose control the goods, wares and merchandise are, or bill of lading, receipt, order or other document is, held by any other person.
Regulations — aircraft objectsThe Governor in Council may make regulations respecting the application of sections 426 to 436 to aircraft objects, including regulationsremoving classes of aircraft objects from the application of those sections or reinstating their application to those classes of aircraft objects; andeliminating rights and powers acquired under those sections in relation to aircraft objects.Definition of aircraft objectsIn subsection (1), aircraft objects has the same meaning as in subsection 2(1) of the International Interests in Mobile Equipment (aircraft equipment) Act.2005, c. 3, s. 10
Deposit Acceptance
Deposit acceptanceA bank may, without the intervention of any other person,accept a deposit from any person whether or not the person is qualified by law to enter into contracts; andpay all or part of the principal of the deposit and all or part of the interest thereon to or to the order of that person.ExceptionParagraph (1)(b) does not apply if, before payment, the money deposited in the bank pursuant to paragraph (1)(a) is claimed by some other personin any action or proceeding to which the bank is a party and in respect of which service of a writ or other process originating that action or proceeding has been made on the bank, orin any other action or proceeding pursuant to which an injunction or order made by the court requiring the bank not to make payment of that money or make payment thereof to some person other than the depositor has been served on the bank,and, in the case of any such claim so made, the money so deposited may be paid to the depositor with the consent of the claimant or to the claimant with the consent of the depositor.Execution of trustA bank is not bound to see to the execution of any trust to which any deposit made under the authority of this Act is subject.Payment when bank has notice of trustSubsection (3) applies regardless of whether the trust is express or arises by the operation of law, and it applies even when the bank has notice of the trust if it acts on the order of or under the authority of the holder or holders of the account into which the deposit is made.1991, c. 46, s. 437; 2001, c. 9, s. 111
Unclaimed Balances
Unclaimed balancesWherea deposit has been made in Canada that is payable in Canada and in respect of which no transaction has taken place and no statement of account has been requested or acknowledged by the creditor during a period of 10 yearsin the case of a deposit made for a fixed period, from the day on which the fixed period terminated, andin the case of any other deposit, from the day on which the last transaction took place or a statement of account was last requested or acknowledged by the creditor, whichever is later, ora cheque, draft or bill of exchange (including any of those instruments drawn by one branch of a bank on another of its branches but not including an instrument issued in payment of a dividend on the capital of a bank) payable in Canada has been issued, certified or accepted by a bank in Canada and no payment has been made in respect of it for a period of 10 years after the date of issue, certification, acceptance or maturity, whichever is later,the bank shall pay to the Bank of Canada not later than December 31 in each year an amount equal to the principal amount of the deposit or instrument, plus interest, if any, calculated in accordance with the terms of the deposit or instrument, and payment accordingly discharges the bank from all liability in respect of the deposit or instrument.Exchange rateIf a deposit referred to in paragraph (1)(a) or an instrument referred to in paragraph (1)(b) is not in Canadian currency, then, before paying to the Bank of Canada the amount required by subsection (1), the bank shall convert the amount of the deposit or instrument to Canadian currency at a rate of exchange determined in accordance with rules prescribed under subsection 26.03(2) of the Canada Deposit Insurance Corporation Act.Provision of informationA bank shall, on making a payment under subsection (1), provide the Bank of Canada, for each deposit or instrument in respect of which the payment is made, with the following information current as of the day the payment is made, in so far as it is known to the bank:in the case of a deposit,the name of the depositor in whose name the deposit is held, as well as their date of birth and Social Insurance Number, if they are a natural person,the recorded address of the depositor,the outstanding amount of the deposit, andthe branch of the bank at which the last transaction took place in respect of the deposit, and the date of that last transaction; andin the case of an instrument,the name of the person to whom or at whose request the instrument was issued, certified or accepted, as well as their date of birth and Social Insurance Number, if they are a natural person,the recorded address of that person,the name of the payee of the instrument,the amount and date of the instrument,the name of the place where the instrument was payable, andthe branch of the bank at which the instrument was issued, certified or accepted.Copies of signature cards and signing authoritiesA bank shall provide the Bank of Canada with copies of signature cards and signing authorities relating to any deposit or instrument in respect of which it has made a payment under subsection (1). If it does not have any with respect to a deposit or instrument to which the request relates, it shall so inform the Bank of Canada.Payment to claimantSubject to section 22 of the Bank of Canada Act, where payment has been made to the Bank of Canada under subsection (1) in respect of any deposit or instrument, and if payment is demanded or the instrument is presented at the Bank of Canada by the person who, but for that section, would be entitled to receive payment of the deposit or instrument, the Bank of Canada is liable to pay, at its agency in the province in which the deposit or instrument was payable, an amount equal to the amount so paid to it together with interest, if interest was payable under the terms of the deposit or instrument,for a period not exceeding ten years from the day on which the payment was received by the Bank of Canada until the date of payment to the claimant; andat such rate and computed in such manner as the Minister determines.Enforcing liabilityThe liability of the Bank of Canada under subsection (3) may be enforced by action against the Bank of Canada in the court in the province in which the deposit or instrument was payable.Application of subsection (1)Subsection (1) applies only in respect ofdeposits made, and cheques, drafts and bills of exchange issued, certified or accepted, in the ten year period immediately preceding the day on which this section comes into force; anddeposits made, and cheques, drafts and bills of exchange issued, certified or accepted, on or after the day on which this section comes into force.1991, c. 46, s. 438; 1999, c. 28, s. 23; 2007, c. 6, s. 292021, c. 23, s. 145
Notice of unpaid amountA bank shall send, by mail and by electronic means, to each person to whom a deposit referred to in paragraph 438(1)(a) is payable, or to each person to whom or at whose request an instrument referred to in paragraph 438(1)(b) was issued, certified or accepted, at their recorded address and electronic address in so far as they are known to the bank, a notice stating that the deposit or instrument remains unpaid.When notice to be sentThe notice must be sent during the month of January next following the end of the first two-year period, during the month of January next following the end of the first five-year period and also during the month of January next following the end of the first nine-year periodin the case of a deposit made for a fixed period, after the fixed period has terminated;in the case of any other deposit, in respect of which no transaction has taken place and no statement of account has been requested or acknowledged by the creditor; andin the case of a cheque, draft or bill of exchange, in respect of which the instrument has remained unpaid.Notification of transfer to the Bank of CanadaThe notice to be sent during the month of January next following the end of the first nine-year period determined under paragraphs (2)(a) to (c), as the case may be, must also[Repealed before coming into force, 2008, c. 20, s. 3]include the mailing address and websites where information can be obtained on how to claim the unpaid deposit or instrument.1991, c. 46, s. 439; 2007, c. 6, s. 302008, c. 20, s. 32021, c. 23, s. 146
Miscellaneous
[Repealed, 2018, c. 27, s. 321]
[Repealed, 2018, c. 27, s. 321]
[Repealed, 2018, c. 27, s. 321]
[Repealed, 2018, c. 27, s. 321]
[Repealed, 2018, c. 27, s. 321]
[Repealed, 2001, c. 9, s. 115]
[Repealed, 2018, c. 27, s. 321]
[Repealed, 2018, c. 27, s. 321]
[Repealed, 2018, c. 27, s. 321]
[Repealed, 2018, c. 27, s. 321]
[Repealed, 2018, c. 27, s. 321]
[Repealed, 2018, c. 27, s. 321]
[Repealed, 2018, c. 27, s. 321]
[Repealed, 2018, c. 27, s. 321]
[Repealed, 2018, c. 27, s. 321]
[Repealed, 2018, c. 27, s. 321]
[Repealed, 2018, c. 27, s. 321]
[Repealed, 2018, c. 27, s. 321]
[Repealed, 2018, c. 27, s. 321]
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Transmission in case of deathWhere the transmission of a debt owing by a bank by reason of a deposit, of property held by a bank as security or for safe-keeping or of rights with respect to a safety deposit box and property deposited therein takes place because of the death of a person, the delivery to the bank ofan affidavit or declaration in writing in form satisfactory to the bank signed by or on behalf of a person claiming by virtue of the transmission stating the nature and effect of the transmission, andone of the following documents, namely,when the claim is based on a will or other testamentary instrument or on a grant of probate thereof or on such a grant and letters testamentary or other document of like import or on a grant of letters of administration or other document of like import, purporting to be issued by any court or authority in Canada or elsewhere, an authenticated copy or certificate thereof under the seal of the court or authority without proof of the authenticity of the seal or other proof, orwhen the claim is based on a notarial will, an authenticated copy thereof,is sufficient justification and authority for giving effect to the transmission in accordance with the claim.IdemNothing in subsection (1) shall be construed to prevent a bank from refusing to give effect to a transmission until there has been delivered to the bank such documentary or other evidence of or in connection with the transmission as it may deem requisite.1991, c. 46, s. 460; 1999, c. 28, s. 25(E)
Branch of account with respect to depositsFor the purposes of this Act, the branch of account with respect to a deposit account isthe branch the address or name of which appears on the specimen signature card or other signing authority signed by a depositor with respect to the deposit account or that is designated by agreement between the bank and the depositor at the time of opening of the deposit account; orif no branch has been identified or agreed on as provided in paragraph (a), the branch that is designated as the branch of account with respect thereto by the bank by notice in writing to the depositor.Where debt payableThe amount of any debt owing by a bank by reason of a deposit in a deposit account in the bank is payable to the person entitled thereto only at the branch of account and the person entitled thereto is not entitled to demand payment or to be paid at any other branch of the bank.IdemNotwithstanding subsection (2), a bank may permit either occasionally or as a regular practice, the person to whom the bank is indebted by reason of a deposit in a deposit account in the bank to withdraw moneys owing by reason of that deposit at a branch of the bank other than the branch of account or to draw cheques or other orders for the payment of such moneys at a branch other than the branch of account.Situs of indebtednessThe indebtedness of a bank by reason of a deposit in a deposit account in the bank shall be deemed for all purposes to be situated at the place where the branch of account is situated.
Effect of writ, etc.Subject to subsections (3) and (4), the following documents are binding on property belonging to a person and in the possession of a bank, or on money owing to a person by reason of a deposit account in a bank, only if the document or a notice of it is served at the branch of the bank that has possession of the property or that is the branch of account in respect of the deposit account, as the case may be:a writ or process originating a legal proceeding or issued in or pursuant to a legal proceeding;an order or injunction made by a court;an instrument purporting to assign, perfect or otherwise dispose of an interest in the property or the deposit account; oran enforcement notice in respect of a support order or support provision.NoticesAny notification sent to a bank with respect to a customer of the bank, other than a document referred to in subsection (1) or (3), constitutes notice to the bank and fixes the bank with knowledge of its contents only if sent to and received at the branch of the bank that is the branch of account of an account held in the name of that customer.Notices: Minister of National RevenueDespite subsections (1) and (2), a notice, demand, order or other document issued with respect to a customer of a bank constitutes notice to the bank and fixes the bank with knowledge of its contents and, where applicable, is binding on property belonging to the customer and in the possession of the bank or on money owing to the customer by reason of an account in the bank, if it is sent to the branch of the bank referred to in subsection (1) or (2), an office of the bank referred to in paragraph (3)(a) or any other office agreed to by the bank and the Minister of National Revenue and it relates tothe administration of an Act of Parliament by the Minister of National Revenue; orthe administration of an Act of the legislature of a province or legislation made by an aboriginal government, where the Minister or the Minister of National Revenue has entered into a tax collection agreement under an Act of Parliament with the government of the province or the aboriginal government.ExceptionSubsections (1) and (2) do not apply in respect of an enforcement notice in respect of a support order or support provision ifthe enforcement notice, accompanied by a written statement containing the information required by the regulations, is served at an office of a bank designated in accordance with the regulations in respect of a province; andthe order or provision can be enforced under the laws of that province.Time of applicationSubsection (3) does not apply in respect of an enforcement notice in respect of a support order or support provision until the second business day following the day of service referred to in that subsection.RegulationsThe Governor in Council may make regulationsrespecting the designation by a bank, for the purpose of subsection (3), of a place in any province for the service of enforcement notices in respect of support orders and support provisions;prescribing the manner in which a bank shall publicize the locations of designated offices of the bank; andrespecting the information that must accompany enforcement notices in respect of support orders and support provisions.DefinitionsThe following definitions apply in this section.designated office means a place designated in accordance with regulations made for the purpose of subsection (3). (bureau désigné)enforcement notice, in respect of a support order or support provision, means a garnishee summons or other instrument issued under the laws of a province for the enforcement of the support order or support provision. (avis d’exécution)support order means an order or judgment or interim order or judgment for family financial support. (ordonnance alimentaire)support provision means a provision of an agreement relating to the payment of maintenance or family financial support. (disposition alimentaire)1991, c. 46, s. 462; 2001, c. 9, s. 126; 2005, c. 19, s. 57
Deemed loanFor the purposes of sections 425 to 436, where a bank accepts a bill of exchange drawn on it and not payable on demand or pays or makes money available for the payment of such a bill of exchange, or issues a guarantee, or otherwise makes a promise to effect a payment, the bank is deemed to lend money or make an advance.
InvestmentsDefinitions and Application
DefinitionsThe following definitions apply in this Part.business growth fund means Canadian Business Growth Fund (GP) Inc., a corporation incorporated under the Canada Business Corporations Act. (fonds de croissance des entreprises)closed-end fund means an entity whose activities are limited to investing the funds of the entity so as to provide investment diversification and professional investment management to the holders of its securities, and whose securities arefixed in number and distributed to the public in an offering under a preliminary prospectus, prospectus, short-form prospectus or similar document in accordance with the laws of a province or a foreign jurisdiction;traded on an exchange or an over-the-counter market; andliquidated on a fixed future termination date, the proceeds of which are allocated to the holders of the securities on a proportional basis. (fonds d’investissement à capital fixe)factoring entity means a factoring entity as defined in the regulations. (entité s’occupant d’affacturage)finance entity means a finance entity as defined in the regulations. (entité s’occupant de financement)financial leasing entity means an entitythe activities of which are limited to the financial leasing of personal property and such related activities as are prescribed and whose activities conform to such restrictions and limitations thereon as are prescribed; andthat, in conducting the activities referred to in paragraph (a) in Canada, does notdirect its customers or potential customers to particular dealers in the leased property or the property to be leased,enter into lease agreements with persons in respect of any motor vehicle having a gross vehicle weight, as that expression is defined by the regulations, of less than twenty-one tonnes, orenter into lease agreements with natural persons in respect of personal household property, as that expression is defined by the regulations. (entité s’occupant de crédit-bail)loan includes an acceptance, endorsement or other guarantee, a deposit, a financial lease, a conditional sales contract, a repurchase agreement and any other similar arrangement for obtaining funds or credit but does not include investments in securities. (prêt ou emprunt)motor vehicle means a motorized vehicle designed to be used primarily on a public highway for the transportation of persons or things, but does not includea fire-engine, bus, ambulance or utility truck; orany other special purpose motorized vehicle that contains significant special features that make it suitable for a specific purpose. (véhicule à moteur)mutual fund distribution entity means an entity whose principal activity is acting as a selling agent of units, shares or other interests in a mutual fund and acting as a collecting agent in the collection of payments for any such interests ifthe proceeds of the sales of any such interests, less any sales commissions and service fees, are paid to the mutual fund; andthe existence of a sales commission and service fee in respect of the sale of any such interest is disclosed to the purchaser of the interest before the purchase of the interest. (courtier de fonds mutuels)mutual fund entity means an entitywhose activities are limited to the investing of the funds of the entity so as to provide investment diversification and professional investment management to the holders of its securities; andwhose securities entitle their holders to receive, on demand, or within a specified period after demand, an amount computed by reference to the value of a proportionate interest in the whole or in a part of its net assets, including a separate fund or trust account of the entity. (entité s’occupant de fonds mutuels)participating share means a share of a body corporate that carries the right to participate in the earnings of the body corporate to an unlimited degree and to participate in a distribution of the remaining property of the body corporate on dissolution and includes a membership share. (action participante)permitted entity means an entity in which a bank is permitted to acquire a substantial investment under section 468. (entité admissible)prescribed subsidiary means a subsidiary that is one of a prescribed class of subsidiaries. (filiale réglementaire)real property brokerage entity means an entity that is primarily engaged inacting as an agent for vendors, purchasers, mortgagors, mortgagees, lessors or lessees of real property; andthe provision of consulting or appraisal services in respect of real property. (courtier immobilier)specialized financing entity means a specialized financing entity as defined in the regulations. (entité s’occupant de financement spécial)Members of a bank’s groupFor the purpose of this Part, a member of a bank’s group is any of the following:an entity referred to in any of paragraphs 468(1)(a) to (f) that controls the bank;a subsidiary of the bank or of an entity referred to in any of paragraphs 468(1)(a) to (f) that controls the bank;an entity in which the bank, or an entity referred to in any of paragraphs 468(1)(a) to (f) that controls the bank, has a substantial investment; ora prescribed entity in relation to the bank.Non-application of PartThis Part does not apply in respect ofthe holding of a security interest in real property, unless the security interest is prescribed under paragraph 479(a) to be an interest in real property; orthe holding of a security interest in securities of an entity.1991, c. 46, ss. 464, 603; 1993, c. 34, s. 9(F); 1997, c. 15, s. 56; 2001, c. 9, s. 127; 2007, c. 6, s. 38; 2010, c. 12, s. 2077; 2018, c. 27, s. 138
General Constraints on Investments
Investment standardsThe directors of a bank shall establish and the bank shall adhere to investment and lending policies, standards and procedures that a reasonable and prudent person would apply in respect of a portfolio of investments and loans to avoid undue risk of loss and obtain a reasonable return.1991, c. 46, s. 465; 2001, c. 9, s. 127
Limit — business growth fundThe aggregate value of all ownership interests in the business growth fund and the entities that the business growth fund controls that a bank and its subsidiaries hold must not exceed $200,000,000.ApplicationFor the purposes of subsection (1), the value of an ownership interest is determined by the amount paid for it at the time of its issuance.2018, c. 27, s. 139
Restriction on control and substantial investmentsSubject to subsections (2) to (4.4), no bank shall acquire control of, or hold, acquire or increase a substantial investment in, any entity other than a permitted entity.Exception: indirect investmentsA bank may, subject to Part XI, acquire control of, or acquire or increase a substantial investment in, an entity other than a permitted entity by way ofan acquisition of control of an entity referred to in any of paragraphs 468(1)(a) to (j), or of a prescribed entity, that controls or has a substantial investment in the entity; oran acquisition of shares or ownership interests in the entity byan entity referred to in any of paragraphs 468(1)(a) to (j), or a prescribed entity, that is controlled by the bank, oran entity controlled by an entity referred to in any of paragraphs 468(1)(a) to (j), or a prescribed entity, that is controlled by the bank.Exception: temporary investments, realizations and loan workoutsA bank may, subject to Part XI, acquire control of, or acquire or increase a substantial investment in, an entity by way ofa temporary investment permitted by section 471;an acquisition of shares of a body corporate or of ownership interests in an unincorporated entity permitted by section 472; ora realization of security permitted by section 473.Exception: specialized financing regulationsA bank may, subject to Part XI, acquire control of, or hold, acquire or increase a substantial investment in, an entity other than a permitted entity if it does so in accordance with regulations made under paragraph 467(d) concerning specialized financing.Business growth fundSubject to section 465.1, subsections (4.2) to (4.4) and Part XI, a bank may hold, acquire or increase a substantial investment in the business growth fund or any entity that the business growth fund controls.For greater certaintyFor greater certainty, a bank is prohibited from acquiring control of the business growth fund or any entity that the business growth fund controls.Prohibition — entityA bank is prohibited from holding or acquiring a substantial investment in the business growth fund or any entity that the business growth fund controls if the business growth fund or any entity that the business growth fund controls holds or acquires shares of, or other ownership interests in, any of the following entities, or in any entity that controls any of the following entities:an entity referred to in any of paragraphs 468(1)(a) to (j);an entity that is primarily engaged in the leasing of motor vehicles in Canada for the purpose of extending credit to a customer or financing a customer’s acquisition of a motor vehicle;an entity that is primarily engaged in providing temporary possession of personal property, including motor vehicles, to customers in Canada for a purpose other than to finance the customer’s acquisition of the property;an entity that acts as an insurance broker or agent in Canada; oran entity that is engaged in any prescribed activity.Prohibition — capital and loansA bank is prohibited from holding or acquiring a substantial investment in the business growth fund or any entity that the business growth fund controls if the business growth fund or any entity that the business growth fund controls holds shares of, or other ownership interests in, an entity or holds a loan made to an entity and, in respect of that entity and its affiliates, the aggregate value of the following exceeds $100,000,000:all ownership interests that are held by the bank, the bank’s subsidiaries, the business growth fund or the entities that the business growth fund controls, the value of those ownership interests as determined by the amount paid for them at the time each was first acquired by any of those entities; andthe outstanding principal of all loans held by the business growth fund or the entities that the business growth fund controls.Exception: uncontrolled eventA bank is deemed not to contravene subsection (1) if the bank acquires control of, or acquires or increases a substantial investment in, an entity solely as the result of an event not within the control of the bank.Non-application of subsection (2)No bank shall, under subsection (2), acquire control of, or acquire or increase a substantial investment in, an entity referred to in paragraph 468(1)(j).HoldingIf a bank holds a substantial investment in an entity referred to in paragraph 468(1)(j) that it acquired or increased under subsection (2) before the coming into force of subsection (5.1), the bank may continue to hold that substantial investment.Application of other provisionDespite having acquired control of, or a substantial investment in, an entity under a particular provision of this Part, a bank may continue to control the entity or hold the substantial investment in the entity as though it had made the acquisition under another provision of this Part so long as the conditions set out in that other provision are met.Timing of deemed acquisitionIf a bank decides to exercise its right under subsection (6), the bank is deemed to be acquiring the control or the substantial investment under the other provision.1991, c. 46, s. 466; 1997, c. 15, s. 57; 2001, c. 9, s. 127; 2007, c. 6, s. 39; 2013, c. 40, s. 168; 2018, c. 27, s. 140
Regulations re limitsThe Governor in Council may make regulationsrespecting the determination of the amount or value of loans, investments and interests for the purposes of this Part;respecting the loans and investments, and the maximum aggregate amount of all loans and investments, that may be made or acquired by a bank and its prescribed subsidiaries to or in a person and any persons connected with that person;specifying the classes of persons who are connected with any person for the purposes of paragraph (b); andconcerning specialized financing for the purposes of subsection 466(4).1991, c. 46, s. 467; 2001, c. 9, s. 127
Subsidiaries and Equity Investments
Permitted investmentsSubject to subsections (4) to (6) and Part XI, a bank may acquire control of, or acquire or increase a substantial investment ina bank;a bank holding company;a body corporate to which the Trust and Loan Companies Act applies;an association to which the Cooperative Credit Associations Act applies;an insurance company or a fraternal benefit society incorporated or formed by or under the Insurance Companies Act;an insurance holding company;a trust, loan or insurance corporation incorporated or formed by or under an Act of the legislature of a province;a cooperative credit society incorporated or formed, and regulated, by or under an Act of the legislature of a province;an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province and that is primarily engaged in dealing in securities; oran entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province and that is primarily engaged outside Canada in a business that, if carried on in Canada, would be the business of banking, the business of a cooperative credit society, the business of insurance, the business of providing fiduciary services or the business of dealing in securities.Permitted investmentsSubject to subsections (3) to (6) and Part XI, a bank may acquire control of, or acquire or increase a substantial investment in, an entity, other than an entity referred to in any of paragraphs (1)(a) to (j), whose business is limited to one or more of the following:engaging in any financial service activity that a bank is permitted to engage in under any of paragraphs 409(2)(a) to (d) or any other activity that a bank is permitted to engage in under section 410 or 411;acquiring or holding shares of, or ownership interests in, entities in which a bank is permitted under this Part to hold or acquire;engaging in the provision of any services exclusively to any or all of the following, so long as the entity is providing those services to the bank or any member of the bank’s group, namely,the bank,any member of the bank’s group,any entity that is primarily engaged in the business of providing financial services,any permitted entity in which an entity referred to in subparagraph (iii) has a substantial investment, orany prescribed person, if it is doing so under prescribed terms and conditions, if any are prescribed;engaging in any activity that a bank is permitted to engage in, other than an activity referred to in paragraph (a) or (e), that relates tothe promotion, sale, delivery or distribution of a financial product or financial service that is provided by the bank or any member of the bank’s group, orif a significant portion of the business of the entity involves an activity referred to in subparagraph (i), the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any other entity that is primarily engaged in the business of providing financial services;engaging in the activities referred to in the definition closed-end fund, mutual fund distribution entity, mutual fund entity or real property brokerage entity in subsection 464(1); andengaging in prescribed activities, under prescribed terms and conditions, if any are prescribed.RestrictionA bank may not acquire control of, or acquire or increase a substantial investment in, an entity whose business includes any activity referred to in any of paragraphs (2)(a) to (e) if the entity engages in the business of accepting deposit liabilities or if the activities of the entity includeactivities that a bank is not permitted to engage in under any of sections 412, 417 and 418;dealing in securities, except as may be permitted under paragraph (2)(e) or as may be permitted to a bank under paragraph 409(2)(c);activities that a bank is not permitted to engage in under section 416 if the entity engages in the activities of a finance entity or of any other entity as may be prescribed;acquiring control of or acquiring or holding a substantial investment in another entity unlessin the case of an entity that is controlled by the bank, the bank itself would be permitted under this Part to acquire a substantial investment in the other entity, orin the case of an entity that is not controlled by the bank, the bank itself would be permitted to acquire a substantial investment in the other entity under subsection (1) or (2), subsection 466(2), paragraph 466(3)(b) or (c) or subsection 466(4); orany prescribed activity.ExceptionDespite paragraph (3)(a), a bank may acquire control of, or acquire or increase a substantial investment in, any entity that acts as a trustee for a trust if the entity has been permitted under the laws of a province to act as a trustee for a trust and the following conditions are satisfied:the entity acts as a trustee only with respect to a closed-end fund or mutual fund entity; andif the entity engages in other business, that business is limited to engaging in one or more of the following:the activities of a mutual fund distribution entity,any activity that a bank is permitted to engage in under paragraph 410(1)(c.2), andthe provision of investment counselling services and portfolio management services.ControlSubject to subsection (8) and the regulations, a bank may not acquire control of, or acquire or increase a substantial investment in,an entity referred to in paragraph (1)(a) or (b), unlessthe bank controls, within the meaning of paragraphs 3(1)(a) and (d), the entity or would thereby acquire control, within the meaning of those paragraphs, of the entity, orthe bank is permitted by regulations made under paragraph 474(a) to acquire or increase the substantial investment;an entity referred to in any of paragraphs (1)(c) to (j), unlessthe bank controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, orthe bank is permitted by regulations made under paragraph 474(a) to acquire or increase the substantial investment;an entity whose business includes one or more of the activities referred to in paragraph (2)(a) and that engages, as part of its business, in any financial intermediary activity that exposes the entity to material market or credit risk, including a finance entity, a factoring entity and a financial leasing entity, unlessthe bank controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, orthe bank is permitted by regulations made under paragraph 474(a) to acquire or increase the substantial investment; oran entity whose business includes an activity referred to in paragraph (2)(b), including a specialized financing entity, unlessthe bank controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity,the bank is permitted by regulations made under paragraph 474(a) to acquire or increase the substantial investment, orsubject to prescribed terms and conditions, if any are prescribed, the activities of the entity do not include the acquisition or holding of control of, or the acquisition or holding of shares or other ownership interests in, an entity referred to in any of paragraphs (a) to (c) or an entity that is not a permitted entity.Minister’s approvalSubject to the regulations, a bank may not, without the prior written approval of the Minister,acquire control of an entity referred to in any of paragraphs (1)(g) to (i) from a person who is not a member of the bank’s group;acquire control of an entity referred to in paragraph (1)(j) or (4)(c), other than an entity whose activities are limited to the activities of one or more of the following entities, if the control is acquired from an entity referred to in any of paragraphs (1)(a) to (f) that is not a member of the bank’s group:a factoring entity, ora financial leasing entity;acquire control of an entity referred to in paragraph (1)(j) if the bank is a bank with equity of two billion dollars or more andA + B > CwhereAis the value of the entity’s consolidated assets, as it would have been reported in the entity’s annual financial statements if those statements had been prepared immediately before the acquisition,Bis the aggregate of the values of the consolidated assets of all other entities referred to in paragraph (1)(j) that the bank has acquired control of within the preceding 12 months, as the value for each entity would have been reported in its annual financial statements if those statements had been prepared immediately before the acquisition of control of that entity, andCis 10% of the value of the bank’s consolidated assets, as shown in the bank’s last annual statement that was prepared before its first acquisition of control of an entity referred to in paragraph (1)(j) within the preceding 12 months;acquire control of, or acquire or increase a substantial investment in, an entity whose business includes one or more of the activities referred to in paragraph (2)(d);acquire control of, or acquire or increase a substantial investment in, an entity that engages in Canada in an activity described in paragraph 410(1)(c);acquire control of, or acquire or increase a substantial investment in, an entity that engages in an activity described in paragraph 410(1)(c.1); oracquire control of, or acquire or increase a substantial investment in, an entity engaging in an activity prescribed for the purposes of paragraph (2)(f).Matters for considerationIn addition to any matters or conditions provided for in this Act that are relevant to the granting of an approval, the Minister may, in considering whether to grant the approval under paragraph (5)(b.1), take into account all matters that he or she considers relevant in the circumstances, includingthe stability of the financial system in Canada; andthe best interests of the financial system in Canada.Superintendent’s approvalSubject to subsection (7) and the regulations, a bank may not acquire control of, or acquire or increase a substantial investment in, an entity referred to in any of paragraphs (1)(g) to (j) and (4)(c) and (d), unless the bank obtains the approval of the Superintendent.ExceptionSubsection (6) does not apply in respect of a particular transaction ifthe bank is acquiring control of an entity, other than a specialized financing entity, and the only reason for which the bank would, but for this subsection, require approval for the acquisition is that the entity carries on activities referred to in paragraph (2)(b);the bank is acquiring control of an entity whose activities are limited to the activities of a factoring entity or a financial leasing entity;the Minister has approved the transaction under subsection (5) or is deemed to have approved it under subsection 469(1);subject to subsection (7.1), the bank is acquiring control of an entity (referred to in this paragraph as the “target entity”) referred to in paragraph (4)(c) or (d) andA/B < CwhereAis the aggregate of the values, as they would have been reported in the bank’s annual financial statements if those statements were prepared on the day of the acquisition of control of the target entity, ofthe target entity’s consolidated assets,the assets of the bank and of any subsidiary of the bank that were acquired, at any time within the 12 months preceding the acquisition of control of the target entity, from any entity that, at that time, held any of the assets referred to in subparagraph (i), andthe consolidated assets of any entity referred to in paragraph (4)(c) or (d) the control of which is acquired by the bank at the same time as the acquisition of control of the target entity — or within the 12 months preceding the acquisition of control of the target entity if, at any time within those 12 months, that entity and the target entity were affiliates — excluding any assets referred to in subparagraph (i) or (ii) and the consolidated assets of an entity in respect of which no approval of the Superintendent is required under any of paragraphs (a) to (c),Bis the value of the bank’s consolidated assets, as shown in its last annual statement prepared before the acquisition of control of the target entity, andCis0.01, in the case of a bank with equity of 12 billion dollars or more, or0.02, in the case of any other bank; orthe bank is acquiring or increasing a substantial investment in an entity (referred to in this paragraph as the “target entity”) without acquiring control of it, andA/B < CwhereAis the aggregate of the values, as they would have been reported in the bank’s annual financial statements if those statements were prepared on the day of the acquisition or increase of the substantial investment in the target entity, ofthe shares of, or other ownership interests in, the target entity that the bank or a subsidiary of the bank is acquiring in the transaction that results in the acquisition or increase of a substantial investment in the target entity, and the shares of, or other ownership interests in, the target entity that are held by an entity the control of which the bank is acquiring in the transaction that results in the acquisition or increase of a substantial investment in the target entity,the shares of, or other ownership interests in, the target entity that are held by the bank or a subsidiary of the bank and that were acquired by the bank or the subsidiary within the 12 months preceding the transaction referred to in subparagraph (i), andthe shares of, or other ownership interests in, the target entity that are held by a subsidiary of the bank the control of which was acquired by the bank within the 12 months preceding the transaction referred to in subparagraph (i), excluding any shares or other ownership interests referred to in subparagraph (ii),Bis the value of the bank’s consolidated assets, as shown in its last annual statement prepared before the transaction that results in the acquisition or increase of the substantial investment in the target entity, andCis0.005, in the case of a bank with equity of 12 billion dollars or more, or0.01, in the case of any other bank.No exception for deemed acquisitionThe exception in paragraph (7)(d) does not apply with respect to a deemed acquisition of control under subsection 466(7).Control not requiredA bank need not control an entity referred to in paragraph (1)(j), or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province, if the laws or customary business practices of the country under the laws of which the entity was incorporated or formed do not permit the bank to control the entity.Giving up control prohibitedA bank that controls, within the meaning of paragraphs 3(1)(a) and (d), an entity referred to in paragraph (1)(a) or (b) may not give up control, within the meaning of paragraph 3(1)(a) or (d), of the entity while continuing to control, within the meaning of the other paragraph, the entity.Prohibition on giving up control in factA bank that, under paragraph (4)(b), (c) or (d), controls an entity may not, without the prior written approval of the Minister, give up control, within the meaning of paragraph 3(1)(d), of the entity while it continues to control the entity.Giving up controlA bank that, under subsection (4), controls an entity may, with the prior written approval of the Superintendent, give up control of the entity while keeping a substantial investment in the entity ifthe bank is permitted to do so by regulations made under paragraph 474(c); orthe entity meets the conditions referred to in subparagraph (4)(d)(iii).Subsections do not applyIf a bank controls, within the meaning of paragraph 3(1)(a), (b) or (c), an entity, subsections (5) and (6) do not apply in respect of any subsequent increases by the bank of its substantial investment in the entity so long as the bank continues to control the entity.1991, c. 46, s. 468; 1997, c. 15, s. 58; 1999, c. 28, s. 26; 2001, c. 9, s. 127; 2007, c. 6, ss. 40, 134(F); 2012, c. 5, s. 53; 2018, c. 27, s. 131
Approval for indirect investmentsIf a bank obtains the approval of the Minister under subsection 468(5) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase, the bank indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Minister under subsection 468(5) or the Superintendent under subsection 468(6) and that indirect acquisition or increase is disclosed to the Minister in writing before the approval is obtained, the bank is deemed to have obtained the approval of the Minister or the Superintendent for that indirect acquisition or increase.Approval for indirect investmentsIf a bank obtains the approval of the Superintendent under subsection 468(6) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase the bank indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Superintendent under that subsection and that indirect acquisition or increase is disclosed to the Superintendent in writing before the approval is obtained, the bank is deemed to have obtained the approval of the Superintendent for that indirect acquisition or increase.1991, c. 46, s. 469; 2001, c. 9, s. 127
UndertakingsIf a bank controls a permitted entity, other than an entity referred to in any of paragraphs 468(1)(a) to (f), the bank shall provide the Superintendent with any undertakings that the Superintendent may require regardingthe activities of the entity; andaccess to information about the entity.UndertakingsIf a bank acquires control of an entity referred to in any of paragraphs 468(1)(g) to (j), the bank shall provide the Superintendent with any undertakings concerning the entity that the Superintendent may require.Agreements with other jurisdictionsThe Superintendent may enter into an agreement with the appropriate official or public body responsible for the supervision of an entity referred to in any of paragraphs 468(1)(g) to (j) 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.Access to recordsDespite any other provision of this Part, a bank shall not control a permitted entity, other than an entity referred to in any of paragraphs 468(1)(a) to (f), unless, in the course of the acquisition of control or within a reasonable time after the control is acquired, the bank obtains from the permitted entity an undertaking to provide the Superintendent with reasonable access to the records of the permitted entity.1991, c. 46, s. 470; 2001, c. 9, s. 127
Exceptions and Exclusions
Temporary investments in entitySubject to subsection (4), a bank 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.TransitionalDespite subsection (1), if a bank 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 bank subsequently increases that substantial investment by way of a temporary investment, the bank 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.ExtensionThe Superintendent may, in the case of any particular bank 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.Temporary investmentIf a bank, 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 468(5) if the bank had acquired the control, or acquired or increased the substantial investment, under section 468, the bank must, within 90 days after acquiring control or after acquiring or increasing the substantial investment,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; ordo 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.Indeterminate extensionIf a bank, by way of temporary investment, acquires control of, or acquires or increases a substantial investment in, an entity for which the approval of the Superintendent would have been required under subsection 468(6) if the bank had acquired the control, or acquired or increased the substantial investment, under section 468, the Superintendent may, on application, permit the bank to retain control of the entity or to continue to hold the substantial investment in the entity for an indeterminate period, on any terms and conditions that the Superintendent considers appropriate.1991, c. 46, s. 471; 2001, c. 9, s. 127; 2007, c. 6, s. 41
Loan workoutsDespite anything in this Part, if a bank or any of its subsidiaries has made a loan to an entity and, under the terms of the agreement between the bank, 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 bank may acquireif the entity is a body corporate, all or any of the shares of the body corporate;if the entity is an unincorporated entity, all or any of the ownership interests in the entity;all or any of the shares or all or any of the ownership interests in any entity that is an affiliate of the entity;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; orall or any of the ownership interests in any entity that is primarily engaged in holding shares of, ownership interests in or assets acquired from the entity or any of its affiliates.Obligation of bankIf a bank acquires shares or ownership interests in an entity under subsection (1), the bank shall, within five years after acquiring them, do all things necessary to ensure that the bank does not control the entity or have a substantial investment in the entity.TransitionalDespite subsection (1), if a bank 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 bank later increases that substantial investment by way of an investment made under subsection (1), the bank 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.ExtensionThe Superintendent may, in the case of any particular bank that makes an application under this subsection, extend the period referred to in subsection (2) or (3) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.Exception — entities controlled by foreign governmentsDespite anything in this Part, if a bank 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 bank 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 bank 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.Time for holding sharesIf a bank acquires any shares or ownership interests under subsection (5), the bank 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.ExceptionIf, under subsection (1), a bank 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 468, the bank 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).1991, c. 46, s. 472; 1997, c. 15, s. 59; 2001, c. 9, s. 127; 2007, c. 6, s. 42
RealizationsDespite anything in this Act, a bank may acquirean investment in a body corporate,an interest in an unincorporated entity, oran interest in real propertyif the investment or interest is acquired through the realization of a security interest held by the bank or any of its subsidiaries.DispositionSubject to subsection 73(2), if a bank acquires control of, or acquires a substantial investment in, an entity by way of the realization of a security interest held by the bank or any of its subsidiaries, the bank 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 bank no longer controls the entity or has a substantial investment in the entity.TransitionalDespite subsection (2), if a bank 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 bank later increases that substantial investment by way of a realization of a security interest under subsection (1), the bank 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.ExtensionThe Superintendent may, in the case of any particular bank that makes an application under this subsection, extend the period referred to in subsection (2) or (3) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.ExceptionIf, under subsection (1), a bank 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 468, the bank 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).1991, c. 46, s. 473; 1997, c. 15, s. 60; 2001, c. 9, s. 127
Regulations restricting ownershipThe Governor in Council may make regulationsfor the purposes of subsection 468(4), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which that subsection does not apply or the banks or other entities in respect of which that subsection does not apply, including prescribing banks or other entities on the basis of the activities they engage in;for the purposes of subsection 468(5) or (6), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which either of those subsections does not apply or the banks or other entities in respect of which either of those subsections does not apply, including prescribing banks or other entities on the basis of the activities they engage in;for the purposes of subsection 468(11), permitting a bank to give up control of an entity; andrestricting the ownership by a bank of shares of a body corporate or of ownership interests in an unincorporated entity under sections 468 to 473 and imposing terms and conditions applicable to banks that own such shares or interests.1991, c. 46, s. 474; 1997, c. 15, s. 61; 2001, c. 9, s. 127
Portfolio Limits
Exclusion from portfolio limitsSubject to subsection (3), the value of all loans, investments and interests acquired by a bank and any of its prescribed subsidiaries under section 472 or as a result of a realization of a security interest is not to be included in calculating the value of loans, investments and interests of the bank and its prescribed subsidiaries under sections 476 to 478for a period of twelve years following the day on which the interest was acquired, in the case of an interest in real property; andfor 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.ExtensionThe Superintendent may, in the case of any particular bank, extend any period referred to in subsection (1) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.ExceptionSubsection (1) does not apply to an investment or interest described in that subsection if the investment or interest is defined by a regulation made under section 479 to be an interest in real property andthe bank or the subsidiary acquired the investment or interest as a result of the realization of a security interest securing a loan that was defined by a regulation made under section 479 to be an interest in real property; orthe bank or the subsidiary acquired the investment or interest under section 472 as a result of a default referred to in that section in respect of a loan that was defined by a regulation made under section 479 to be an interest in real property.1991, c. 46, s. 475; 1997, c. 15, s. 62; 2001, c. 9, s. 127
Real Property
Limit on total property interestA bank shall not, and shall not permit its prescribed subsidiaries to, purchase or otherwise acquire an interest in real property or make an improvement to any real property in which the bank or any of its prescribed subsidiaries has an interest if the aggregate value of all interests of the bank in real property exceeds, or the acquisition of the interest or the making of the improvement would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank.1991, c. 46, s. 476; 2001, c. 9, s. 127
Equities
Limits on equity acquisitionsA bank shall not, and shall not permit its prescribed subsidiaries to,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 bank has, or by virtue of the acquisition would have, a substantial investment, oracquire control of an entity that holds shares or ownership interests referred to in paragraph (a),if the aggregate value ofall participating shares, excluding participating shares of permitted entities in which the bank has a substantial investment, andall ownership interests in unincorporated entities, other than ownership interests in permitted entities in which the bank has a substantial investment,beneficially owned by the bank and its prescribed subsidiaries, exceeds, or the purchase or acquisition would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank.1991, c. 46, s. 477; 2001, c. 9, s. 127
Aggregate Limit
Aggregate limitA bank shall not, and shall not permit its prescribed subsidiaries to,purchase or otherwise acquireparticipating shares of a body corporate, other than those of a permitted entity in which the bank has, or by virtue of the acquisition would have, a substantial investment,ownership interests in an unincorporated entity, other than ownership interests in a permitted entity in which the bank has, or by virtue of the acquisition would have, a substantial investment, orinterests in real property, ormake an improvement to real property in which the bank or any of its prescribed subsidiaries has an interestif the aggregate value ofall participating shares and ownership interests referred to in subparagraphs (a)(i) and (ii) that are beneficially owned by the bank and its prescribed subsidiaries, andall interests of the bank 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, the prescribed percentage of the regulatory capital of the bank.1991, c. 46, s. 478; 1997, c. 15, s. 63; 2001, c. 9, s. 127
Miscellaneous
RegulationsFor the purposes of this Part, the Governor in Council may make regulationsdefining the interests of a bank in real property;determining the method of valuing those interests; orexempting classes of banks from the application of sections 475 to 478.1991, c. 46, s. 479; 1997, c. 15, s. 64; 2001, c. 9, s. 127
Divestment orderThe Superintendent may, by order, direct a bank to dispose of, within any period that the Superintendent considers reasonable, any loan, investment or interest made or acquired in contravention of this Part.Divestment orderIf, in the opinion of the Superintendent,an investment by a bank or any entity it controls in shares of a body corporate or in ownership interests in an unincorporated entity enables the bank to control the body corporate or the unincorporated entity, orthe bank or any entity it controls has entered into an arrangement whereby it or its nominee may veto any proposal put beforethe board of directors of a body corporate, ora similar group or committee of an unincorporated entity,or whereby no proposal may be approved except with the consent of the bank, the entity it controls or the nominee,the Superintendent may, by order, require the bank, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the bank no longer controls the body corporate or unincorporated entity or has the ability to veto or otherwise defeat any proposal referred to in paragraph (b).Divestment orderIfa bankfails to provide or obtain within a reasonable time the undertakings referred to in subsection 470(1), (2) or (4), oris in default of an undertaking referred to in subsection 470(1) or (2) and the default is not remedied within ninety days after the day of receipt by the bank of a notice from the Superintendent of the default, ora permitted entity referred to in subsection 470(4) is in default of an undertaking referred to in that subsection and the default is not remedied within ninety days after the day of receipt by the bank of a notice from the Superintendent of the default,the Superintendent may, by order, require the bank, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the bank no longer has a substantial investment in the entity to which the undertaking relates.ExceptionSubsection (2) does not apply in respect of an entity in which a bank has a substantial investment permitted by this Part.1991, c. 46, s. 480; 2001, c. 9, s. 127
Deemed temporary investmentIf a bank controls or has a substantial investment in an entity as permitted by this Part and the bank becomes aware of a change in the business or affairs of the entity that, if the change had taken place before the acquisition of control or of the substantial investment, would have caused the entity not to be a permitted entity or would have been such that approval for the acquisition would have been required under subsection 468(5) or (6), the bank is deemed to have acquired, on the day the bank becomes aware of the change, a temporary investment in respect of which section 471 applies.1991, c. 46, s. 481; 1997, c. 15, s. 65; 2001, c. 9, s. 127
Asset transactionsA bank shall not, and shall not permit its subsidiaries to, without the approval of the Superintendent, acquire assets from a person or transfer assets to a person ifA + B > CwhereAis the value of the assets;Bis the total value of all assets that the bank and its subsidiaries acquired from or transferred to that person in the twelve months ending immediately before the acquisition or transfer; andCis ten per cent of the total value of the assets of the bank, as shown in the last annual statement of the bank prepared before the acquisition or transfer.Approval of series of transactionsThe Superintendent may, for the purposes of subsection (1), approve a transaction or series of transactions relating to the acquisition or transfer of assets that may be entered into with a person, or with persons of any class of persons, regardless of whether those persons are known at the time of the granting of the approval or not.ExceptionSubsection (1) does not apply in respect ofassets that are debt obligations that areguaranteed by any financial institution other than the bank,fully secured by deposits with any financial institution, including the bank, orfully secured by debt obligations that are guaranteed by any financial institution other than the bank;assets that are debt obligations issuedby, or by any agency of,the Government of Canada,the government of a province,a municipality, orthe government of a foreign country or any political subdivision of a foreign country, orby a prescribed international agency;assets that are debt obligations that are guaranteed by, or fully secured by securities issued by, a government, a municipality or an agency referred to in paragraph (b);assets that are debt obligations that are widely distributed, as that expression is defined by the regulations;assets that are debt obligations of an entity controlled by the bank;assets acquired or transferred under a transaction or series of transactions by the bank with another financial institution as a result of the bank’s participation in one or more syndicated loans with that financial institution;assets purchased or sold under a sale agreement that is approved by the Minister under section 236;shares of, or ownership interests in, an entity for which the approval of the Minister under Part VII or subsection 468(5) is required or the approval of the Superintendent under subsection 468(6) is required;assets that are acquired or transferred under a transaction that has been approved by the Minister under subsection 678(1) of this Act or subsection 715(1) of the Insurance Companies Act;assets, other than real property, acquired or disposed of under an arrangement that has been approved by the Superintendent under subsection 494(3); orassets acquired or disposed of with the approval of the Superintendent under subsection 494(4).[Repealed, 2007, c. 6, s. 43]Value of assetsFor the purposes of “A” in subsection (1), the value of the assets isin the case of assets that are acquired, the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which will be included in the annual statement of the bank after the acquisition, the fair market value of the assets; andin the case of assets that are transferred, the value of the assets as reported in the last annual statement of the bank prepared before the transfer or, if the value of the assets is not reported in that annual statement, the value of the assets as it would be reported in the annual statement of the bank if the annual statement had been prepared, in accordance with the accounting principles referred to in subsection 308(4), immediately before the transfer.Total value of all assetsFor the purposes of subsection (1), the total value of all assets that the bank or any of its subsidiaries has acquired during the period of twelve months referred to in subsection (1) is the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which immediately after the acquisition were included in the annual statement of the bank, the fair market value of the assets of the entity at the date of the acquisition.Total value of all assetsFor the purposes of subsection (1), the total value of all assets that the bank or any of its subsidiaries has transferred during the 12-month period referred to in subsection (1) is the total of the value of each of those assets as reported in the last annual statement of the bank prepared before the transfer of the asset or, if the value of any of those assets is not reported in that annual statement, as it would be reported in the annual statement of the bank if the annual statement had been prepared, in accordance with the accounting principles referred to in subsection 308(4), immediately before the transfer of the asset.1991, c. 46, s. 482; 1997, c. 15, s. 66; 2001, c. 9, s. 127; 2007, c. 6, s. 43
TransitionalNothing in this Part requiresthe termination of a loan made before February 7, 2001;the termination of a loan made after that date as a result of a commitment made before that date;the disposal of an investment made before that date; orthe disposal of an investment made after that date as a result of a commitment made before that date.But if the loan or investment would be precluded or limited by this Part, the amount of the loan or investment may not, except as provided in subsections 471(2), 472(3) and 473(3), be increased after that date.1991, c. 46, s. 483; 2001, c. 9, s. 127
SavingA loan or investment referred to in section 483 is deemed not to be prohibited by the provisions of this Part.1991, c. 46, s. 484; 2001, c. 9, s. 127
Capital, Liquidity and Capacity to Absorb Losses
Domestic systemically important bankThe Superintendent may, by order, designate a bank as a domestic systemically important bank unless the Minister advises the Superintendent that the Minister is of the opinion that it is not in the public interest to do so.RevocationThe Superintendent may, by order, revoke the designation unless the Minister advises the Superintendent that the Minister is of the opinion that it is not in the public interest to do so.FactorsIn making the designation or revoking it, the Superintendent shall take into account all factors that he or she considers relevant, including whether the distress or failure of the bank could have a significant adverse impact on the financial system in Canada.Notice and publicationIf a designation is made or revoked, the Superintendent shall, as soon as feasible, cause a notice of the designation or revocation, as the case may be, to be published in the Canada Gazette and on the website of the Office of the Superintendent of Financial Institutions.2016, c. 7, s. 159
Adequacy of capital and liquidityA bank shall, in relation to its operations, maintainadequate capital, andadequate and appropriate forms of liquidity,and shall comply with any regulations in relation thereto.Domestic systemically important banksIf the bank is a domestic systemically important bank, it shall also maintain the minimum capacity to absorb losses that is provided for under subsection (1.2) and shall comply with any regulations in relation to that requirement.Superintendent’s orderFor each domestic systemically important bank, the Superintendent shall, by order made after consulting with the other members of the committee established under subsection 18(1) of the Office of the Superintendent of Financial Institutions Act, provide for the amount that constitutes the bank’s minimum capacity to absorb losses.Amount — subsection (1.2)The amount set under subsection (1.2) consists of capital, prescribed shares and prescribed liabilities, which have the value determined in accordance with any criteria the Superintendent considers appropriate.Public interestDespite subsection (1.2), if, before the order is made, the Minister advises the Superintendent that the Minister is of the opinion that the amount provided for by the Superintendent is not in the public interest, the Superintendent shall provide for another amount in accordance with that subsection.Notice and publicationIf an order is made under subsection (1.2), the Superintendent shall, in writing and without delay, inform the bank that is subject to the order and shall, as soon as feasible, cause the order to be published in the Canada Gazette and on the website of the Office of the Superintendent of Financial Institutions.Regulations and guidelinesThe Governor in Council may make regulations and the Superintendent may make guidelines respecting the maintenance by banks of adequate capital and adequate and appropriate forms of liquidity and the maintenance by domestic systemically important banks of the minimum capacity to absorb losses.DirectivesNotwithstanding that a bank is complying with regulations or guidelines made under subsection (2), the Superintendent may, by order, direct the bankto increase its capital; orto provide additional liquidity in such forms and amounts as the Superintendent may require.Orders to limit or prohibitIf the Superintendent becomes aware that a domestic systemically important bank is not maintaining its minimum capacity to absorb losses, the Superintendent shall notify the other members of the committee established under subsection 18(1) of the Office of the Superintendent of Financial Institutions Act and may, by order, take any measures that he or she considers appropriate, includinglimiting the growth of the bank’s total assets;limiting or prohibiting acquisitions of assets by the bank;limiting or prohibiting discretionary payments in respect of the bank’s shares or subordinated indebtedness;limiting or prohibiting purchases by the bank, or redemptions, of the bank’s shares, subordinated indebtedness or prescribed liabilities;limiting or prohibiting reductions of the bank’s stated capital; andlimiting or prohibiting the opening of new branches by the bank.ConsultationBefore making an order under subsection (3.1) or varying or revoking such an order, the Superintendent shall consult with the other members of the committee established under subsection 18(1) of the Office of the Superintendent of Financial Institutions Act.ComplianceA bank shall comply with an order made under subsection (3) or (3.1) within the time that is specified in the order.Notice of valueWhere an appraisal of any asset held by a bank or any of its subsidiaries has been made by the Superintendent and the value determined by the Superintendent to be the appropriate value of the asset varies materially from the value placed by the bank or subsidiary on the asset, the Superintendent shall send to the bank, the auditor or auditors of the bank and the audit committee of the bank a written notice of the appropriate value of the asset as determined by the Superintendent.1991, c. 46, s. 485; 1996, c. 6, s. 7; 2016, c. 7, s. 160; 2017, c. 20, s. 111
Prescribed conditionsThe Governor in Council may make regulations respecting the conditions that domestic systemically important banks must meet in issuing, originating or amending prescribed shares or liabilities.2016, c. 7, s. 161
Regulations and guidelines — disclosure of informationThe Governor in Council may make regulations and the Superintendent may make guidelines respecting the disclosure by domestic systemically important banks of information in relation to their capacity to absorb losses.2016, c. 7, s. 162
Self-dealingInterpretation and Application
Definition of senior officerFor the purposes of this Part, a senior officer of a body corporate is a person who isa director of the body corporate who is a full-time employee of the body corporate;the chief executive officer, chief operating officer, president, secretary, treasurer, controller, chief financial officer, chief accountant, chief auditor or chief actuary of the body corporate;a natural person who performs functions for the body corporate similar to those performed by a person referred to in paragraph (b);the head of the strategic planning unit of the body corporate;the head of the unit of the body corporate that provides legal services or human resources services to the body corporate; orany other officer reporting directly to the body corporate’s board of directors, chief executive officer or chief operating officer.1997, c. 15, s. 67
Related party of bankFor the purposes of this Part, a person is a related party of a bank where the personis a person who has a significant interest in a class of shares or in membership shares of the bank;is a director or senior officer of the bank or of a body corporate that controls the bank or is acting in a similar capacity in respect of an unincorporated entity that controls the bank;is the spouse or common-law partner, or a child who is less than eighteen years of age, of a person described in paragraph (a) or (b);is an entity that is controlled by a person referred to in any of paragraphs (a) to (c);is an entity in which a person who controls the bank has a substantial investment;is an entity in which the spouse or common-law partner, or a child who is less than eighteen years of age, of a person who controls the bank has a substantial investment; oris a person, or forms part of a class of persons, designated under subsection (3) or (4) as, or deemed under subsection (5) to be, a related party of the bank.[Repealed, 1997, c. 15, s. 68]Exception — subsidiaries and substantial investments of banksWhere an entity in which a bank has a substantial investment would, but for this subsection, be a related party of the bank only because a person who controls the bank controls the entity or has a substantial investment in the entity, and the person does not control the entity or have a substantial investment in the entity otherwise than through the person’s controlling interest in the bank, the entity is not a related party of the bank.Designated related partyFor the purposes of this Part, the Superintendent may, with respect to a particular bank, designate as a related party of the bankany person or class of persons whose direct or indirect interest in or relationship with the bank or a related party of the bank might reasonably be expected to affect the exercise of the best judgment of the bank in respect of a transaction; orany person who is a party to any agreement, commitment or understanding referred to in section 9 if the bank referred to in that section is the particular bank.IdemWhere a person is designated as a related party of a bank pursuant to subsection (3), the Superintendent may also designate any entity in which the person has a substantial investment and any entity controlled by such an entity to be a related party of the bank.Deemed related partyWhere, in contemplation of a person becoming a related party of a bank, the bank enters into a transaction with the person, the person is deemed for the purposes of this Part to be a related party of the bank in respect of that transaction.Holders of exempted sharesThe Superintendent may, by order, designate a class of non-voting shares of a bank for the purpose of this subsection. If a class of non-voting shares of a bank is so designated, a person is deemed, notwithstanding paragraph (1)(a), not to be a related party of the bank if the person would otherwise be a related party of the bank only because the person has a significant interest in that class.Determination of substantial investmentFor the purpose of determining whether an entity or a person has a substantial investment for the purposes of paragraph (1)(e) or (f), the references to “control” and “controlled” in section 10 shall be construed as references to “control, within the meaning of section 3, determined without regard to paragraph 3(1)(d)” and “controlled, within the meaning of section 3, determined without regard to paragraph 3(1)(d)”, respectively.Determination of controlFor the purposes of paragraph (1)(d), controlled means “controlled, within the meaning of section 3, determined without regard to paragraph 3(1)(d)”.1991, c. 46, s. 486; 1997, c. 15, s. 68; 2000, c. 12, s. 7; 2010, c. 12, s. 2078
Non-application of PartThis Part does not apply in respect of any transaction entered into prior to the coming into force of this Part but, after the coming into force of this Part, any modification of, addition to, or renewal or extension of a prior transaction is subject to this Part.IdemThis Part does not apply in respect ofthe issue of shares of any class of shares, or of membership shares, of a bank when fully paid for in money or when issuedin accordance with any provisions for the conversion of other issued and outstanding membership shares or securities of the bank into shares of that class of shares, or into membership shares,as a share or membership share dividend,in exchange for shares, or membership shares, however designated, of a body corporate that has been continued as a bank under Part III,in accordance with the terms of an amalgamation or conversion under Part VI,by way of consideration in accordance with the terms of a sale agreement under Part VI, orwith the approval in writing of the Superintendent, in exchange for shares of another body corporate;the payment of dividends or patronage allocations by a bank;transactions that consist of the payment or provision by a bank to persons who are related parties of the bank of salaries, fees, stock options, pension benefits, incentive benefits or other benefits or remuneration in their capacity as directors, officers or employees of the bank;transactions approved by the Minister under subsection 678(1) of this Act or subsection 715(1) of the Insurance Companies Act; orif a bank is controlled by a widely held bank holding company or a widely held insurance holding company, transactions approved by the Superintendent that are entered as part of, or in the course of, a restructuring of the holding company or of any entity controlled by it.ExceptionNothing in paragraph (2)(c) exempts from the application of this Part the payment by a bank of fees or other remuneration to a person forthe provision of services referred to in paragraph 495(1)(a); orduties outside the ordinary course of business of the bank.Exception for holding body corporateA holding body corporate of a bank is not a related party of the bank if the holding body corporate is a Canadian financial institution that is referred to in any of paragraphs (a) to (d) of the definition financial institution in section 2.Substantial investment — related party exceptionWhere a holding body corporate of a bank is, because of subsection (4), not a related party of the bank, any entity in which the holding body corporate has a substantial investment is not a related party of the bank if no related party of the bank has a substantial investment in the entity otherwise than through the control of the holding body corporate.1991, c. 46, s. 487, c. 48, s. 494; 1997, c. 15, s. 69; 2001, c. 9, s. 128; 2010, c. 12, s. 2079; 2012, c. 5, s. 223
Meaning of transactionFor the purposes of this Part, entering into a transaction with a related party of a bank includesmaking a guarantee on behalf of the related party;making an investment in any securities of the related party;taking an assignment of or otherwise acquiring a loan made by a third party to the related party; andtaking a security interest in the securities of the related party.InterpretationFor the purposes of this Part, the fulfilment of an obligation under the terms of any transaction, including the payment of interest on a loan or deposit, is part of the transaction, and not a separate transaction.Meaning of loanFor the purposes of this Part, loan includes a deposit, a financial lease, a conditional sales contract, a repurchase agreement and any other similar arrangement for obtaining funds or credit, but does not include investments in securities or the making of an acceptance, endorsement or other guarantee.Security of a related partyFor the purposes of this Part, security of a related party includes an option, transferable by delivery, to demand delivery of a specified number or amount of shares of the related party at a fixed price within a specified time.1991, c. 46, s. 488; 2007, c. 6, s. 44
Prohibited Related Party Transactions
Prohibited transactionsExcept as provided in this Part, a bank shall not, directly or indirectly, enter into any transaction with a related party of the bank.Transaction of entityWithout limiting the generality of subsection (1), a bank is deemed to have indirectly entered into a transaction in respect of which this Part applies where the transaction is entered into by an entity that is controlled by the bank.ExceptionSubsection (2) does not apply where an entity that is controlled by a bank is a financial institution incorporated or formed under the laws of a province and is subject to regulation and supervision, satisfactory to the Minister, regarding transactions with related parties of the bank.IdemSubsection (2) does not apply in respect of transactions entered into by an entity that is controlled by a bank if the transaction is a prescribed transaction or is one of a class of prescribed transactions.
Permitted Related Party Transactions
Nominal value transactionsNotwithstanding anything in this Part, a bank may enter into a transaction with a related party of the bank if the value of the transaction is nominal or immaterial to the bank when measured by criteria that have been established by the conduct review committee of the bank and approved in writing by the Superintendent.
Secured loansA bank may make a loan to or a guarantee on behalf of a related party of the bank or take an assignment of or otherwise acquire a loan to a related party of the bank ifthe loan or guarantee is fully secured by securities of or guaranteed by the Government of Canada or the government of a province; orthe loan is a loan permitted by section 418 made to a related party who is a natural person on the security of a mortgage of the principal residence of that related party.
DepositsA bank may enter into a transaction with a related party of the bank if the transaction consists of a deposit by the bank with a financial institution that is a direct clearer or a member of a clearing group under the by-laws of the Canadian Payments Association and the deposit is made for clearing purposes.
Borrowing, etc., from related partyA bank may borrow money from, take deposits from, or issue debt obligations to, a related party of the bank.
Acquisition of assetsA bank may purchase or otherwise acquire from a related party of the banksecurities of, or securities guaranteed by, the Government of Canada or the government of a province;assets fully secured by securities of, or securities guaranteed by, the Government of Canada or the government of a province; orgoods for use in the ordinary course of business.Sale of assetsSubject to section 482, a bank may sell any assets of the bank to a related party of the bank ifthe consideration for the assets is fully paid in money; andthere is an active market for those assets.Asset transactions with financial institutionsNotwithstanding any of the provisions of subsections (1) and (2), a bank may, in the normal course of business and pursuant to arrangements that have been approved by the Superintendent in writing, acquire or dispose of any assets, other than real property, from or to a related party of the bank that is a financial institution.Asset transactions in restructuringNotwithstanding any of the provisions of subsections (1) and (2), a bank may acquire any assets from, or dispose of any assets to, a related party of the bank as part of, or in the course of, a restructuring, if the acquisition or disposition has been approved in writing by the Superintendent.Goods or space for use in businessA bank may lease assetsfrom a related party of the bank for use in the ordinary course of business of the bank, orto a related party of the bankif the lease payments are made in money.Approval under section 236A bank may acquire any assets from, or dispose of any assets to, a related party of the bank under a sale agreement that is approved by the Minister under section 236.1991, c. 46, s. 494; 2007, c. 6, s. 45
ServicesA bank may enter into a transaction with a related party of the bank if the transactionsubject to subsection (2), consists of a written contract for the purchase by the bank of services used in the ordinary course of business;subject to subsection (4), involves the provision of services normally offered to the public by the bank in the ordinary course of business;consists of a written contract with a financial institution or an entity in which the bank is permitted to have a substantial investment pursuant to section 468 that is a related party of the bankfor the networking of any services provided by the bank or the financial institution or entity, orfor the referral of any person by the bank to the financial institution or entity, or for the referral of any person by the financial institution or entity to the bank;consists of a written contract for such pension or benefit plans or their management or administration as are incidental to directorships or to the employment of officers or employees of the bank or its subsidiaries; orinvolves the provision by the bank of management, advisory, accounting, information processing or other services in relation to any business of the related party.Order concerning management by employeesWhere a bank has entered into a contract pursuant to paragraph (1)(a) and the contract, when taken together with all other such contracts entered into by the bank, results in all or substantially all of the management functions of the bank being exercised by persons who are not employees of the bank, the Superintendent may, by order, if the Superintendent considers that result to be inappropriate, require the bank, within such time as may be specified in the order, to take all steps necessary to ensure that management functions that are integral to the carrying on of business by the bank are exercised by employees of the bank to the extent specified in the order.ExceptionDespite subsection 489(2), a bank is deemed not to have indirectly entered into a transaction in respect of which this Part applies if the transaction is entered into by an entity that is controlled by the bank and the business of which is limited to the activity referred to in paragraph 468(2)(c) and the transaction is on terms and conditions at least as favourable to the bank as market terms and conditions, as defined in subsection 501(2).ServicesThe provision of services, for the purposes of paragraph (1)(b), does not include the making of loans or guarantees.1991, c. 46, s. 495; 1997, c. 15, s. 70; 2007, c. 6, s. 46
Transactions with holding companiesSubject to subsection (2) and sections 495.2 and 495.3, if a widely held bank holding company or a widely held insurance holding company has a significant interest in any class of shares of a bank, the bank may enter into any transaction with the holding company or with any other related party of the bank that is an entity in which the holding company has a substantial investment.Policies and proceduresThe bank shall adhere to policies and procedures established under subsection 195(3) when entering into the transaction.2001, c. 9, s. 129
RestrictionIf a bank enters into a transaction with a related party of the bank with whom the bank may enter into transactions under subsection 495.1(1) and that is not a federal financial institution, the bank shall not directly or indirectly make, take an assignment of or otherwise acquire a loan to the related party, make an acceptance, endorsement or other guarantee on behalf of the related party or make an investment in the securities of the related party if, immediately following the transaction, the aggregate financial exposure, as that expression is defined by the regulations, of the bank would exceedin respect of all transactions of the bank with the related party, the prescribed percentage of the bank’s regulatory capital or, if no percentage is prescribed, five per cent of the bank’s regulatory capital; orin respect of all transactions of the bank with such related parties of the bank, the prescribed percentage of the bank’s regulatory capital or, if no percentage is prescribed, ten per cent of the bank’s regulatory capital.OrderIf the Superintendent is of the opinion that it is necessary for the protection of the interests of the depositors and creditors of a bank, the Superintendent may, by order,reduce the limit in paragraph (1)(a) or (b) that would otherwise apply to the bank; andimpose limits on transactions by the bank with related parties with whom the bank may enter into transactions under subsection 495.1(1) that are federal financial institutions.OrderThe Superintendent may, by order, increase the limit in paragraph (1)(a) or (b) that would otherwise apply to a bank on transactions by the bank with related parties that are financial institutions that are regulated in a manner acceptable to the Superintendent.2001, c. 9, s. 129
Assets transactionsDespite subsection 494(3), a bank shall not, without the approval of the Superintendent and its conduct review committee, directly or indirectly acquire assets from a related party of the bank with whom the bank may enter into transactions under subsection 495.1(1) that is not a federal financial institution, or directly or indirectly transfer assets to such a related party ifA + B > CwhereAis the value of the assets;Bis the total value of all assets that the bank directly or indirectly acquired from, or directly or indirectly transferred to, that related party in the 12 months ending immediately before the acquisition or transfer, other than assets acquired by or transferred to the bank under transactions permitted by section 490; andCis five per cent, or the percentage that may be prescribed, of the total value of the assets of the bank, as shown in the last annual statement of the bank prepared before the acquisition or transfer.ExceptionThe prohibition in subsection (1) does not apply in respect of assets purchased or otherwise acquired under subsection 494(1), assets sold under subsection 494(2) or any other assets as may be prescribed.ExceptionThe approval of the Superintendent is not required ifthe bank purchases or sells assets under a sale agreement that is approved by the Minister under section 236; orthe bank or its subsidiary acquires shares of, or ownership interests in, an entity for which the approval of the Minister under Part VII or subsection 468(5) is required or the approval of the Superintendent under subsection 468(6) is required.Value of assetsFor the purposes of “A” in subsection (1), the value of the assets isin the case of assets that are acquired, the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which will be included in the annual statement of the bank after the acquisition, the fair market value of the assets; andin the case of assets that are transferred, the book value of the assets as stated in the last annual statement of the bank prepared before the transfer or, if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the bank before the transfer, the value of the assets as stated in the annual statement.Total value of all assetsFor the purposes of subsection (1), the total value of all assets that the bank or any of its subsidiaries has acquired during the period of twelve months referred to in subsection (1) is the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which immediately after the acquisition were included in the annual statement of the bank, the fair market value of the assets of the entity at the date of the acquisition.Total value of all assetsFor the purposes of subsection (1), the total value of all assets that the bank or any of its subsidiaries has transferred during the period of twelve months referred to in subsection (1) is the book value of the assets as stated in the last annual statement of the bank prepared before the transfer or, if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the bank before the transfer, the value of the assets of the entity as stated in the annual statement.2001, c. 9, s. 129; 2007, c. 6, s. 47
Directors and officers and their interestsSubject to subsection (2) and sections 497 and 498, a bank may enter into any transaction with a related party of the bank if the related party isa natural person who is a related party of the bank only because the person isa director or a senior officer of the bank or of an entity that controls the bank, orthe spouse or common-law partner, or a child who is less than eighteen years of age, of a director or senior officer of the bank or of an entity that controls the bank; oran entity that is a related party of the bank only because the entity is controlled bya director or senior officer of the bank or of an entity that controls the bank, orthe spouse or common-law partner, or a child who is less than eighteen years of age, of a director or senior officer referred to in subparagraph (i).Loans to full-time officersA bank may, with respect to a related party of the bank referred to in subsection (1) who is a full-time senior officer of the bank, make, take an assignment of or otherwise acquire a loan to the related party only if the aggregate principal amount of all outstanding loans to the related party that are held by the bank and its subsidiaries, together with the principal amount of the proposed loan, does not exceed the greater of twice the annual salary of the related party and $100,000.ExceptionSubsection (2) does not apply in respect ofloans referred to in paragraph 491(b), andmargin loans referred to in section 498,and the amount of any such loans to a related party of a bank shall not be included in determining, for the purposes of subsection (2), the aggregate principal amount of all outstanding loans made by the bank to the related party.Preferred terms — loan to officerNotwithstanding section 501, a bank may make a loan, other than a margin loan, to a senior officer of the bank on terms and conditions more favourable to the officer than those offered to the public by the bank if those terms and conditions have been approved by the conduct review committee of the bank.Preferred terms — loan to spouse or common-law partnerNotwithstanding section 501, a bank may make a loan referred to in paragraph 491(b) to the spouse or common-law partner of a senior officer of the bank on terms and conditions more favourable than those offered to the public by the bank if those terms and conditions have been approved by the conduct review committee of the bank.Preferred terms — other financial servicesNotwithstanding section 501, a bank may offer financial services, other than loans or guarantees, to a senior officer of the bank, or to the spouse or common-law partner, or a child who is less than eighteen years of age, of a senior officer of the bank, on terms and conditions more favourable than those offered to the public by the bank ifthe financial services are offered by the bank to employees of the bank on those favourable terms and conditions; andthe conduct review committee of the bank has approved the practice of making those financial services available on those favourable terms and conditions to senior officers of the bank or to the spouses or common-law partners, or the children under eighteen years of age, of senior officers of the bank.1991, c. 46, s. 496; 1997, c. 15, s. 71; 2000, c. 12, ss. 5, 7
Board approval requiredExcept with the concurrence of at least two thirds of the directors present at a meeting of the board of directors of the bank, a bank shall not, with respect to a related party of the bank referred to in subsection 496(1),make, take an assignment of or otherwise acquire a loan to the related party, including a margin loan referred to in section 498,make a guarantee on behalf of the related party, ormake an investment in the securities of the related partyif, immediately following the transaction, the aggregate ofthe principal amount of all outstanding loans to the related party that are held by the bank and its subsidiaries, other thanloans referred to in paragraph 491(b), andwhere the related party is a full-time senior officer of the bank, loans to the related party that are permitted by subsection 496(2),the sum of all outstanding amounts guaranteed by the bank and its subsidiaries on behalf of the related party, andwhere the related party is an entity, the book value of all investments by the bank and its subsidiaries in the securities of the entitywould exceed 2 per cent of the regulatory capital of the bank.Limit on transactions with directors, officers and their interestsA bank shall not, with respect to a related party of the bank referred to in subsection 496(1),make, take an assignment of or otherwise acquire a loan to the related party, including a margin loan referred to in section 498,make a guarantee on behalf of the related party, ormake an investment in the securities of the related partyif, immediately following the transaction, the aggregate ofthe principal amount of all outstanding loans to all related parties of the bank referred to in subsection 496(1) that are held by the bank and its subsidiaries, other thanloans referred to in section 491, andloans permitted by subsection 496(2),the sum of all outstanding amounts guaranteed by the bank and its subsidiaries on behalf of all related parties of the bank referred to in subsection 496(1), andthe book value of all investments by the bank and its subsidiaries in the securities of all entities that are related parties of the bank referred to in subsection 496(1)would exceed 50 per cent of the regulatory capital of the bank.Exclusion of de minimus transactionsLoans, guarantees and investments that are referred to in section 490 shall not be included in calculating the aggregate of loans, guarantees and investments referred to in subsections (1) and (2).1991, c. 46, s. 497; 1997, c. 15, s. 72
Margin loansThe Superintendent may establish terms and conditions with respect to the making by a bank of margin loans to a director or senior officer of the bank.1991, c. 46, s. 498; 1997, c. 15, s. 73
Exemption by orderA bank may enter into a transaction with a related party of the bank if the Superintendent, by order, has exempted the transaction from the provisions of section 489.Conditions for orderThe Superintendent shall not make an order referred to in subsection (1) unless the Superintendent is satisfied that the decision of the bank to enter into the transaction has not been and is not likely to be influenced in any significant way by a related party of the bank and does not involve in any significant way the interests of a related party of the bank.1991, c. 46, s. 499; 1996, c. 6, s. 8
Prescribed transactionsA bank may enter into a transaction with a related party of the bank if the transaction is a prescribed transaction or one of a class of prescribed transactions.
Restrictions on Permitted Transactions
Market terms and conditionsExcept as provided in subsections 496(4) to (6), any transaction entered into with a related party of the bank shall be on terms and conditions that are at least as favourable to the bank as market terms and conditions.Meaning of market terms and conditionsFor the purposes of subsection (1), market terms and conditions meansin respect of a service or a loan facility or a deposit facility offered to the public by the bank in the ordinary course of business, terms and conditions that are no more or less favourable than those offered to the public by the bank in the ordinary course of business; andin respect of any other transaction,terms and conditions, including those relating to price, rent or interest rate, that might reasonably be expected to apply in a similar transaction in an open market under conditions requisite to a fair transaction between parties who are at arm’s length and who are acting prudently, knowledgeably and willingly, orif the transaction is one that would not reasonably be expected to occur in an open market between parties who are at arm’s length, terms and conditions, including those relating to price, rent or interest rate, that would reasonably be expected to provide the bank with fair value, having regard to all the circumstances of the transaction, and that would be consistent with the parties to the transaction acting prudently, knowledgeably and willingly.1991, c. 46, s. 501; 2001, c. 9, s. 130
[Repealed, 1997, c. 15, s. 74]
Disclosure
Bank obligationWhere, in respect of any proposed transaction permitted by this Part, other than those referred to in section 490, a bank has reason to believe that the other party to the transaction is a related party of the bank, the bank shall take all reasonable steps to obtain from the other party full disclosure, in writing, of any interest or relationship, direct or indirect, that would make the other party a related party of the bank.Reliance on informationA bank and any person who is a director or an officer, employee or agent of the bank may rely on any information contained in any disclosure received by the bank pursuant to subsection (1) or any information otherwise acquired in respect of any matter that might be the subject of such a disclosure and no action lies against the bank or any such person for anything done or omitted in good faith in reliance on any such information.
Notice to SuperintendentWhere a bank has entered into a transaction that the bank is prohibited by this Part from entering into or where a bank has entered into a transaction for which approval is required under subsection 497(1) without having obtained the approval, the bank shall, on becoming aware of that fact, notify the Superintendent without delay.1991, c. 46, s. 505; 1997, c. 15, s. 75
Remedial Actions
Order to void contract or to grant other remedyIf a bank enters into a transaction that it is prohibited from entering into by this Part, the bank or the Superintendent may apply to a court for an order setting aside the transaction or for any other appropriate remedy, including an order directing that the related party of the bank involved in the transaction account to the bank for any profit or gain realized or that any director or senior officer of the bank who authorized the transaction compensate the bank for any loss or damage incurred by the bank.Time limitAn application under subsection (1) in respect of a particular transaction may only be made within the period of three months following the day the notice referred to in section 505 in respect of the transaction is given to the Superintendent or, if no such notice is given, the day the Superintendent becomes aware of the transaction.CertificateFor the purposes of subsection (2), a document purporting to have been issued by the Superintendent, certifying the day on which the Superintendent became aware of the transaction, shall, in the absence of evidence to the contrary, be received in evidence as conclusive proof of that fact without proof of the signature or of the official character of the person appearing to have signed the document and without further proof.1991, c. 46, s. 506; 2001, c. 9, s. 131
Foreign BanksInterpretation and Application
DefinitionsThe following definitions apply in this Part.business growth fund means Canadian Business Growth Fund (GP) Inc., a corporation incorporated under the Canada Business Corporations Act. (fonds de croissance des entreprises)designated foreign bank[Repealed, 2007, c. 6, s. 48]designation order[Repealed, 2007, c. 6, s. 48]exemption order[Repealed, 2007, c. 6, s. 48]finance entity means a Canadian entity that is a finance entity as defined in the regulations. (entité s’occupant de financement)financial leasing entity means a Canadian entity that is a financial leasing entity as defined in subsection 464(1). (entité s’occupant de crédit-bail)financial services entity means an entity, other than an entity referred to in any of paragraphs 468(1)(a) to (i) or a leasing entity, that engages in activities at least the prescribed portion — or if no portion is prescribed, 10 per cent — of which, determined in the prescribed manner, consists of one or more of the following activities:providing any financial service;acting as a financial agent;providing investment counselling and portfolio management services;issuing payment, credit or charge cards and, in cooperation with others, including other financial institutions, operating a payment, credit or charge card plan;engaging in the activities referred to in the definition closed-end fund, mutual fund distribution entity or mutual fund entity in subsection 464(1);engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed;engaging in any activity referred to in paragraphs (a) to (f) as an agent for another entity referred to in any of those paragraphs or in any of paragraphs 468(1)(a) to (j); oracquiring or holding control of, or becoming a major owner of, an entity referred to in any of paragraphs (a) to (g) or any of paragraphs 468(1)(a) to (j). (entité s’occupant de services financiers)foreign cooperative credit society means an entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province, and that, outside Canada, engages in or carries on the business of a cooperative credit society. (société coopérative de crédit étrangère)foreign insurance company means a foreign company as defined in subsection 2(1) of the Insurance Companies Act. (société d’assurances étrangère)foreign securities dealer means an entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province, and that, outside Canada, engages in or carries on the business of dealing in securities. (courtier de valeurs mobilières étranger)leasing activities meansthe financial leasing of personal property and the related activities that a financial leasing entity may engage in; andall other leasing of personal property. (activités de location)leasing entity means an entity that engages in onlyleasing activities; orleasing activities and activities other than those described in paragraphs (a) to (h) of the definition financial services entity. (entité s’occupant de location)limited commercial entity means a Canadian entity that a foreign bank or an entity associated with a foreign bank may control in accordance with subsection 522.09(1) or (2), or in which a foreign bank or an entity associated with a foreign bank is permitted to acquire a substantial investment in accordance with that subsection. (entité à activités commerciales restreintes)non-bank affiliate of a foreign bank means a Canadian entity, other than a bank,in which a foreign bank or an entity associated with a foreign bank holds a substantial investment, orthat is controlled by a foreign bank or an entity associated with a foreign bank,but a Canadian entity is not a non-bank affiliate of a foreign bank by reason only that a bank that is a subsidiary of the foreign bank or of the entity associated with a foreign bank controls, or holds a substantial investment in, the Canadian entity. (établissement affilié à une banque étrangère)permitted Canadian entity means a Canadian entity that a foreign bank or an entity associated with a foreign bank may control in accordance with section 522.08, or in which a foreign bank or an entity associated with a foreign bank is permitted to acquire a substantial investment in accordance with that section. (entité canadienne admissible)representative office means an office established to represent a foreign bank in Canada that is not subject to the direction of, or management by, an entity incorporated or formed by or under an Act of Parliament or of the legislature of a province, and the personnel of which are employed directly or indirectly by the foreign bank. (bureau de représentation)specialized financing entity means a Canadian entity that is a specialized financing entity as defined in the regulations. (entité s’occupant de financement spécial)Entity associated with foreign bankFor the purposes of this Part,an entity is associated with a foreign bank ifthe entity controls, or is controlled by, the foreign bank, orthe entity and the foreign bank are controlled by the same person;an entity may be associated with more than one foreign bank; anda foreign bank may be associated with another foreign bank.Entity deemed to be associated with a foreign bankFor the purposes of this Part, the Minister may deem an entity to be associated with a foreign bank if, in the opinion of the Minister, it is reasonable to conclude that under any agreement, commitment or understanding, whether formal or informal, verbal or written,the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the entity, with one or more other persons such that, if they were one person, they would control the entity;the entity is acting, jointly or in concert, in relation to the shares or ownership interests of the foreign bank, with one or more other persons such that, if they were one person, they would control the foreign bank;another entity that is associated with the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the entity, with one or more other persons such that, if they were one person, they would control the entity;a person who controls the entity is acting, jointly or in concert, in relation to the shares or ownership interests of the foreign bank, with one or more other persons, such that, if they were one person, they would control the foreign bank;a person who controls the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the entity, with one or more other persons, such that, if they were one person, they would control the entity; ortwo or more persons are acting, jointly or in concert, in relation to the shares or ownership interests of the entity and the foreign bank such that, if they were one person, they would control the entity and the foreign bank.Deemed substantial investment by foreign bankFor the purposes of this Part, a foreign bank is deemed to hold a substantial investment in a Canadian entity ifthe foreign bank and one or more entities associated with the foreign bank, ortwo or more entities associated with the foreign bankwould, if they were one person, hold a substantial investment in the Canadian entity.Deemed substantial investment by entity associatedFor the purposes of this Part, an entity associated with a foreign bank is deemed to hold a substantial investment in a Canadian entity ifthe entity and the foreign bank, orthe entity and one or more other entities associated with the foreign bankwould, if they were one person, hold a substantial investment in the Canadian entity.Deemed control by foreign bankFor the purposes of this Part, a foreign bank is deemed to control a Canadian entity ifthe foreign bank and one or more entities associated with the foreign bank, ortwo or more entities associated with the foreign bankwould, if they were one person, control the Canadian entity.Deemed control by entity associatedFor the purposes of this Part, an entity associated with a foreign bank is deemed to control a Canadian entity ifthe entity and the foreign bank, orthe entity and one or more other entities associated with the foreign bankwould, if they were one person, control the Canadian entity.Person is a major ownerFor the purposes of this Part, a person, other than a foreign bank or an entity associated with a foreign bank,is a major owner of an unincorporated Canadian entity if the aggregate of any ownership interests, however designated, into which the unincorporated Canadian entity is divided that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 35 per cent of all of the ownership interests into which the unincorporated Canadian entity is divided; andis a major owner of a Canadian entity that is a body corporate ifthe aggregate of the shares of any class of voting shares of the Canadian entity that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 20 per cent of the outstanding shares of that class of voting shares of the Canadian entity, orthe aggregate of the shares of any class of non-voting shares of the Canadian entity that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 30 per cent of the outstanding shares of that class of non-voting shares of the Canadian entity.Foreign bank a major ownerFor the purposes of this Part, a foreign bankis a major owner of an unincorporated Canadian entity if the aggregate of any ownership interests, however designated, into which the unincorporated Canadian entity is divided that are beneficially owned by the foreign bank and that are beneficially owned by any entities associated with the foreign bank is more than 35 per cent of all of the ownership interests into which the unincorporated Canadian entity is divided; andis a major owner of a Canadian entity that is a body corporate ifthe aggregate of the shares of any class of voting shares of the Canadian entity that are beneficially owned by the foreign bank and that are beneficially owned by any entities associated with the foreign bank is more than 20 per cent of the outstanding shares of that class of voting shares of the Canadian entity, orthe aggregate of the shares of any class of non-voting shares of the Canadian entity that are beneficially owned by the foreign bank and that are beneficially owned by any entities associated with the foreign bank is more than 30 per cent of the outstanding shares of that class of non-voting shares of the Canadian entity.Associated entity a major ownerFor the purposes of this Part, an entity associated with a foreign bankis a major owner of an unincorporated Canadian entity if the aggregate of any ownership interests, however designated, into which the unincorporated Canadian entity is divided that are beneficially owned by the entity associated with the foreign bank, that are beneficially owned by the foreign bank and that are beneficially owned by any other entities associated with the foreign bank is more than 35 per cent of all of the ownership interests into which the unincorporated Canadian entity is divided; andis a major owner of a Canadian entity that is a body corporate ifthe aggregate of the shares of any class of voting shares of the Canadian entity that are beneficially owned by the entity associated with the foreign bank, that are beneficially owned by the foreign bank and that are beneficially owned by any other entities associated with the foreign bank is more than 20 per cent of the outstanding shares of that class of voting shares of the Canadian entity, orthe aggregate of the shares of any class of non-voting shares of the Canadian entity that are beneficially owned by the entity associated with the foreign bank, that are beneficially owned by the foreign bank and that are beneficially owned by any other entities associated with the foreign bank is more than 30 per cent of the outstanding shares of that class of non-voting shares of the Canadian entity.Deemed major owner — personFor the purposes of this Part, the Minister may deem a person to be a major owner of a Canadian entity if, in the opinion of the Minister, it is reasonable to conclude that under any agreement, commitment or understanding, whether formal or informal, verbal or written, the person is acting, jointly or in concert, in relation to the shares or ownership interests of the Canadian entity, with one or more other persons such that, if they were one person, they would be a major owner of the Canadian entity.Deemed major owner — foreign bankFor the purposes of this Part, the Minister may deem a foreign bank to be a major owner of a Canadian entity if, in the opinion of the Minister, it is reasonable to conclude that under any agreement, commitment or understanding, whether formal or informal, verbal or written,the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the Canadian entity, with one or more other persons such that, if they were one person, they would be a major owner of the Canadian entity; ortwo or more persons are acting, jointly or in concert in relation to the shares or ownership interests of the Canadian entity and in relation to the shares or ownership interests of the foreign bank such that, if they were one person, they would control the foreign bank and be a major owner of the Canadian entity.Deemed major owner — entity associated with a foreign bankFor the purposes of this Part, the Minister may deem an entity associated with a foreign bank to be a major owner of a Canadian entity if, in the opinion of the Minister, it is reasonable to conclude that under any agreement, commitment or understanding, whether formal or informal, verbal or written, the entity associated with the foreign bank is acting, jointly or in concert, in relation to the shares and ownership interests of the Canadian entity with one or more other persons, such that, if they were one person, they would be a major owner of the Canadian entity.Member of foreign bank’s groupFor the purposes of this Part, a member of a foreign bank’s group is any of the following:an entity associated with the foreign bank;an entity in which the foreign bank or an entity associated with the foreign bank holds a substantial investment; anda prescribed entity, in relation to the foreign bank.Foreign bank that has a financial establishment in CanadaFor the purposes of this Part, a foreign bank has, or is deemed to have, a financial establishment in Canada if the foreign bank or any entity associated with the foreign bankis an authorized foreign bank;is a foreign insurance company;has received the approval of the Minister under paragraph 522.22(1)(f); orcontrols, or is a major owner of,a Canadian entity referred to in any of paragraphs 468(1)(a) to (i), ora Canadian entity that is a financial services entity.Associated entity that has a financial establishment in CanadaFor the purposes of this Part, an entity associated with a foreign bank has, or is deemed to have, a financial establishment in Canada if the entity, the foreign bank or any other entity associated with the foreign bankis an authorized foreign bank;is a foreign insurance company;has received the approval of the Minister under paragraph 522.22(1)(f); orcontrols, or is a major owner of,a Canadian entity referred to in any of paragraphs 468(1)(a) to (i), ora Canadian entity that is a financial services entity.Regulations concerning exemption from associated statusThe Governor in Council may make regulationsrespecting the exemption, from the application of any provision of this Act, of any class or classes of entities associated with a foreign bank from the status of being associated with a foreign bank; andauthorizing the Minister, by order, and subject to any terms and conditions that the Minister considers appropriate, to deem, for the purposes of any provision of this Act, any entity not to be an entity associated with a foreign bank.Revocation or variation of orderThe Minister may, by further order, revoke or vary any order referred to in paragraph (17)(b) and any such revocation or variation comes into effect three months after the date the further order is made unless the Minister and the entity to which the order relates agree that the revocation or variation is to take effect at some other time agreed to by them.PublicationIf the Minister makes an order referred to in paragraph (17)(b) or subsection (18), the Minister shall publish in the Canada Gazette a notice of the making of the order.1991, c. 46, s. 507; 1997, c. 15, s. 76; 1999, c. 28, s. 27; 2001, c. 9, s. 132; 2007, c. 6, s. 48; 2018, c. 27, s. 141
ApplicationThis Part applies toa foreign bank thatis a bank according to the laws of the jurisdiction under whose laws it was incorporated or in any jurisdiction in which it carries on business,engages in the business of providing financial services and employs, to identify or describe its business, a name that includes the word “bank”, “banque”, “banking” or “bancaire”, either alone or in combination with other words, or any word or words in any language other than English or French corresponding generally to any of those words, oris regulated as a bank or as a deposit-taking institution according to the jurisdiction under whose laws it was incorporated or in any jurisdiction in which it carries on business; andan entity that is associated with a foreign bank and that isa member of a material banking group,controlled by a foreign bank described in any of subparagraphs (a)(i) to (iii), orassociated with a foreign bank described in any of subparagraphs (a)(i) to (iii) and that foreign bank or any entity controlled by that foreign bank isengaging in or carrying on business in Canada, other than holding, managing or otherwise dealing with real property,maintaining a branch in Canada, other than an office referred to in section 522,establishing, maintaining or acquiring for use in Canada an automated banking machine, a remote service unit or a similar automated service, or, in Canada, accepting data from such a machine, unit or service other than in circumstances described in section 511 or 512,acquiring or holding control of, or a substantial investment in, a Canadian entity, oracquiring or holding any share or ownership interest in a Canadian entity andan entity associated with the foreign bank holds control of, or a substantial investment in, the Canadian entity, orthe foreign bank, an entity associated with the foreign bank and one or more other entities associated with the foreign bank would, if they were one person, hold control of, or a substantial investment in, the Canadian entity.Member of a material banking groupFor the purposes of this section, an entity is a member of a material banking group if either of the following ratios, expressed as a percentage, is equal to or greater than the percentage prescribed for the purpose of this subsection:A/B or C/DwhereAis the sum of the total assets of all foreign banks described in any of subparagraphs (1)(a)(i) to (iii) with which the entity is associated, other than the total assets of foreign banks described in any of those subparagraphs whose assets are consolidated into the total assets of any foreign bank described in any of those subparagraphs with which the entity is associated;Bisif the entity is not controlled by any person, the total assets of the entity, orin any other case, the sum of the total assets of the entity and of all its affiliates, other than entities whose total assets are consolidated into the total assets of an affiliate of the entity;Cis the sum of the total revenue of all foreign banks described in any of subparagraphs (1)(a)(i) to (iii) with which the entity is associated, other than the total revenue of foreign banks described in any of those subparagraphs whose revenue is consolidated into the total revenue of any foreign bank described in any of those subparagraphs with which the entity is associated; andDisif the entity is not controlled by any person, the total revenue of the entity, orin any other case, the sum of the total revenue of the entity and of all its affiliates, other than entities whose total revenue is consolidated into the total revenue of an affiliate of the entity.Exemption from material banking group statusDespite subsection (2), the Minister may, subject to any terms and conditions that he or she considers appropriate, exempt an entity from being a member of a material banking group if neither of the ratios determined in accordance with that subsection in relation to that entity exceeds the percentage prescribed for the purposes of this subsection.Subsections 507(4) to (7) do not applySubsections 507(4) to (7) do not apply with respect to the making of any determination relating to control or a substantial investment for the purposes of subparagraph (1)(b)(iii).DefinitionsThe following definitions apply in this section.total assets, in respect of an entity, means the total value of its assets as reported on a consolidated basis in its most recently completed financial statements that were prepared in accordance with generally accepted accounting principles inthe jurisdiction in which the entity was formed or incorporated,a jurisdiction in which it carries on business, ora country or territory that is a WTO Member as defined in subsection 2(1) of the World Trade Organization Agreement Implementation Act; orif its most recently completed financial statements were not prepared in the manner described in paragraph (a), as would have been reported on a consolidated basis in its most recently completed financial statements had they been prepared in accordance with generally accepted accounting principles in Canada. (actif total)total revenue, in respect of an entity, means its total revenueas reported on a consolidated basis in its most recently completed financial statements that were prepared in accordance with generally accepted accounting principles inthe jurisdiction in which the entity was formed or incorporated,a jurisdiction in which it carries on business, ora country or territory that is a WTO Member as defined in subsection 2(1) of the World Trade Organization Agreement Implementation Act; orif its most recently completed financial statements were not prepared in the manner described in paragraph (a), as would have been reported on a consolidated basis in its most recently completed financial statements had they been prepared in accordance with generally accepted accounting principles in Canada. (recettes d’exploitation totales)1991, c. 46, s. 508, c. 47, s. 756; 1993, c. 44, s. 29; 1994, c. 47, s. 26; 1999, c. 28, s. 28; 2001, c. 9, s. 132; 2007, c. 6, s. 49
[Repealed, 2007, c. 6, s. 49]
[Repealed, 2007, c. 6, s. 49]
General Prohibitions and Exceptions
Prohibited activitiesExcept as permitted by this Part, a foreign bank or an entity associated with a foreign bank shall notin Canada, engage in or carry onany business that a bank is permitted to engage in or carry on under this Act, orany other business;maintain a branch in Canada for any purpose;establish, maintain or acquire for use in Canada an automated banking machine, a remote service unit or a similar automated service, or in Canada accept data from such a machine, unit or service; oracquire or hold control of, or a substantial investment in, a Canadian entity.Deeming re acts of agent, etc. — foreign banksFor the purposes of this Part, a foreign bank is deemed to be carrying out or to have carried out anything prohibited by subsection (1) if it is carried out by a nominee or agent of the foreign bank acting as such.Deeming re acts of agent, etc. — associated entitiesFor the purposes of this Part, an entity associated with a foreign bank is deemed to be carrying out or to have carried out anything prohibited by subsection (1) if it is carried out by a nominee or agent of the entity associated with the foreign bank acting as such.Non-application re federal institutions associated with a foreign bankSubsection (1) does not apply toan entity referred to in any of paragraphs 468(1)(a) to (f) that is an entity associated with a foreign bank; ora Canadian entity that an entity referred to in paragraph (a) controls, or in which such an entity has a substantial investment.Non-application re Canadian entity associated with a foreign bankParagraphs (1)(a) and (b) do not apply to a Canadian entity that is an entity associated with a foreign bank and that is held or acquired in accordance with this Part.1991, c. 46, s. 510; 1996, c. 6, s. 9; 1997, c. 15, s. 77; 2001, c. 9, s. 132; 2007, c. 6, s. 50
Limit — business growth fundThe aggregate value of all ownership interests in the business growth fund and the entities that the business growth fund controls that a foreign bank and the entities associated with it hold must not exceed $200,000,000.ApplicationFor the purposes of subsection (1), the value of an ownership interest is determined by the amount paid for it at the time of its issuance.2018, c. 27, s. 142
Business growth fundSubject to section 510.01 and subsections (2) to (4), a foreign bank or an entity associated with a foreign bank may hold or acquire a substantial investment in the business growth fund or a Canadian entity that the business growth fund controls.For greater certaintyFor greater certainty, a foreign bank or an entity associated with a foreign bank is prohibited from acquiring control of the business growth fund or any Canadian entity that the business growth fund controls.Prohibition — entityA foreign bank or an entity associated with a foreign bank is prohibited from holding or acquiring a substantial investment in the business growth fund or any Canadian entity that the business growth fund controls if the business growth fund or any entity that the business growth fund controls holds or acquires shares of, or other ownership interests in, any of the following entities, or in any entity that controls any of the following entities:an entity referred to in any of paragraphs 468(1)(a) to (j);an entity that is primarily engaged in the leasing of motor vehicles in Canada for the purpose of extending credit to a customer or financing a customer’s acquisition of a motor vehicle;an entity that is primarily engaged in providing temporary possession of personal property, including motor vehicles, to customers in Canada for a purpose other than to finance the customer’s acquisition of the property;an entity that acts as an insurance broker or agent in Canada; oran entity that is engaged in any prescribed activity.Prohibition — capital and loansA foreign bank or an entity associated with a foreign bank is prohibited from holding or acquiring a substantial investment in the business growth fund or any Canadian entity that the business growth fund controls if the business growth fund or any entity that the business growth fund controls holds shares of, or other ownership interests in, an entity or holds a loan made to an entity and, in respect of that entity and its affiliates, the aggregate value of the following exceeds $100,000,000:all ownership interests that are held by the foreign bank, the entities associated with the foreign bank, the business growth fund or the entities that the business growth fund controls, the value of those ownership interests as determined by the amount paid for them at the time each was first acquired by any of those entities; andthe outstanding principal of all loans held by the business growth fund or the entities that the business growth fund controls.2018, c. 27, s. 142
Exception re real property holding and managementExcept as may be prescribed, paragraphs 510(1)(a) and (b) do not apply in respect of the holding or managing of, or otherwise dealing with, real property in Canada by a foreign bank or an entity associated with a foreign bank.2007, c. 6, s. 51
Exception re accessing accountsNothing in paragraphs 510(1)(a) to (c) is to be construed as prohibiting a foreign bank or an entity associated with a foreign bank from providing its customers who are natural persons not ordinarily resident in Canada with access in Canada to their accounts located outside Canada through the use of automated banking machines located in Canada.1991, c. 46, s. 511; 2001, c. 9, s. 132; 2007, c. 6, s. 51
Exception re quotationsNothing in paragraphs 510(1)(a) to (c) is to be construed as prohibiting a foreign bank or an entity associated with a foreign bank from establishing, maintaining or using a private telephone service or similar facility for the purpose of quoting to customers in Canada, or entering with customers in Canada into verbal agreements relating to, foreign exchange, deposit or loan rates if there is no accounting or information processing involved in the private telephone service or similar facility.1991, c. 46, s. 512; 2001, c. 9, s. 132
Exception re automated servicesA foreign bank, or an entity associated with a foreign bank, that has received the approval of the Minister under paragraph 522.22(1)(f) mayif it is a foreign securities dealer that has also received the approval of the Minister under paragraph 522.22(1)(i), engage in the activities referred to in paragraph 510(1)(c) so long as they relate to its business referred to in paragraph 522.18(1)(b); andif it is a foreign cooperative credit society, engage in the activities referred to in paragraph 510(1)(c) so long as they relate to its business as a cooperative credit society engaged in or carried on by it in accordance with provincial laws relating to cooperative credit societies.Non-applicationParagraph 510(1)(c) does not apply toa Canadian entity referred to in any of paragraphs 468(1)(g) to (i);a prescribed Canadian entity, other than a permitted Canadian entity, that is controlled by a Canadian entity referred to in paragraph (a); orany other Canadian entity, other than a limited commercial entity, that is acquired or held by a foreign bank or an entity associated with a foreign bank in accordance with Divisions 4 and 5, and that has received the approval of the Minister under paragraph 522.22(1)(i).1991, c. 46, s. 513; 1997, c. 15, s. 78; 1999, c. 28, s. 29; 2001, c. 9, s. 132; 2007, c. 6, s. 52
[Repealed, 2007, c. 6, s. 53]
[Repealed, 2007, c. 6, s. 53]
Change of statusIf an entity becomes a foreign bank, or an entity associated with a foreign bank, to which this Part applies and immediately before it became such a foreign bank or such an entity it maintained a branch or engaged in or carried on business in Canada that is not permitted by or under this Part, it may continue to maintain that branch or engage in or carry on that business for a period of six months after the day on which it became such a foreign bank or such an entity, or for any other shorter period that may be specified or approved by the Minister.TransitionalIf a foreign bank or an entity associated with a foreign bank was permitted by section 516 or 517, as that section read immediately before the day on which this subsection came into force, to maintain a branch or engage in or carry on business in Canada that is not permitted by or under this Part, it may continue to maintain that branch or engage in or carry on that business for the period during which it could have done so under that section.1991, c. 46, s. 516; 2001, c. 9, s. 132; 2007, c. 6, s. 53
Change of statusIf an entity becomes a foreign bank, or an entity associated with a foreign bank, to which this Part applies and immediately before it became such a foreign bank or such an entity it held control of, or a substantial investment in, a Canadian entity and that control or substantial investment is not permitted by or under this Part, it may continue to hold control of, or a substantial investment in, the Canadian entity for a period of six months after the day on which it became such a foreign bank or such an entity, or for any other shorter period that may be specified or approved by the Minister.TransitionalIf a foreign bank or an entity associated with a foreign bank was permitted by section 516 or 517, as that section read immediately before the day on which this subsection came into force, to hold control of, or a substantial investment in, a Canadian entity and that holding is not permitted by or under this Part, it may continue to hold control of, or the substantial investment in, the Canadian entity for the period during which it could have done so under that section.1991, c. 46, s. 517; 1997, c. 15, s. 81; 2001, c. 9, s. 132; 2007, c. 6, s. 53
RestrictionIf an order has been made under subsection 973.1(1) in respect of a foreign bank or an entity associated with a foreign bank and section 516 or 517 applies to the foreign bank or entity, as the case may be, the period under section 516 or 517 may not extend beyond the expiry of the period referred to in the order made under subsection 973.1(1).2001, c. 9, s. 132; 2007, c. 6, s. 54(E)
Prohibition re guarantee and acceptance of securities and billsSubject to subsections (2) to (4),a foreign bank shall not guarantee any securities or accept any bills of exchange or depository bills that are issued by a person resident in Canada and that are intended by the issuer or by any party to the security or bill to be sold or traded in Canada; andno person shall participate in any arrangement in connection with a guarantee or acceptance prohibited by paragraph (a).ExceptionSubsection (1) does not apply in respect of the guarantee or acceptance by a foreign bank of securities, bills of exchange or depository bills that are issued bya non-bank affiliate of the foreign bank;any other person resident in Canada and guaranteed or accepted bya bank that is a subsidiary of the foreign bank or of an entity associated with the foreign bank,a Canadian entity referred to in any of paragraphs 468(1)(a) to (i) in which a bank that is a subsidiary of the foreign bank, or of an entity associated with the foreign bank, holds a substantial investment,a Canadian entity referred to in any of paragraphs 468(1)(a) to (i) that is controlled by a bank that is a subsidiary of the foreign bank, or of an entity associated with the foreign bank,a Canadian entity referred to in any of paragraphs 468(1)(b) to (i) that is a non-bank affiliate of the foreign bank, ora prescribed entity;a bank that is a subsidiary of the foreign bank or of an entity associated with the foreign bank;a Canadian entity in which a bank that is a subsidiary of the foreign bank, or of an entity associated with the foreign bank, holds a substantial investment;a Canadian entity controlled by a bank that is a subsidiary of the foreign bank or of an entity associated with the foreign bank; ora prescribed entity.ExceptionSubsection (1) does not apply in respect ofthe business in Canada of an authorized foreign bank; ora foreign insurance company in relation to its insurance business in Canada.ExceptionDespite subsection (1), a foreign bank, or an entity associated with a foreign bank, that has received the approval of the Minister under paragraph 522.22(1)(f) may guarantee any securities or accept any bills of exchange or depository bills in relation to its business permitted under paragraph 522.18(1)(a) or (b).1991, c. 46, s. 518; 1997, c. 15, s. 82; 1999, c. 28, s. 30, c. 31, s. 15(F); 2001, c. 9, s. 132; 2007, c. 6, s. 55
Prohibited activities — non-bank affiliatesDespite subsections 510(4) and (5), a non-bank affiliate of a foreign bank shall not, in Canada,engage in the business of accepting deposit liabilities;engage in the business of acting as an agent for the acceptance of deposit liabilities for a foreign bank or an entity associated with a foreign bank, other than foran authorized foreign bank,a foreign cooperative credit society that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of a cooperative credit society, oran entity referred to in any of paragraphs 468(1)(a), (c), (d) and (h) or a trust or loan corporation referred to in paragraph 468(1)(g); orrepresent to the public that any instrument issued by it is a deposit or that any liability incurred by it is a deposit.ExceptionSubsection (1) does not apply to a non-bank affiliate that isa trust or loan corporation incorporated by or under an Act of Parliament or of the legislature of a province;a Canadian entity referred to in paragraph 468(1)(d) or (h); ora prescribed entity.1991, c. 46, s. 519; 1997, c. 15, s. 83; 1999, c. 28, s. 31; 2001, c. 9, s. 132; 2007, c. 6, s. 56
Borrowing from the public — non-bank affiliatesA non-bank affiliate of a foreign bank that carries on as part of its business the provision of financial services may borrow money in Canada from the public only if it discloses thatit is not a member institution of the Canada Deposit Insurance Corporation;the liability incurred by it through the borrowing is not a deposit; andit is not regulated as a financial institution in Canada.Manner of disclosureThe disclosure must bein a prospectus, information circular or other offering document or a similar document related to the borrowing or, if there is no such document, in a statement delivered to the lender; orin any other manner that may be prescribed.Exception for certain borrowingSubsection (1) does not applyto a borrowing of a prescribed class or type or to a borrowing in prescribed circumstances or in a prescribed manner; orexcept as may be provided in any regulations, to a borrowingfrom a person in an amount of $150,000 or more, orthrough the issue of instruments in denominations of $150,000 or more.ExceptionSubsection (1) does not apply to a non-bank affiliate that isa Canadian entity referred to in any of paragraphs 468(1)(b), (c) or (e) to (g);an entity controlled by a bank holding company or an insurance holding company or in which a bank holding company or an insurance holding company has a substantial investment;a financial institution referred to in paragraph (g) of the definition financial institution in section 2; ora prescribed entity.2007, c. 6, s. 56
Prohibition re depositsA foreign bank — or an entity that is associated with a foreign bank and that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province — shall not, as part of its business in Canada,engage in the business of accepting deposit liabilities;engage in the business of acting as an agent for the acceptance of deposit liabilities for a foreign bank or an entity associated with a foreign bank; orrepresent to the public that any instrument issued by it is a deposit or that any liability incurred by it is a deposit.ExceptionSubsection (1) does not apply toa foreign bank that is an authorized foreign bank; ora foreign cooperative credit society that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of a cooperative credit society.ExceptionParagraph (1)(b) does not apply to a foreign securities dealer that has received the approval of the Minister under paragraph 522.22(1)(f) or to a foreign insurance company — or to a prescribed entity — that engages in the business of acting as an agent for the acceptance of deposit liabilities foran authorized foreign bank;a foreign cooperative credit society that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of a cooperative credit society; oran entity referred to in paragraph 468(1)(a), (c), (d) or (h) or a trust or loan corporation referred to in paragraph 468(1)(g).1991, c. 46, s. 520; 1999, c. 28, s. 32; 2001, c. 9, s. 132; 2007, c. 6, s. 56
Borrowing from the publicA foreign bank — or an entity that is associated with a foreign bank and that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province — may, as part of its business in Canada, borrow money in Canada from the public only ifit maintains a branch in Canada as permitted by section 522.05 or 522.19 or it engages in or carries on business in Canada as permitted by that section; andit discloses thatit is not a member institution of the Canada Deposit Insurance Corporation,the liability incurred through the borrowing is not a deposit, andit is not regulated as a financial institution in Canada.Manner of disclosureThe disclosure must bein a prospectus, information circular or other offering document or a similar document related to the borrowing or, if there is no such document, in a statement delivered to the lender; orin any other manner that may be prescribed.Exception for certain borrowingThe disclosure is not required in respect ofa borrowing of a prescribed class or type or a borrowing in prescribed circumstances or in a prescribed manner; orexcept as may be provided in any regulations, a borrowingfrom a person in an amount of $150,000 or more, orthrough the issue of instruments in denominations of $150,000 or more.ExceptionSubsection (1) does not apply toan authorized foreign bank;a foreign cooperative credit society that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of a cooperative credit society;a foreign insurance company;a foreign securities dealer that has received the approval of the Minister under paragraph 522.22(1)(f); ora prescribed entity.2007, c. 6, s. 56
RegulationsThe Governor in Council may make regulations exempting any class or classes of businesses, investments, activities and branches from any of the prohibitions set out in section 510 or 518.1991, c. 46, s. 521; 1997, c. 15, s. 84; 1999, c. 28, s. 33; 2001, c. 9, s. 132
Permitted Canadian officesA foreign bank maywith the approval of the Superintendent andsubject to any terms and conditions that are attached to the approval, andsubject to and in accordance with rules that are prescribed in relation to the operation of representative offices and the conduct of their personnel,maintain representative offices in Canada that are registered with the Superintendent in the prescribed manner; andwith the approval of the Governor in Council and subject to any terms and conditions that are attached to the approval, locate its head office in Canada and, from that office, issue directions and do all other things reasonably necessary for the conduct of its banking business outside Canada.1991, c. 46, s. 522; 1997, c. 15, s. 85; 1999, c. 28, s. 34; 2001, c. 9, s. 132
Examination of representative officesThe Superintendent shall, from time to time, make or cause to be made any examination and inquiry into the operation of any representative office of a foreign bank and the conduct of the personnel in that office that the Superintendent considers necessary for the purpose of ascertaining whether the office is being operated, and whether the personnel of the office are conducting themselves, in accordance with the rules prescribed for the purposes of paragraph 522(a).Powers of SuperintendentFor the purposes of subsection (1), the Superintendent and any person acting under the direction of the Superintendent have the same powers and obligations that the Superintendent has in relation to the examination of banks under this Act.2001, c. 9, s. 132
Name of representative officeIf the name under which a representative office of a foreign bank is or will be identifying itself in Canada is one referred to in any of paragraphs 530(1)(a) to (e), the Superintendent may, as the case may be,refuse to grant the approval referred to in paragraph 522(a);impose restrictions on the use of the name in Canada; ordirect the foreign bank to change the name.2007, c. 6, s. 57
Cancellation of registrationThe Superintendent may cancel the registration of a representative office of a foreign bank ifthe foreign bank requests the Superintendent to cancel the registration;the Superintendent is of the opinion that the representative office is not being operated, or the personnel of that office are not conducting themselves, in accordance with the rules prescribed for the purposes of paragraph 522(a); orthe Superintendent is of the opinion that the foreign bank has failed to comply with a restriction imposed under paragraph 522.011(b) or a direction made under paragraph 522.011(c).2001, c. 9, s. 132; 2007, c. 6, s. 57
Business conducted from head office in CanadaSubject to subsections (2) and (3), if the head office of a foreign bank is located in Canada under paragraph 522(b), the foreign bank shall not conduct any business from that office with persons resident in Canada or with Her Majesty in right of Canada or a province except for the purpose of acquiring premises, supplies, services and staff for that office.ExceptionIf a foreign bank, immediately before the establishment of its head office in Canada under paragraph 522(b), held deposits of, or had loans outstanding to, persons resident in Canada or Her Majesty in right of Canada or a province, the foreign bank may repay those deposits and collect those loans through the head office in Canada.ExceptionIf a foreign bank controlled a bank or was a major shareholder of a bank immediately before the establishment of the foreign bank’s head office in Canada under paragraph 522(b), the foreign bank may continue to carry out from the head office in Canada any activities that were carried out from the head office of the foreign bank in relation to the bank before the establishment of the head office in Canada.2001, c. 9, s. 132
No Financial Establishment in Canada
Permitted investment — foreign bankA foreign bank that does not have a financial establishment in Canada may acquire or hold control of, or a substantial investment in, a Canadian entity, so long as, by virtue of the acquisition, neither the foreign bank nor any entity associated with the foreign bank controls or becomes a major owner ofa Canadian entity referred to in any of paragraphs 468(1)(a) to (i); ora Canadian entity that is a financial services entity.Permitted investment — associated entityAn entity that is associated with a foreign bank and that does not have a financial establishment in Canada may acquire or hold control of, or a substantial investment in, a Canadian entity, so long as, by virtue of the acquisition, neither the entity nor the foreign bank, nor any other entity associated with the foreign bank, controls or becomes a major owner ofa Canadian entity referred to in any of paragraphs 468(1)(a) to (i); ora Canadian entity that is a financial services entity.2001, c. 9, s. 132
Permitted Canadian commercial branchA foreign bank, or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province and that is associated with a foreign bank, that does not have a financial establishment in Canada may maintain a branch in Canada or engage in or carry on business in Canada so long as less thanthe prescribed portion — or if no portion is prescribed, 10 per cent — of its business in Canada, determined in the prescribed manner, consists of one or more of the activities referred to in any of paragraphs (a) to (g) of the definition financial services entity in subsection 507(1); andthe prescribed portion — or if no portion is prescribed, 10 per cent — of its business outside Canada, determined in the prescribed manner, consists of one or more activities referred to in any ofparagraphs (a) to (g) of the definition financial services entity in subsection 507(1), andparagraph (h) of that definition, except under prescribed circumstances.2001, c. 9, s. 132
Permitted branches re leasingDespite section 522.05, a foreign bank, or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province and that is associated with a foreign bank, that does not have a financial establishment in Canada and that outside Canadaengages only in the activities referred to in the definition leasing entity in subsection 507(1), orengages only in activities other than those referred to in any ofparagraphs (a) to (g) of the definition financial services entity in subsection 507(1), andparagraph (h) of that definition, except under prescribed circumstances,may in Canada engage in the activities of a leasing entity so long as it does not engage in any other activity in Canada.2001, c. 9, s. 132
Financial Establishment in CanadaInvestments
Investment in a financial institutionSubject to the requirements relating to approval set out in Division 5, a foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity referred to in any of paragraphs 468(1)(a) to (i).2001, c. 9, s. 132; 2007, c. 6, s. 58
Permitted investmentsSubject to subsection (2) and the requirements relating to approval set out in Division 5, a foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity, other than an entity referred to in any of paragraphs 468(1)(a) to (i), whose business is limited to one or more of the following:engaging inany financial service activity that a bank is permitted to engage in under any of paragraphs 409(2)(a) to (d), orany other activity that a bank is permitted to engage in under section 410 or 411;acquiring or holding shares of, or ownership interests in, entities that a foreign bank or an entity associated with a foreign bank is permitted to acquire or hold under this Division or Division 8 — other than limited commercial entities, except in prescribed circumstances;acquiring or holding shares of, or ownership interests in, entities incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province;engaging in the provision of any services exclusively to any or all of the following, so long as the Canadian entity is also providing those services to the foreign bank or to any member of the foreign bank’s group, namely,the foreign bank,any member of the foreign bank’s group,any entity that is primarily engaged in the business of providing financial services,any entity in which an entity referred to in subparagraph (iii) has a substantial investment and that isan entity in which a bank is permitted to acquire a substantial investment under section 468,an entity in which a foreign bank or an entity associated with a foreign bank is permitted to acquire a substantial investment under this section and section 522.07, ora prescribed entity, orany prescribed person, if it is doing so under prescribed terms and conditions, if any are prescribed;engaging in any activity that a bank is permitted to engage in — or in any other prescribed activity —, other than an activity referred to in paragraph (a) or (e), that relates tothe promotion, sale, delivery or distribution of a financial product or financial service that is provided by the foreign bank or by any member of the foreign bank’s group, orif a significant portion of the business of the Canadian entity involves an activity referred to in subparagraph (i), the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any other entity that is primarily engaged in the business of providing financial services;engaging in the activities referred to in the definition closed-end fund, mutual fund distribution entity, mutual fund entity or real property brokerage entity in subsection 464(1); andengaging in prescribed activities, under prescribed terms and conditions, if any are prescribed.Additional restrictionA foreign bank or an entity associated with a foreign bank may not acquire or hold control of, or a substantial investment in, a Canadian entity whose business includes any activity referred to in any of paragraphs (1)(a) to (e) if the activities of the Canadian entity includeactivities that a bank is not permitted to engage in under section 412, 417 or 418;dealing in securities, except as may be permitted under paragraph (1)(e) or as may be permitted to a bank under paragraph 409(2)(c);activities that a bank is not permitted to engage in under section 416, if the Canadian entity engages in the activities of a finance entity or of any other entity as may be prescribed;acquiring or holding control of, or a substantial investment in, another Canadian entity unlessin the case of a Canadian entity that is controlled by the foreign bank or the entity associated with a foreign bank, the foreign bank or the entity associated with a foreign bank itself would be permitted to acquire or hold control of, or a substantial investment in, the other Canadian entity under this section or section 522.07 or 522.1 or Division 8, orin the case of a Canadian entity that is not controlled by the foreign bank or the entity associated with a foreign bank, the foreign bank or the entity associated with a foreign bank itself would be permitted to acquire or hold control of, or a substantial investment in, the other Canadian entity under this section, section 522.07, any of paragraphs 522.1(a) or (c) to (e) or Division 8; orany prescribed activity.ExceptionDespite paragraph (2)(a), a foreign bank or an entity associated with a foreign bank may acquire or hold control of, or acquire or increase a substantial investment in, any entity that acts as a trustee for a trust if the entity has been permitted under the laws of a province to act as a trustee for a trust and the following conditions are satisfied:the entity acts as a trustee only with respect to a closed-end fund or mutual fund entity; andif the entity engages in other business, that business is limited to engaging in one or more of the following:the activities of a mutual fund distribution entity,any activity that a bank is permitted to engage in under paragraph 410(1)(c.2), andthe provision of investment counselling services and portfolio management services.2001, c. 9, s. 132; 2007, c. 6, s. 59; 2012, c. 5, s. 55
Investment in a limited commercial entity — foreign bankSubject to the requirements relating to approval set out in Division 5, a foreign bank that has a financial establishment in Canada may acquire or hold control of, or a substantial investment in, a Canadian entity ifthe Canadian entity is not an entity referred to in any of paragraphs 468(1)(a) to (i);the Canadian entity does not engage in more than the prescribed portion of — or if no portion is prescribed, 10 per cent of — the activities referred to in paragraphs 522.08(1)(a) to (f) or in any of paragraphs (a) to (h) of the definition financial services entity in subsection 507(1), determined in the prescribed manner;the Canadian entity does not engage in any leasing activities; andin the opinion of the Minister, the Canadian entity engages in or carries on business that is the same as, or similar, related or incidental to, the business outside Canada of the foreign bank or any entity associated with the foreign bank.Investment in a limited commercial entity — entity associated with a foreign bankSubject to the requirements relating to approval set out in Division 5, an entity that is associated with a foreign bank and that has a financial establishment in Canada may acquire or hold control of, or a substantial investment in, a Canadian entity ifthe Canadian entity is not an entity referred to in any of paragraphs 468(1)(a) to (i);the Canadian entity does not engage in more than the prescribed portion of — or if no portion is prescribed, 10 per cent of — the activities referred to in paragraphs 522.08(1)(a) to (f) or in any of paragraphs (a) to (h) of the definition financial services entity in subsection 507(1), determined in the prescribed manner;the Canadian entity does not engage in leasing activities; andin the opinion of the Minister, the Canadian entity engages in or carries on business that is the same as, or similar, related or incidental to, the business outside Canada of the entity associated with the foreign bank, the foreign bank or any other entity associated with the foreign bank.Investment in holding body corporate — limited commercial entitiesA foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity whose business is limited to acquiring or holding shares of, or ownership interests in, limited commercial entities.2001, c. 9, s. 132; 2007, c. 6, s. 60
Acquisition of other investmentsA foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entityby way of an investment permitted by any of sections 522.11 to 522.13;by way of a temporary investment permitted by section 522.14;as a result of a default that has occurred under the terms of an agreement with respect to a loan or under any other documents governing the terms of a loan, as permitted by section 522.15;through a realization of security, as permitted by section 522.15; orif it does so in accordance with regulations made under paragraph 522.23(a) concerning specialized financing.2001, c. 9, s. 132; 2007, c. 6, s. 61
Indirect investments through federal institutionsA foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity by way ofan acquisition or holding of the control of a Canadian entity referred to in any of paragraphs 468(1)(a) to (f), or of a prescribed Canadian entity, that controls or has a substantial investment in the Canadian entity; oran acquisition or holding of shares or ownership interests in the Canadian entity bya Canadian entity referred to in any of paragraphs 468(1)(a) to (f), or a prescribed Canadian entity, that is controlled by the foreign bank or the entity associated with the foreign bank, ora Canadian entity controlled by a Canadian entity referred to in subparagraph (i).Indirect investments through federal institutionsIf a foreign bank or an entity associated with a foreign bank acquires or holds control of, or a substantial investment in, a Canadian entity under subsection (1), none of the requirements relating to approval set out in Division 5 apply in respect of that acquisition or holding.2001, c. 9, s. 132; 2007, c. 6, s. 62
Investments through provincial institutionsAn entity that is associated with a foreign bank and that isan entity referred to in any of paragraphs 468(1)(g) to (i), ora Canadian entity controlled by an entity referred to in any of paragraphs 468(1)(g) to (i)may acquire or hold control of, or a substantial investment in, a Canadian entity that is not a permitted Canadian entity or an entity referred to in paragraphs 468(1)(a) to (i), and if it does so, none of the requirements relating to approval set out in Division 5 apply in respect of that acquisition or holding.2001, c. 9, s. 132
Indirect investments through provincial institutionsA foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity, other than a permitted Canadian entity or a Canadian entity referred to in any of paragraphs 468(1)(a) to (i), by way ofan acquisition or holding of the control of a Canadian entity referred to in any of paragraphs 468(1)(g) to (i), or of a prescribed Canadian entity, that controls or has a substantial investment in the Canadian entity; oran acquisition or holding of shares or ownership interests in the Canadian entity bya Canadian entity referred to in any of paragraphs 468(1)(g) to (i), or a prescribed Canadian entity, that is controlled by the foreign bank or the entity associated with the foreign bank, ora Canadian entity controlled by a Canadian entity referred to in subparagraph (i).2001, c. 9, s. 132
Temporary investmentsSubject to sections 522.21 and 522.211, a foreign bank or an entity associated with a foreign bank may, by way of temporary investment, acquire or hold control of, or a substantial investment in, a Canadian entity if the foreign bank or the entity associated with a foreign bank has a financial establishment in Canada or would, by virtue of the temporary investment, have a financial establishment in Canada.DivestitureIf subsection (1) applies in respect of a foreign bank or an entity associated with a foreign bank, the foreign bank or entity shall do all things necessary to ensure that, within two years after acquiring the control or the substantial investment or within any other period that may be specified or approved by the Minister, it no longer controls or has a substantial investment in the entity.ExtensionOn application by a foreign bank, or an entity associated with a foreign bank, the Minister may extend the period referred to in subsection (2) by any further period or periods.ExceptionIf a foreign bank, or an entity associated with a foreign bank, acquires or holds, by way of a temporary investment, control of, or a substantial investment in, a Canadian entity for which the approval of the Minister would have been required under any of paragraphs 522.22(1)(a) to (e) if the foreign bank or the entity associated with a foreign bank had acquired the control or the substantial investment under section 522.07 or 522.08, the foreign bank or the entity associated with a foreign bank shall, within 90 days after acquiring control, or after acquiring the substantial investment,apply to the Minister for approval to retain control of the Canadian entity or to continue to hold the substantial investment in the Canadian entity for a period specified by the Minister or for an indeterminate period on any terms and conditions that the Minister considers appropriate; ordo all things necessary to ensure that, on the expiry of the 90 days, it no longer controls the Canadian entity or holds a substantial investment in the Canadian entity.Deemed temporary investmentIf a foreign bank or an entity associated with a foreign bank holds control of, or a substantial investment in, a Canadian entity as permitted by this Division and the foreign bank or the entity associated with the foreign bank becomes aware of a change in the business, affairs or activities of the Canadian entity that, if the change had taken place before the acquisition of control or the substantial investment, would have caused the entity not to be a limited commercial entity or a Canadian entity referred to in section 522.07 or 522.08 or would have been such that approval for the acquisition would have been required under any of paragraphs 522.22(1)(a) to (e) or (g), the foreign bank or the entity associated with the foreign bank is deemed to have acquired, on the day it becomes aware of the change, a temporary investment in respect of which subsections (1) to (4) apply.NotificationWithin 90 days after acquiring control or a substantial investment under subsection (1) or (5), a foreign bank or an entity associated with a foreign bank shall notify the Minister in writing of the acquisition.2001, c. 9, s. 132; 2007, c. 6, s. 63
Acquisition by loan workout or realization of securityIf a foreign bank or an entity associated with a foreign bank acquires or holds control of, or a substantial investment in, a Canadian entityas a result of a default that has occurred under the terms of an agreement with respect to a loan made between the foreign bank — or the entity associated with a foreign bank — and the Canadian entity, or under any other documents governing the terms of the loan, orthrough the realization of a security interest for any loan or advance made by the foreign bank or the entity associated with the foreign bank, or for any other debt or liability owing to it,it may retain the control or the substantial investment for five years, but it shall do all things necessary to ensure that, within five years after the acquisition, it no longer controls the Canadian entity or holds a substantial investment in the Canadian entity.ExtensionOn application by a foreign bank or an entity associated with a foreign bank, the Minister may extend the period referred to in subsection (1) by any further period or periods.ExceptionIf, under subsection (1), a foreign bank or an entity associated with a foreign bank acquires or holds control of, or a substantial investment in, a Canadian entity for which the approval of the Minister is required under Division 5, the foreign bank or entity associated with the foreign bank may retain control of the Canadian 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 (1) or of any extension granted under subsection (2).2001, c. 9, s. 132
Branches
Bank branchesA foreign bank may, under Part XII.1, maintain a branch in Canada to carry on business in Canada.2001, c. 9, s. 132
Insurance branchesA foreign bank, or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province and that is associated with a foreign bank may obtain an order under Part XIII of the Insurance Companies Act to insure, in Canada, risks.2001, c. 9, s. 132
Business of a cooperative credit society and dealing in securitiesSubject to the requirements relating to approval set out in Division 5, a foreign bank — or an entity associated with a foreign bank —that is a foreign cooperative credit society may, in Canada, engage in or carry on the business of a cooperative credit society, so long as that business is engaged in or carried on in accordance with provincial laws relating to cooperative credit societies; orthat is a foreign securities dealer may, in Canada, engage in or carry on the business of dealing in securities, or the business of providing investment counselling services and portfolio management services, so long as that business is engaged in or carried on in accordance with provincial laws relating to securities dealing or investment counselling and portfolio management.Business of investment counselling services and portfolio management servicesSubject to the requirements relating to approval set out in Division 5, an entity associated with a foreign bank incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province, that engages in or carries on, outside Canada, the business of providing investment counselling services and portfolio management services may engage in or carry on that business in Canada so long as that business in Canada is engaged in or carried on in accordance with provincial laws relating to investment counselling and portfolio management.2001, c. 9, s. 132; 2007, c. 6, s. 64
Limited commercial branchesSubject to the requirements relating to approval set out in Division 5, and subject to subsection (2), a foreign bank, or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province and that is associated with a foreign bank, that has a financial establishment in Canada may maintain a branch in Canada or engage in or carry on business in Canada, so long asless than the prescribed portion — or if no portion is prescribed, 10 per cent — of its business in Canada, determined in the prescribed manner, consists of one or more of the activities referred to in any ofparagraphs 522.08(1)(a) to (f), andparagraphs (a) to (g) of the definition financial services entity in subsection 507(1);less than the prescribed portion — or if no portion is prescribed, 10 per cent — of its business outside Canada, determined in the prescribed manner, consists of one or more of the activities referred to in any ofparagraphs 522.08(1)(a) to (f),paragraphs (a) to (g) of the definition financial services entity in subsection 507(1), andparagraph (h) of that definition, except under prescribed circumstances; andin the opinion of the Minister, the business in Canada is the same as, or similar, related or incidental to, the business outside Canada of the foreign bank or the entity associated with a foreign bank.ProhibitionA foreign bank — or an entity associated with a foreign bank — that maintains a branch or engages in or carries on any business under subsection (1) may not in Canada engage in any leasing activities.2001, c. 9, s. 132; 2007, c. 6, s. 65
ApprovalsApplication
Non-applicationThis Division does not apply in respect of investments acquired and held, branches maintained and businesses engaged in or carried on in accordance with Division 3.2001, c. 9, s. 132
Approval to Have a Financial Establishment in Canada
No financial establishment without approval — foreign bankA foreign bank may not, without the prior written approval of the Minister, have a financial establishment in Canada.ExceptionSubsection (1) does not apply if the foreign bank or any entity associated with the foreign bankis an authorized foreign bank;is a foreign insurance company;controls or is a major owner of a Canadian entity referred to in any of paragraphs 468(1)(a) to (f); orhas already received the approval of the Minister to have a financial establishment in Canada.DeemingA foreign bank that was the subject of a designation order under subsection 508(1) as that subsection read immediately before the coming into force of this subsection and whose designation order has not been revoked is deemed to have received the approval of the Minister to have a financial establishment in Canada.2001, c. 9, s. 132; 2007, c. 6, s. 67
No financial establishment without approval — associated entityAn entity that is associated with a foreign bank may not, without the prior written approval of the Minister, have a financial establishment in Canada.ExceptionSubsection (1) does not apply if the entity associated with a foreign bank, the foreign bank or any other entity associated with the foreign bankis an authorized foreign bank;is a foreign insurance company;controls or is a major owner of a Canadian entity referred to in any of paragraphs 468(1)(a) to (f); orhas already received the approval of the Minister to have a financial establishment in Canada.DeemingAn entity associated with a foreign bank that was the subject of a designation order under subsection 508(1) as that subsection read immediately before the coming into force of this subsection and whose designation order has not been revoked is deemed to have received the approval of the Minister to have a financial establishment in Canada.2007, c. 6, s. 67
Approvals in Respect of Investments and Activities
Minister’s approvalSubject to subsection (2) and the regulations, a foreign bank or an entity associated with a foreign bank may not, without the prior written approval of the Minister,acquire control of a Canadian entity referred to in any of paragraphs 468(1)(g) to (i) from a person who is not a member of the foreign bank’s group;acquire control of a Canadian entity whose business includes one or more of the activities referred to in paragraph 522.08(1)(a) and that engages, as part of its business, in any financial intermediary activity that exposes the Canadian entity to material market or credit risk — including a finance entity — if the control is acquired from an entity referred to in any of paragraphs 468(1)(a) to (f) that is not a member of the foreign bank’s group, but does not include a Canadian entity whose activities are limited to the activities of one or more of the following entities:a factoring entity as defined in the regulations, ora financial leasing entity;acquire or hold control of, or a substantial investment in, a Canadian entity whose business includes one or more of the activities referred to in paragraph 522.08(1)(d);acquire or hold control of, or a substantial investment in, a Canadian entity that engages in Canada in an activity described in paragraph 410(1)(c);acquire or hold control of, or a substantial investment in, a Canadian entity that engages in an activity described in paragraph 410(1)(c.1);acquire or hold control of, or a substantial investment in, a Canadian entity that engages in an activity prescribed for the purposes of paragraph 522.08(1)(f);engage in or carry on a business permitted by paragraph 522.18(1)(a) or (b) or subsection 522.18(2);acquire or hold control of, or a substantial investment in, a limited commercial entity;maintain a branch or engage in or carry on a business permitted by section 522.19; orengage in an activity referred to in paragraph 510(1)(c) in the circumstances described in paragraph 513(1)(a) or (2)(c).Approval for indirect investmentsSubject to the regulations, if a foreign bank or an entity associated with a foreign bankobtains the approval of the Minister under any of paragraphs (1)(a) to (e) and (g) to acquire or hold control of, or a substantial investment in, a Canadian entity, andthrough that acquisition or holding, indirectly acquires control of, or a substantial investment in, another Canadian entity that would require the approval of the Minister under any of those paragraphs,and that indirect acquisition is disclosed to the Minister in writing before the approval is obtained, the foreign bank or the entity associated with a foreign bank is deemed to have obtained the approval of the Minister for that indirect acquisition.Ministerial approval of more than one entityIf the Minister, under paragraph (1)(g), approves the acquisition or holding of control of, or a substantial investment in, a limited commercial entity by a foreign bank or by an entity associated with a foreign bank, the Minister may also authorize the foreign bank or entity associated with a foreign bank to, at any time, acquire and hold control of, or a substantial investment in, another limited commercial entity that engages in activities that are substantially the same as those engaged in by the Canadian entity in respect of which the approval was given.Substantial investment by underwriterNothing in this Part precludes a foreign bank or an entity associated with a foreign bank from acquiring a substantial investment in a Canadian entity if the substantial investment is acquired in the course of a distribution to the public of shares or ownership interests in the Canadian entity by a securities underwriter so long as the securities underwriter holds the substantial investment for no longer than six months.ApplicationSubsection (1) applies regardless of whether or not the approval of the Minister is required under section 522.21 or 522.211.2001, c. 9, s. 132; 2007, c. 6, s. 68
Administration
RegulationsThe Governor in Council may make regulations for the purposes of this Part and, in particular, may make regulationsconcerning specialized financing;for the purposes of subsection 522.22(1) or (2), permitting the acquisition or holding of control or the acquisition or holding of substantial investments, or prescribing the circumstances under which either of those subsections does not apply or the foreign banks, entities associated with foreign banks or other entities in respect of which either of those subsections does not apply, including prescribing foreign banks, entities associated with foreign banks or other entities on the basis of the activities they engage in;restricting the ownership by foreign banks, or entities associated with foreign banks, of shares in a body corporate or of ownership interests in an unincorporated entity under Division 3 or 4 and imposing terms and conditions applicable to foreign banks, or entities associated with foreign banks, that own such shares or interests;in respect of sections 409 to 411, for the purposes of paragraph 522.08(1)(a), subsection 522.22(1) and section 522.24;respecting the calculation referred to in subsection 508(2), including regulations respecting the classes of entities associated with a foreign bank, and the classes of foreign banks described in any of subparagraphs 508(1)(a)(i) to (iii) that are associated with a foreign bank, that are to be taken into account in that calculation;defining any terms in subsection 508(2);respecting exemptions under subsection 508(3); anddefining factoring entity for the purpose of paragraph 522.22(1)(b).2001, c. 9, s. 132; 2007, c. 6, s. 69
Application of regulationsAny regulations made for the purposes of sections 409 to 411 apply for the purposes of paragraph 522.08(1)(a) and subsection 522.22(1) unless otherwise provided in the regulations.2001, c. 9, s. 132
DivestitureIf a foreign bank or an entity associated with a foreign bank contravenes any provision of Division 4 or fails to comply with any terms and conditions imposed by any order made for the purpose of any of those provisions, the Minister may, if the Minister considers it in the public interest to do so, by order, direct the foreign bank or the entity to divest itself of the control of, or a substantial investment in, a bank or bank holding company to which the offence relates.Ceasing to engage in or carry on businessIf an authorized foreign bank or an entity associated with an authorized foreign bank contravenes any provision of Division 4 or fails to comply with any terms and conditions imposed by any order made for the purpose of any of those provisions, the Minister may, if the Minister considers it in the public interest to do so, revoke the order made under subsection 524(1).Divestment orderThe Minister may, by order, direct a foreign bank or an entity associated with a foreign bank, within any period that the Minister considers reasonable, to dispose of assets used in a business or activity engaged in or carried on, or to dispose of the control of an entity or a substantial investment in an entity acquired or held, in contravention of this Part or in contravention of any terms and conditions imposedunder subsection 522.26(2); orunder subsection 518(4) or 521(1.02), as it read immediately before October 24, 2001.2001, c. 9, s. 132; 2007, c. 6, s. 70
PublicationThe Superintendent must publish in the Canada Gazette a notice of every approval granted for the purpose of section 522.21 or 522.211 and of every revocation of any such approval.2001, c. 9, s. 132; 2007, c. 6, s. 71
Obligation to provide informationA foreign bank or entity associated with a foreign bank shall, at the times and in the form specified by the Superintendent, provide the Superintendent with the information that he or she may require.2001, c. 9, s. 132; 2007, c. 6, s. 71
[Repealed, 2007, c. 6, s. 72]
[Repealed, 2007, c. 6, s. 72]
Transitional
DefinitionsThe following definitions apply in this Division.affected entity meansan entity associated with a foreign bank that is an affected foreign bank and that has a financial establishment in Canada; ora prescribed entity associated with a foreign bank referred to in paragraph (c) of the definition affected foreign bank. (entité visée)affected foreign bank means a foreign bank thatimmediately before the day this Division comes into force, was the subject of an order made under subsection 524(1) or former subsection 521(1.06) and whose order has not been revoked; oron or before June 13, 2000, controlled a foreign bank subsidiary as defined in former section 2.[Repealed, 2007, c. 6, s. 73] (banque étrangère visée)Former provisionEvery reference in this Division to a former provision means a reference to that provision as it read immediately before the day this Division comes into force.2001, c. 9, s. 132; 2007, c. 6, s. 73
Former s. 507(4)Every order made under former subsection 507(4) exempting an entity from the status of being associated with a foreign bank or exempting a Canadian entity from being a “non-bank affiliate of a foreign bank” that is in force on the day this Division comes in force continues in force, subject to any further order that the Minister may make varying or revoking it.Date order takes effectA revocation order or variation order takes effect three months after the date it is made unless the Minister and the entity to which it relates agree that the order is to take effect at another time.PublicationThe Minister shall publish in the Canada Gazette a notice of every revocation order.2001, c. 9, s. 132
Former par. 518(3)(b) or s. 521(1)Every order made under former paragraph 518(3)(b) or former subsection 521(1) that is in force on the day this Division comes into force continues in force, subject to any further order that the Minister may make varying or revoking it.2001, c. 9, s. 132
Former s. 521(1)An affected foreign bank or affected entity that had received consent under former subsection 521(1) to acquire or hold control of, or a substantial investment in, a Canadian entity that is a financial services entity but is not a permitted Canadian entity or an entity referred to in any of paragraphs 468(1)(a) to (i) may continue to hold control of, or a substantial investment in, the Canadian entity on and after the day this Division comes into force if the consent had not been revoked before that day.ApplicationSubsection (1) applies so long asthe Canadian entity restricts its businesses in accordance with any terms and conditions in the consent under former subsection 521(1), or in an undertaking to the Minister or Superintendent, other than a term or condition that limits the size of the Canadian entity’s assets; andneither the affected foreign bank nor any affected entity in relation to the foreign bankis an authorized foreign bank, orcontrols or is a major shareholder of a bank or a bank holding company.Former par. 518(3)(b) and former s. 521(1)An affected foreign bank or an affected entity that, immediately before the day this Division comes into force, holds control of, or a substantial investment in, a Canadian entity that is a permitted Canadian entity or an entity referred to in any of paragraphs 468(1)(g) to (i) by virtue of former paragraph 518(3)(b) or a consent received under former subsection 521(1) may continue to hold control of, or a substantial investment in, the Canadian entity on and after the day this Division comes into force if the approval or consent had not been revoked before that day and, if it does so, it is deemed to have received any approval required under paragraphs 522.22(1)(a) to (e) in respect of the Canadian entity.Former par. 518(3)(b)An affected foreign bank or affected entity that, immediately before the day this Division comes into force, holds, by virtue of former paragraph 518(3)(b), control of, or a substantial investment in, a Canadian entity that is not a permitted Canadian entity or a financial services entity may continue to hold control of, or a substantial investment in, the Canadian entity on and after the day this Division comes into force if any approval of the Minister under that former paragraph has not been revoked before that day, so long as the Canadian entity does not engage in leasing activities.ApplicationSubsections (3) and (4) apply so long asafter the coming into force of this Division, the Canadian entity restricts its businesses in accordance with any terms and conditions in the Minister’s approval under former paragraph 518(3)(b), or in a consent received under former subsection 521(1), as the case may be, or in an undertaking to the Minister or Superintendent given before the day this Division comes into force, other than a term or condition that limits the size of the Canadian entity’s assets;within one year after the coming into force of this Division, the affected foreign bank or affected entity discloses to the Minister the nature of its businesses and activities on June 13, 2000; andafter the coming into force of this Division, the Canadian entity does not change the nature of its businesses as ofJune 13, 2000, orany other date after June 13, 2000 and before the coming into force of this Division on which the businesses of the Canadian entity were approved by the Minister.Holding other than by virtue of former par. 518(3)(b) or s. 521(1)An affected foreign bank or an affected entity that, immediately before the day this Division comes into force, holds, otherwise than by virtue of former paragraph 518(3)(b) or a consent received under former subsection 521(1), control of, or a substantial investment in, a Canadian entity that is not a permitted Canadian entity or a financial services entity may continue to hold control of, or a substantial investment in, the Canadian entity on and after the day this Division comes into force.ApplicationSubsection (6) applies so long aswithin one year after the coming into force of this Division, the affected foreign bank or affected entity discloses to the Minister the nature of its businesses on June 13, 2000;after the coming into force of this Division, the Canadian entity does not change the nature of its businesses as of June 13, 2000 and its businesses remain in conformity with former paragraph 518(3)(a);the Canadian entity does not engage in leasing activities; andneither the affected foreign bank nor any affected entityis an authorized foreign bank, orcontrols or is a major shareholder of a bank or a bank holding company.2001, c. 9, s. 132
InvestmentsDespite section 517 and subject to subsection (2), paragraph 510(1)(d) does not apply in respect of the holding of control of, or a substantial investment in, a Canadian entity whose principal activity in Canada is an activity referred to in any of former subparagraphs 518(3)(a)(i) to (v) and that was acquired by a foreign bank or an entity associated with a foreign bank before August 1, 1997 and beforethe foreign bank became a foreign bank or the foreign bank with which the entity is associated became a foreign bank, as the case may be; orthe Canadian entity’s principal activity in Canada became an activity described in those subparagraphs.RestrictionSubsection (1) applies only if the foreign bank or an entity associated with the foreign bankis not an authorized foreign bank; anddoes not control, and is not a major shareholder of, a bank or a bank holding company.2001, c. 9, s. 132
Non-Application of the Investment Canada Act
Investment Canada ActThe Investment Canada Act does not apply in respect of any of the following, whether it occurs directly or indirectly:the acquisition of control of a Canadian business, within the meaning of that Act, that is an entity referred to in any of paragraphs 468(1)(a) to (f) by a foreign bank or by an entity associated with a foreign bank;the establishment of a new Canadian business, within the meaning of that Act, that is the insurance business in Canada of a foreign insurance company that is a foreign bank to which Part XII does not apply or that is an entity associated with a foreign bank to which that Part does not apply;the acquisition of control of a Canadian business, within the meaning of that Act, by an entity referred to in any of paragraphs 468(1)(a) to (f) that is controlled by a foreign bank or by an entity associated with a foreign bank;the establishment of a new Canadian business, within the meaning of that Act, by a foreign bank to which Part XII applies, or by an entity associated with a foreign bank to which that Part applies, that has a financial establishment in Canada, or would have one by virtue of the establishment of the new Canadian business; andthe acquisition of control of a Canadian business, within the meaning of that Act, by a foreign bank to which Part XII applies, or by an entity associated with a foreign bank to which that Part applies, that has a financial establishment in Canada, or would have one by virtue of the acquisition.DefinitionsThe following definitions apply in subsection (1).entity associated with a foreign bank means an entity that is or is deemed to be associated with a foreign bank within the meaning of section 507. (entité liée à une banque étrangère)foreign insurance company means a foreign company as defined in subsection 2(1) of the Insurance Companies Act. (société d’assurances étrangère)Financial establishment in CanadaFor the purpose of subsection (1), a foreign bank has a financial establishment in Canada if the foreign bank has or is deemed to have a financial establishment in Canada for the purpose of Part XII.Financial establishment in CanadaFor the purpose of subsection (1), an entity associated with a foreign bank has a financial establishment in Canada if the entity has or is deemed to have a financial establishment in Canada for the purpose of Part XII.2007, c. 6, s. 74
Authorized Foreign BanksApplication
Application to authorized foreign banksThis Part applies only in respect of the business in Canada of authorized foreign banks.Assets and liabilitiesThe assets and liabilities of an authorized foreign bank in respect of its business in Canada, as shown by its books and records, are considered to be the assets and liabilities of the authorized foreign bank in respect of its business in Canada.1991, c. 46, s. 523; 1997, c. 15, s. 86; 1999, c. 28, s. 35
Formalities of Authorization
Order permitting carrying on of business in Canada, etc.On application by a foreign bank, the Minister may make an order permitting the foreign bank to establish a branch in Canada to carry on business in Canada under this Part.Restrictions and requirementsThe order may be made subject to the restrictions referred to in subsection 540(1) and the requirements referred to in section 627.74.Reciprocal treatmentThe Minister may make an order only if the Minister is satisfied that, if the application is made by a non-WTO Member foreign bank, treatment as favourable for banks to which this Act applies exists or will be provided in the jurisdiction in which the authorized foreign bank principally carries on business, either directly or through a subsidiary.Consultation with SuperintendentThe Minister may make an order only if the Minister is of the opinion, after consultation with the Superintendent, thatthe applicant is a bank in the jurisdiction under whose laws it was incorporated and is regulated in a manner acceptable to the Superintendent; andthe applicant’s principal activity is the provision offinancial services, orservices that would be permitted by this Act if they were provided by a bank in Canada.1991, c. 46, s. 524; 1999, c. 28, s. 35; 2001, c. 9, s. 1332018, c. 27, s. 322
ProhibitionNo foreign bank may establish a branch in Canada to carry on business in Canada under this Part if the foreign bank or an entity affiliated with the foreign bankhas control of or has a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in; orengages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.2001, c. 9, s. 134
ProhibitionNo authorized foreign bank and no entity affiliated with an authorized foreign bank maycontrol or have a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in; orengage in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.2001, c. 9, s. 134
Policies and procedures — integrity or securityAn authorized foreign bank shall establish and adhere to policies and procedures to protect itself against threats to its integrity or security in relation to its business in Canada.2023, c. 26, s. 543
Application procedureAn application for an order under subsection 524(1) shall be filed with the Superintendent, together with any other information, material and evidence that the Superintendent may require.Publishing notice of intentBefore filing an application, a foreign bank applicant shall, at least once a week for a period of four consecutive weeks, publish, in a form satisfactory to the Superintendent, a notice of intention to make the application in the Canada Gazette and in a newspaper in general circulation at or near the place where its principal office is to be situated.ObjectionsA person who objects to the proposed order may, within thirty days after the date of the last publication under subsection (2), submit the objection in writing to the Superintendent.Minister to be informedOn receipt of an objection, the Superintendent shall inform the Minister of it.Inquiry into objection and reportOn receipt of an objection, and if the application for the order has been received, the Superintendent shall, if satisfied that it is necessary and in the public interest to do so, hold or cause to be held a public inquiry into the objection as it relates to the application and, on completion of the inquiry, the Superintendent shall report the findings of the inquiry to the Minister.Report to be made availableWithin thirty days after receiving the report, the Minister shall make it available to the public.Rules governing proceedingsSubject to the approval of the Governor in Council, the Superintendent may make rules governing the proceedings at public inquiries held under this section.1991, c. 46, s. 525; 1999, c. 28, s. 35
Factors to be considered by MinisterBefore making an order under subsection 524(1), the Minister shall take into account all matters that the Minister considers relevant to the application, includingthe nature and sufficiency of the financial resources of the foreign bank as a source of continuing financial support for the carrying on of its business in Canada;the soundness and feasibility of plans of the foreign bank for the future conduct and development of its business in Canada;the business record and past performance of the foreign bank;the reputation of the foreign bank for being operated in a manner that is consistent with the standards of good character and integrity;whether the proposed authorized foreign bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;the impact of any integration of the businesses and operations in Canada of the authorized foreign bank with those of its affiliates in Canada on the conduct of those businesses and operations; andthe best interests of the financial system in Canada.1991, c. 46, s. 526; 1999, c. 28, s. 35; 2001, c. 9, s. 135
Contents of orderAn order made under subsection 524(1) shall set outthe name of the authorized foreign bank and, where applicable, the name under which it is permitted to carry on business in Canada;the province in which the principal office of the authorized foreign bank is to be situated;whether the authorized foreign bank is subject to any restrictions and requirements referred to in subsection 524(2); andthe date on which the order becomes effective.Provisions of orderThe Minister may set out in the order any provision not contrary to this Act that the Minister considers advisable in order to take into account the particular circumstances of the proposed authorized foreign bank with respect to the carrying on of business in Canada.Terms and conditionsThe Minister may impose any terms and conditions in respect of the order that the Minister considers appropriate.Notice of orderThe Superintendent shall cause to be published in the Canada Gazette a notice of the making of the order.1991, c. 46, s. 527; 1999, c. 28, s. 35; 2005, c. 54, s. 79
Amended orderOn application by an authorized foreign bank, the Minister may, by further order,[Repealed, 2007, c. 6, s. 75]add any provision referred to in subsection 527(2) or any term or condition referred to in subsection 527(3) or change or remove any of those provisions, terms or conditions that are included in the order made under subsection 524(1) or in any other order made under this section; oradd or remove the restrictions and requirements referred to in subsection 524(2).Change of nameOn application by an authorized foreign bank, the Superintendent may, by order, change the name under which it is permitted to carry on business in Canada or the province in which its principal office is situated as that name or province is set out in the order made under subsection 524(1) or in any other order made under this section.Notice of intentionBefore making an application under subsection (1), the authorized foreign bank must publish a notice of intention to make the application at least once a week for a period of four consecutive weeks in the Canada Gazette and in a newspaper of general circulation at or near the place where its principal office is situated.1991, c. 46, s. 528; 1999, c. 28, s. 35; 2005, c. 54, s. 80; 2007, c. 6, s. 75
TransitionalSubject to this section but notwithstanding any other provision of this Act or the regulations, the Minister may, on the recommendation of the Superintendent, by order, grant an authorized foreign bank permission toengage in a business activity specified in the order that an authorized foreign bank is not otherwise permitted by this Part to engage in;have liabilities that an authorized foreign bank is not otherwise permitted by this Part to have, if the authorized foreign bank or an affiliate of the authorized foreign bank had those liabilities at the time an application for an order under subsection 524(1) was made;hold assets that an authorized foreign bank is not otherwise permitted by this Part to hold, if the assets were held, at the time an application for an order under subsection 524(1) was made, by the authorized foreign bank or an affiliate of the authorized foreign bank;acquire and hold assets that an authorized foreign bank is not otherwise permitted by this Part to acquire or hold if the authorized foreign bank was obliged, at the time an application for an order under subsection 524(1) was made, to acquire those assets;[Repealed, 2001, c. 9, s. 136]in the case of an authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2), carry on business in Canada without having to deposit assets having a value of at least five million dollars, as required by subparagraphs 534(3)(a)(ii) and 582(1)(b)(i), if the authorized foreign bank continues to hold a substantial investment ina bank that is a subsidiary of a foreign bank and the Minister has approved an application for letters patent dissolving the bank made by the subsidiary under section 344, ora company to which the Trust and Loan Companies Act applies and the Minister has approved an application for letters patent dissolving the company made under section 349 of that Act; ormaintain outside Canada any records or registers required by this Act to be maintained in Canada.RestrictionAn order under subsection (1) may not be made if the effect of the order would be to permit an authorized foreign bank tocontravene section 545, in the case of an authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2); orhave deposit liabilities so as to cause the authorized foreign bank to be in contravention of section 540, in the case of an authorized foreign bank that is subject to the restrictions and requirements referred to in subsection 524(2).DurationPermission granted under subsection (1) shall be expressed to be granted for a period specified in the order not exceedingwith respect to any activity described in paragraph (1)(a), thirty days after the day on which an order made under subsection 524(1) becomes effective in respect of the authorized foreign bank or, where the activity is conducted pursuant to an agreement existing on that day, on the expiration of the agreement;with respect to any matter described in paragraph (1)(b), ten years; andwith respect to any matter described in any of paragraphs (1)(c) to (g), two years.RenewalSubject to subsection (5), the Minister may, on the recommendation of the Superintendent, by order, renew permission granted under subsection (1) with respect to any matter described in paragraphs (1)(b) to (f) for any further period or periods that the Minister considers necessary.LimitationThe Minister may not grant to an authorized foreign bank any permissionwith respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the day on which an order made under subsection 534(1) becomes effective in respect of the authorized foreign bank, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the authorized foreign bank that the authorized foreign bank will not be able at law to redeem or discharge at the end of the ten years any liabilities to which the permission relates;with respect to matters described in paragraphs (1)(c) and (d), that purports to be effective more than ten years after the day on which an order made under subsection 534(1) becomes effective in respect of the authorized foreign bank; andwith respect to matters described in paragraph (1)(f), that purports to be effective more than seven years after the day on which an order made under subsection 534(1) becomes effective in respect of the authorized foreign bank.1991, c. 46, s. 529; 1999, c. 28, s. 35; 2001, c. 9, s. 136; 2007, c. 6, s. 76
Prohibited namesAn order made under subsection 524(1) or 528(1.1) may not provide for the use of a name that isprohibited by an Act of Parliament;in the opinion of the Superintendent, deceptively misdescriptive;the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, any existing trademark, trade name or corporate name of a body corporate, except wherethe trademark or trade name is being changed or the body corporate is being dissolved or is changing its corporate name, andconsent to the use of the trademark, trade name or corporate name is signified to the Superintendent in any manner that the Superintendent may require;the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, the known name under or by which any other entity carries on business or is identified; orreserved under section 43 for an existing or proposed bank or for an existing or proposed authorized foreign bank or under section 697 for an existing or proposed bank holding company.Name otherwise prohibitedAn order made under subsection 524(1) or 528(1.1) may provide for the use of a name that includes a word referred to in section 47 of the Trust and Loan Companies Act.1991, c. 46, s. 530; 1999, c. 28, s. 35; 2001, c. 9, s. 137; 2007, c. 6, s. 772014, c. 20, s. 366(E)
Publication of nameAn authorized foreign bank shall set out its name and, where applicable, any other permitted name, as set out in the order made under subsection 524(1) or 528(1.1), in legible characters in all contracts, invoices, negotiable instruments and other documents evidencing rights and obligations with respect to other parties that are issued or made by or on behalf of the authorized foreign bank.1991, c. 46, s. 531; 1996, c. 6, s. 10; 1997, c. 15, s. 87; 1999, c. 28, s. 35; 2007, c. 6, s. 78
Directing change of nameIf through inadvertence or otherwise an order made under subsection 524(1) or 528(1.1) provides for the use of a name that is prohibited by section 530, the Superintendent may, by order, direct the authorized foreign bank to change the name without delay and the authorized foreign bank shall comply with that direction.Revoking nameWhere an authorized foreign bank does not comply with a direction under subsection (1) within sixty days after the service of the direction, the Superintendent may revoke the name and assign another name and, until changed in accordance with section 528, that other name is the name of the authorized foreign bank.1991, c. 46, s. 532; 1996, c. 6, s. 11; 1999, c. 28, s. 35; 2007, c. 6, s. 79(E)
[Repealed, 1999, c. 28, s. 35]
Other nameSubject to section 531 and subsection (2), an authorized foreign bank may carry on business in Canada under a name other than the name set out in the order made under subsection 524(1) or 528(1.1).DirectionsWhere an authorized foreign bank carries on business in Canada under a name other than the name set out in the order, the Superintendent may, by order, direct the authorized foreign bank not to use that other name if the Superintendent is of the opinion that the other name is a name referred to in any of paragraphs 530(1)(a) to (e).1991, c. 46, s. 533; 1999, c. 28, s. 35; 2007, c. 6, s. 80
Commencement and Carrying on of Business in Canada
Order approving commencement and carrying on of business in CanadaOn application by an authorized foreign bank, the Superintendent may make an order approving the commencement and carrying on of business in Canada by the authorized foreign bank.ProhibitionAn authorized foreign bank may not commence to carry on business in Canada until it is authorized to do so by an order made under subsection (1).Conditions for orderThe Superintendent may make the order only if the Superintendent is satisfied that the authorized foreign bank hasdeposited in Canada unencumbered assets of a type approved by the Superintendent, the total value of which, determined in accordance with the accounting principles referred to in subsection 308(4), shall bein the case of an authorized foreign bank that is subject to the restrictions and requirements referred to in subsection 524(2), one hundred thousand dollars, orin any other case, five million dollars or any greater amount that the Superintendent specifies;submitted a power of attorney in accordance with subsection 536(2); andcomplied with all other relevant requirements of this Act.Deposit agreementThe assets referred to in paragraph (3)(a) shall be kept with a Canadian financial institution approved by the Superintendent pursuant to a deposit agreement entered into with the prior approval of the Superintendent.Conditions of orderThe order under subsection (1) may contain any conditions or limitations that the Superintendent considers appropriate that are consistent with this Act and that relate to the carrying on of the business in Canada of the authorized foreign bank.VariationsIn respect of an order made under subsection (1), the Superintendent may at any time, by further order,make the order subject to any conditions or limitations that the Superintendent considers appropriate that are consistent with this Act and that relate to the business in Canada of the authorized foreign bank, oramend or revoke any authorization contained in the order or any condition or limitation to which the order is subject,but before making a further order the Superintendent shall provide the authorized foreign bank with an opportunity to make representations regarding that further order.Public noticeOn the making of an order under subsection (1), the authorized foreign bank shall publish a notice of the making of the order in a newspaper in general circulation at or near the place where its principal office is to be situated.Notice in Canada GazetteThe Superintendent shall cause to be published in the Canada Gazette a notice of the making of an order under subsection (1).Time limitThe Superintendent shall not make an order under subsection (1) in respect of an authorized foreign bank more than one year after the day on which the order under subsection 524(1) in respect of the authorized foreign bank becomes effective.Cessation of existenceIf an order under subsection (1) is not obtained within one year after the day on which the order under subsection 524(1) in respect of the authorized foreign bank becomes effective, the order made under subsection 524(1) is revoked.1991, c. 46, s. 534; 1999, c. 28, s. 35; 2001, c. 9, s. 138
Principal Office and Principal Officer
Principal officeAn authorized foreign bank shall at all times have a principal office in the province specified in the order made under subsection 524(1) or 528(1.1) with respect to it.Change of principal officeAn authorized foreign bank may change the address of its principal office within the province specified in the order made under subsection 524(1) or 528(1.1) with respect to it.Notice of change of addressAn authorized foreign bank shall send to the Superintendent, within fifteen days after any change of address of its principal office, a notice of the change of address.1991, c. 46, s. 535; 1999, c. 28, s. 35; 2005, c. 54, s. 81; 2007, c. 6, s. 81
Principal officerAn authorized foreign bank shall appoint an employee who is ordinarily resident in Canada to be its principal officer for the purposes of this Part.Power of attorneyThe authorized foreign bank shall provide the principal officer with a power of attorney expressly authorizing the principal officer to receive all notices under the laws of Canada from the Minister or Superintendent and shall without delay submit a copy of the power of attorney to the Superintendent.VacancyWhere a vacancy occurs in the position of principal officer, the authorized foreign bank shall, without delay, fill the vacancy and submit a copy of the new power of attorney to the Superintendent.1991, c. 46, s. 536; 1996, c. 6, s. 13; 1999, c. 28, s. 35
Transfer of Liabilities
Transfer of liabilities not permittedSubject to subsection (2), an authorized foreign bank shall not transfer all or substantially all of the liabilities in respect of its business in Canada.ExceptionAn authorized foreign bank may, with the approval of the Minister, transfer all or substantially all of the liabilities in respect of its business in Canada to another authorized foreign bank in respect of its business in Canada, to a bank or to a body corporate to which the Trust and Loan Companies Act applies.Application for approvalAn approval may be given under subsection (2) only ifnotice of the authorized foreign bank’s intention to apply for the approval has been published at least once a week for a period of four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the principal office of the transferring authorized foreign bank is situated; andthe application for approval is supported by evidence satisfactory to the Minister that the requirement of paragraph (a) has been satisfied and that the entity to which the authorized foreign bank intends to make the transfer is an entity referred to in subsection (2).1991, c. 46, s. 537; 1999, c. 28, s. 35
[Repealed, 1999, c. 28, s. 35]
Business and Powers
Main businessSubject to this Act, an authorized foreign bank shall not carry on any business in Canada other than the business of banking and any business generally that appertains to the business of banking.Included activitiesFor greater certainty, the business of banking includesproviding any financial service;acting as a financial agent;providing investment counselling services and portfolio management services; andissuing payment, credit or charge cards and, in cooperation with others including other financial institutions, operating a payment, credit or charge card plan.1991, c. 46, s. 538; 1996, c. 6, s. 15; 1997, c. 15, s. 88; 1999, c. 28, s. 35; 2009, c. 2, s. 272(F)
Additional activitiesIn addition, an authorized foreign bank may, in Canada,hold, manage and otherwise deal with real property;provide prescribed bank-related data processing services;with the prior written approval of the Minister, engage in any of the following activities, namely,collecting, manipulating and transmittinginformation that is primarily financial or economic in nature,information that relates to the business of an entity in which a bank is permitted to acquire a substantial investment under section 468 or to the business of a Canadian entity acquired or held under section 522.08, andany other information that the Minister may, by order, specify,providing advisory or other services in the design, development or implementation of information management systems,designing, developing or marketing computer software, anddesigning, developing, manufacturing or selling, as an ancillary activity to any activity referred to in any of subparagraphs (i) to (iii) that the authorized foreign bank is engaging in, computer equipment integral to the provision of information services related to the business of financial institutions or to the provision of financial services;with the prior written approval of the Minister, develop, design, hold, manage, manufacture, sell or otherwise deal with data transmission systems, information sites, communication devices or information platforms or portals that are usedto provide information that is primarily financial or economic in nature,to provide information that relates to the business of an entity in which a bank is permitted to acquire a substantial investment under section 468 or to the business of a Canadian entity acquired or held under section 522.08, orfor a prescribed purpose or in prescribed circumstances;engage, under prescribed terms and conditions, if any are prescribed, in specialized business management or advisory services;promote merchandise and services to the holders of any payment, credit or charge card issued by the authorized foreign bank;engage in the sale oftickets, including lottery tickets, on a non-profit public service basis in connection with special, temporary and infrequent non-commercial celebrations or projects that are of local, municipal, provincial or national interest,urban transit tickets, andtickets in respect of a lottery sponsored by the federal government or a provincial or municipal government or an agency of any of those governments;act as a custodian of property;act as receiver, liquidator or sequestrator; andprovide identification, authentication or verification services.RestrictionExcept as authorized by or under this Act, an authorized foreign bank shall not deal in Canada in goods, wares or merchandise or engage in any trade or other business.RegulationsThe Governor in Council may make regulationsrespecting what an authorized foreign bank may or may not do with respect to the carrying on of the activities referred to in paragraphs (1)(b.1) to (b.3);imposing terms and conditions in respect ofthe provision of financial services referred to in paragraph 538(2)(a) that are financial planning services,the provision of services referred to in paragraph 538(2)(c), andthe carrying on of the activities referred to in any of paragraphs (1)(b.1) to (b.3); andrespecting the circumstances in which authorized foreign banks may be exempted from the requirement to obtain the approval of the Minister before carrying on a particular activity referred to in paragraph (1)(b.1) or (b.2).1991, c. 46, s. 539; 1996, c. 6, s. 16; 1999, c. 28, s. 35; 2001, c. 9, s. 139; 2007, c. 6, s. 82; 2018, c. 12, s. 324
Regulations applyRegulations made for the purpose of any of sections 409 to 411 apply in respect of authorized foreign banks with any modifications that the circumstances require unless regulations made under subsection 539(3) provide otherwise.2001, c. 9, s. 140
RestrictionsWhere subsection 524(2) applies, the authorized foreign bank shall not, in respect of its business in Canada,except as permitted by subsection (4), engage in the business of accepting deposit liabilities, or otherwise borrow money;subject to the regulations, act as an agent for any person in the taking of deposit liabilities; orguarantee any securities or accept any bills of exchange or depository bills that areissued by any person, andintended by the issuer or any party to be sold or traded.[Repealed, 2018, c. 27, s. 323][Repealed, 2018, c. 27, s. 323]Authorized borrowingFor the purposes of paragraph (1)(a), an authorized foreign bank mayaccept deposit liabilities or otherwise borrow money froma financial institution other than a foreign bank, ora foreign bank described in any of subparagraphs 508(1)(a)(i) to (iii),by means of financial instruments that cannot be subsequently sold or traded; oraccept deposit liabilities or otherwise borrow money, from prescribed classes of entities referred to in subparagraph (a)(i) or (ii), by means of financial instruments that can be sold to or traded with those classes of entities, in accordance with regulations made pursuant to subsection (6).Non-application of paragraph (1)(c)Paragraph (1)(c) does not apply in respect ofsecurities or bills of exchange that are sold to or traded with any entity referred to in subparagraph (4)(a)(i) or (ii) and that cannot be subsequently sold or traded; orsecurities or bills of exchange that can be sold to or traded with prescribed classes of entities referred to in subparagraph (4)(a)(i) or (ii), in accordance with regulations made pursuant to subsection (6).RegulationsThe Governor in Council may make regulationsprescribing the class, type or amount of deposit liabilities or borrowings referred to in paragraph (4)(b);prescribing the class, type or amount of securities or bills of exchange referred to in paragraph (5)(b);prescribing the classes of entities referred to in paragraph (4)(b) or (5)(b);prescribing the terms and conditions respecting any sale or trade of financial instruments, securities or bills of exchange;respecting circumstances in which and the conditions under which an authorized foreign bank that is subject to the restrictions and requirements referred to in subsection 524(2) may act as agent for any person in the taking of deposit liabilities; andrespecting such other matters or things as are necessary to carry out the purposes of this section.1991, c. 46, s. 540; 1996, c. 6, s. 16; 1999, c. 28, s. 35; 2001, c. 9, s. 141; 2007, c. 6, s. 83; 2012, c. 5, s. 602018, c. 27, s. 323
Application of certain provisionsThe provisions of this Act that apply in respect of an authorized foreign bank apply in respect of an authorized foreign bank that is subject to the restrictions and requirements referred to in subsection 524(2), with any modifications that may be required to take into account those restrictions and requirements.Non-application of certain provisionsThe following provisions do not apply in respect of an authorized foreign bank that is subject to the restrictions and requirements referred to in subsection 524(2):sections 545 and 546; andsections 627.68 to 627.72 and 627.85.1991, c. 46, s. 541; 1996, c. 6, s. 16; 1999, c. 28, s. 352018, c. 27, s. 324
Guarantees and acceptancesAn authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2) may, in respect of its business in Canada, guarantee any securities and accept any bills of exchange that are issued by any person and intended by the issuer or any party to be sold or traded.1999, c. 28, s. 35
Payment clearing and settlementSubject to section 22.1 of the Payment Clearing and Settlement Act, an authorized foreign bank may be a participant in a clearing and settlement system designated under subsection 4(1) of that Act.1991, c. 46, s. 542; 1996, c. 6, s. 17; 1999, c. 28, s. 35; 2014, c. 39, s. 375
NetworkingSubject to sections 540, 546 and 549, an authorized foreign bank may, in Canada,act as agent for any person in respect of the provision of any service that is provided by a financial institution, an entity in which a bank is permitted to acquire a substantial investment under section 468 or a Canadian entity acquired or held under section 522.08 and may enter into an arrangement with any person in respect of the provision of that service; orrefer any person to any such financial institution or entity.RegulationsThe Governor in Council may make regulations respecting the disclosure ofthe name of the principal for whom an authorized foreign bank is acting as agent pursuant to subsection (1); andwhether any commission is being earned by an authorized foreign bank when acting as agent pursuant to subsection (1).1991, c. 46, s. 543; 1996, c. 6, s. 17; 1999, c. 28, s. 35; 2001, c. 9, s. 142; 2007, c. 6, s. 84
[Repealed, 1999, c. 28, s. 35]
Restriction on fiduciary activitiesNo authorized foreign bank shall act in Canada asan executor, administrator or official guardian or a guardian, tutor, curator, judicial adviser or committee of a mentally incompetent person; ora trustee for a trust.1991, c. 46, s. 544; 1996, c. 6, s. 17; 1999, c. 28, s. 35
Deposits that fall below $150,000An authorized foreign bank shall, in respect of its business in Canada, ensure that, on each day that is at least thirty days after the date of the order under subsection 534(1) made in respect of it,A/B ≤ 0.01whereAis the sum of all amounts each of which is the sum of all the deposits held by the authorized foreign bank at the end of a day in the preceding thirty days each of which deposits is less than $150,000 and payable in Canada; andBis the sum of all amounts each of which is the sum of all deposits held by the authorized foreign bank at the end of a day in those preceding thirty days and payable in Canada.Exchange rateFor the purpose of subsection (1), the rate of exchange that shall be applied on any day in determining the amount in Canadian dollars of a deposit in a currency of a country other than Canada shall be determined in accordance with any regulations that may be made.Meaning of depositFor the purpose of subsection (1), deposit has the meaning that would be given to it by the schedule to the Canada Deposit Insurance Corporation Act for the purposes of deposit insurance if that schedule were read without reference to subsections 2(2), (5) and (6) of that schedule, but does not include prescribed deposits.[Repealed, 2018, c. 27, s. 325][Repealed, 2018, c. 27, s. 325]RegulationsThe Governor in Council may make regulationsrespecting the determination of rates of exchange referred to in subsection (2); andprescribing the deposits referred to in subsection (3) and the terms and conditions with respect to the acceptance of those deposits.[Repealed, 2018, c. 27, s. 325][Repealed, 2018, c. 27, s. 325]1991, c. 46, s. 545; 1996, c. 6, s. 17; 1999, c. 28, s. 35; 2007, c. 6, s. 85; 2012, c. 5, s. 612018, c. 27, s. 325
Deposits less than $150,000Subject to the regulations, an authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2) may not, in respect of its business in Canada, act as agent for any person in the taking of a deposit that is less than $150,000 and payable in Canada.Meaning of depositIn this section, deposit has the meaning assigned to that term by subsection 545(3).RegulationsThe Governor in Council may make regulations respecting the circumstances in which, and the conditions under which, an authorized foreign bank referred to in subsection (1) may act as agent for any person in the taking of a deposit that is less than $150,000 and payable in Canada.1991, c. 46, s. 546; 1996, c. 6, s. 18; 1999, c. 28, s. 35; 2001, c. 9, s. 143
Shared premisesSubject to the regulations, no authorized foreign bank shall carry on business in Canada on premises that are shared with those of a member institution, within the meaning of section 2 of the Canada Deposit Insurance Corporation Act, that is affiliated with the authorized foreign bank.LimitationSubsection (1) only applies in respect of premises or any portion of premises on which both the authorized foreign bank and the member institution carry on business with the public and to which the public has access.Adjacent premisesSubject to the regulations, no authorized foreign bank shall carry on business in Canada on premises that are adjacent to a branch or office of a member institution, within the meaning of section 2 of the Canada Deposit Insurance Corporation Act, that is affiliated with the authorized foreign bank, unless the authorized foreign bank clearly indicates to its customers that its business and the premises on which it is carried on are separate and distinct from the business and premises of the affiliated member institution.RegulationsThe Governor in Council may make regulationsrespecting the circumstances in which, and the conditions under which, an authorized foreign bank may carry on business in Canada on premises that are shared with those of a member institution referred to in subsection (1); andrespecting the circumstances in which, and the conditions under which, an authorized foreign bank may carry on business in Canada on premises that are adjacent to a branch or office of a member institution referred to in subsection (3).1991, c. 46, s. 547; 1996, c. 6, s. 19(E); 1999, c. 28, s. 35; 2001, c. 9, s. 144
Restriction on securities activitiesAn authorized foreign bank shall not deal in Canada in securities to the extent prohibited or restricted by any regulations that the Governor in Council may make for the purposes of this section.1991, c. 46, s. 548; 1999, c. 28, s. 35
Restriction on insurance businessAn authorized foreign bank shall not undertake in Canada the business of insurance except to the extent permitted by this Act or the regulations.Restriction on acting as agentAn authorized foreign bank shall not act in Canada as agent for any person in the placing of insurance and shall not lease or provide space in any branch in Canada of the authorized foreign bank to any person engaged in the placing of insurance.RegulationsThe Governor in Council may make regulations respecting the matters referred to in subsection (1) and regulations respecting relations between authorized foreign banks andentities that undertake the business of insurance; orinsurance agents or insurance brokers.SavingNothing in this section precludes an authorized foreign bank fromrequiring insurance to be placed by a borrower for the security of the authorized foreign bank; orobtaining group insurance for its employees.Definition of business of insuranceIn this section, business of insurance includesthe issuance of any annuity if the liability in respect of the annuity is contingent on the death of a person; andthe issuance of any debt obligation, any of whose terms and conditions are established on the basis of mortality considerations, under which the issuer is obliged to make periodic payments.1991, c. 46, s. 549; 1999, c. 28, s. 35; 2012, c. 19, s. 207
Restriction on leasingAn authorized foreign bank shall not engage in Canada in any personal property leasing activity in which a financial leasing entity as defined in subsection 464(1) is not permitted to engage.1991, c. 46, s. 550; 1999, c. 28, s. 35; 2001, c. 9, s. 145
Restriction on residential mortgagesAn authorized foreign bank shall not make a loan in Canada on the security of residential property in Canada for the purpose of purchasing, renovating or improving that property, or refinance a loan for that purpose, if the amount of the loan, together with the amount outstanding of any mortgage having an equal or prior claim against the property, would exceed 80 per cent of the value of the property at the time of the loan.ExceptionSubsection (1) does not apply in respect ofa loan made or guaranteed under the National Housing Act or any other Act of Parliament by or under which a different limit on the value of property on the security of which the authorized foreign bank may make a loan is established;a loan if repayment of the amount of the loan that exceeds the maximum amount set out in subsection (1) is guaranteed or insured by a government agency or a private insurer approved by the Superintendent;the acquisition by the authorized foreign bank from an entity of securities issued or guaranteed by the entity that are secured on any residential property, whether in favour of a trustee or otherwise, or the making of a loan by the authorized foreign bank to the entity against the issue of those securities; ora loan secured by a mortgage wherethe mortgage is taken back by the authorized foreign bank on a property disposed of by it, including where the disposition is by way of a realization of a security interest, andthe mortgage secures payment of an amount payable to the authorized foreign bank for the property.1991, c. 46, s. 551; 1999, c. 28, s. 35; 2007, c. 6, s. 86
Restriction on charges to borrowersSubject to any regulations made under subsection (2), an authorized foreign bank that has obtained insurance or a guarantee against default on a loan made in Canada on the security of residential property shall not charge a borrower an amount for the insurance or guarantee that exceeds the actual cost to the authorized foreign bank of the insurance or guarantee.RegulationsThe Governor in Council may make regulationsrespecting the determination of the actual cost to an authorized foreign bank for the purposes of subsection (1);respecting the circumstances in which an authorized foreign bank is exempt from the application of subsection (1);respecting, in relation to insurance or a guarantee against default on a loan made by an authorized foreign bank in Canada on the security of residential property,the arrangements into which the authorized foreign bank, its representatives and its employees may or may not enter, andthe payments or benefits that the authorized foreign bank, its representatives and its employees may or may not accept from an insurer or the insurer’s affiliates; andrespecting any other matters necessary to carry out the purposes of subsection (1).[Repealed, 2018, c. 27, s. 326]1999, c. 28, s. 35; 2001, c. 9, s. 146; 2009, c. 2, s. 273; 2012, c. 5, s. 62(E)2018, c. 27, s. 326
Restriction on receiversAn authorized foreign bank shall not, in respect of its business in Canada, grant to a person the right to appoint a receiver or a receiver and manager of the property or of the business of the authorized foreign bank.1991, c. 46, s. 553; 1999, c. 28, s. 35
Restriction on partnershipsExcept with the approval of the Superintendent, an authorized foreign bank may not, in respect of its business in Canada, be a general partner in a limited partnership or a partner in a general partnership.Meaning of general partnershipFor the purposes of subsection (1), general partnership means any partnership other than a limited partnership.1999, c. 28, s. 35; 2001, c. 9, s. 147
Definition of non-WTO Member authorized foreign bankIn this section, non-WTO Member authorized foreign bank means an authorized foreign bank that is not controlled by a WTO Member resident.Limitation on branches in Canada of non-WTO Member authorized foreign bankNo non-WTO Member authorized foreign bank shall have any branch in Canada, other than its principal office and one branch, without the approval of the Minister.1991, c. 46, s. 554; 1999, c. 28, s. 35
Special securitySections 425 to 436, as they exist from time to time, apply, with any modifications that the circumstances require, in respect of the carrying on of business in Canada by an authorized foreign bank as if a reference to “bank” in any of those provisions were a reference to “authorized foreign bank”.1991, c. 46, s. 555; 1999, c. 28, s. 35
[Repealed, 1999, c. 28, s. 35]
Deposit Acceptance
Deposit acceptanceSubject to this Part, an authorized foreign bank may, without the intervention of any other person,accept a deposit from any person whether or not the person is qualified by law to enter into contracts; andpay all or part of the principal of the deposit and all or part of the interest on it to or to the order of that person.ExceptionParagraph (1)(b) does not apply if, before payment, the money deposited in the authorized foreign bank pursuant to paragraph (1)(a) is claimed by some other personin any action or proceeding to which the authorized foreign bank is a party and in respect of which service of a writ or other process originating that action or proceeding has been made on the authorized foreign bank, orin any other action or proceeding pursuant to which an injunction or order made by the court requiring the authorized foreign bank not to make payment of that money or make payment of it to some person other than the depositor has been served on the authorized foreign bank,and, if a claim is made, the deposited money may be paid to the depositor with the consent of the claimant, or to the claimant with the consent of the depositor.Execution of trustAn authorized foreign bank is not, in respect of its business in Canada, bound to see to the execution of any trust to which a deposit made under the authority of this Act is subject.Payment when authorized foreign bank has notice of trustSubsection (3) applies regardless of whether the trust is express or arises by the operation of law, and it applies even when the authorized foreign bank has notice of the trust if it acts on the order of or under the authority of the holder or holders of the account into which the deposit is made.1991, c. 46, s. 556; 1999, c. 28, s. 35; 2001, c. 9, s. 148
Unclaimed Balances
Unclaimed balancesWherea deposit has been made in Canada that is payable in Canada and in respect of which no transaction has taken place and no statement of account has been requested or acknowledged by the creditor during a period of 10 yearsfrom the day on which the fixed period terminated, in the case of a deposit made for a fixed period, andfrom the day on which the last transaction took place or a statement of account was last requested or acknowledged by the creditor, whichever is later, in the case of any other deposit, ora cheque, draft or bill of exchange (including any of those instruments drawn by one branch of an authorized foreign bank on another of its branches but not including an instrument issued in payment of a dividend on the capital of an authorized foreign bank) payable in Canada has been issued, certified or accepted by an authorized foreign bank in Canada and no payment has been made in respect of it for a period of 10 years after the date of issue, certification, acceptance or maturity, whichever is later,the authorized foreign bank shall pay to the Bank of Canada not later than December 31 in each year an amount equal to the principal amount of the deposit or instrument, plus interest, if any, calculated in accordance with the terms of the deposit or instrument, and payment accordingly discharges the authorized foreign bank from all liability in respect of the deposit or instrument.Exchange rateIf a deposit referred to in paragraph (1)(a) or an instrument referred to in paragraph (1)(b) is not in Canadian currency, then, before paying to the Bank of Canada the amount required by subsection (1), the authorized foreign bank shall convert the amount of the deposit or instrument to Canadian currency at a rate of exchange determined in accordance with rules prescribed under subsection 26.03(2) of the Canada Deposit Insurance Corporation Act.Provision of informationAn authorized foreign bank shall, on making a payment under subsection (1), provide the Bank of Canada, for each deposit or instrument in respect of which the payment is made, with the following information current as of the day the payment is made, in so far as it is known to the authorized foreign bank:in the case of a deposit,the name of the depositor in whose name the deposit is held, as well as their date of birth and Social Insurance Number, if they are a natural person,the recorded address of the depositor,the outstanding amount of the deposit, andthe branch of the authorized foreign bank at which the last transaction took place in respect of the deposit, and the date of that last transaction; andin the case of an instrument,the name of the person to whom or at whose request the instrument was issued, certified or accepted, as well as their date of birth and Social Insurance Number, if they are a natural person,the recorded address of that person,the name of the payee of the instrument,the amount and date of the instrument,the name of the place where the instrument was payable, andthe branch of the authorized foreign bank at which the instrument was issued, certified or accepted.Copies of signature cards and signing authoritiesAn authorized foreign bank shall provide the Bank of Canada with copies of signature cards and signing authorities relating to any deposit or instrument in respect of which it has made a payment under subsection (1). If it does not have any with respect to a deposit or instrument to which the request relates, it shall so inform the Bank of Canada.Payment to claimantSubject to section 22 of the Bank of Canada Act, where payment has been made to the Bank of Canada under subsection (1) in respect of any deposit or instrument, and if payment is demanded or the instrument is presented at the Bank of Canada by the person who, but for that section, would be entitled to receive payment of the deposit or instrument, the Bank of Canada is liable to pay, at its agency in the province in which the deposit or instrument was payable, an amount equal to the amount so paid to it together with interest, if interest was payable under the terms of the deposit or instrument,for a period not exceeding ten years from the day on which the payment was received by the Bank of Canada until the date of payment to the claimant; andat any rate and computed in any manner that the Minister determines.Enforcing liabilityThe liability of the Bank of Canada under subsection (3) may be enforced by action against the Bank of Canada in the court in the province in which the deposit or instrument was payable.1991, c. 46, s. 557; 1999, c. 28, s. 35; 2007, c. 6, s. 872021, c. 23, s. 147
Notice of unpaid amountAn authorized foreign bank shall send, by mail and by electronic means, to each person to whom a deposit referred to in paragraph 557(1)(a) is payable, or to each person to whom or at whose request an instrument referred to in paragraph 557(1)(b) was issued, certified or accepted, at their recorded address and electronic address in so far as they are known to the authorized foreign bank, a notice stating that the deposit or instrument remains unpaid.When notice to be sentThe notice must be sent during the month of January next following the end of the first two-year period, during the month of January next following the end of the first five-year period and also during the month of January next following the end of the first nine-year periodafter the fixed period has terminated, in the case of a deposit made for a fixed period;in respect of which no transaction has taken place and no statement of account has been requested or acknowledged by the creditor, in the case of any other deposit; andin respect of which the instrument has remained unpaid, in the case of a cheque, draft or bill of exchange.Notification of transfer to the Bank of CanadaThe notice to be sent during the month of January next following the end of the first nine-year period determined under paragraphs (2)(a) to (c), as the case may be, must also[Repealed before coming into force, 2008, c. 20, s. 3]include the mailing address and websites where information can be obtained on how to claim the unpaid deposit or instrument.1991, c. 46, ss. 558, 580; 1996, c. 6, s. 20; 1999, c. 28, s. 35; 2007, c. 6, s. 882008, c. 20, s. 32021, c. 23, s. 148
Miscellaneous
[Repealed, 2018, c. 27, s. 327]
[Repealed, 2018, c. 27, s. 327]
[Repealed, 2018, c. 27, s. 327]
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[Repealed, 2018, c. 27, s. 327]
[Repealed, 2018, c. 27, s. 327]
[Repealed, 2018, c. 27, s. 327]
[Repealed, 2018, c. 27, s. 327]
[Repealed, 2018, c. 27, s. 327]
[Repealed, 2018, c. 27, s. 327]
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[Repealed, 2018, c. 27, s. 327]
[Repealed, 2018, c. 27, s. 327]
[Repealed, 2018, c. 27, s. 327]
[Repealed, 2018, c. 27, s. 327]
[Repealed, 2018, c. 27, s. 327]
[Repealed, 2018, c. 27, s. 327]
Transmission in case of deathWhere the transmission of a debt owing by an authorized foreign bank by reason of a deposit, of property held by an authorized foreign bank as security or for safe-keeping or of rights with respect to a safety deposit box and property deposited in it takes place because of the death of a person, the delivery to the authorized foreign bank of the following is sufficient justification and authority for giving effect to the transmission in accordance with the claim:an affidavit or declaration in writing in form satisfactory to the authorized foreign bank signed by or on behalf of a person claiming by virtue of the transmission stating the nature and effect of the transmission; andone of the following, namely,if the claim is based on a will or other testamentary instrument or on a grant of probate of a will or testamentary instrument or on such a grant and letters testamentary or other document of like import or on a grant of letters of administration or other document of like import, purporting to be issued by any court or authority in Canada or elsewhere, an authenticated copy or certificate of the document under the seal of the court or authority without proof of the authenticity of the seal or other proof, orif the claim is based on a notarial will, an authenticated copy of the notarial will.Evidence of transmissionNothing in subsection (1) shall be construed to prevent an authorized foreign bank from refusing to give effect to a transmission until there has been delivered to the authorized foreign bank any documentary or other evidence of or in connection with the transmission that it may consider necessary.1991, c. 46, s. 577; 1999, c. 28, s. 35
Branch of account with respect to depositsFor the purposes of this Act, the branch of account with respect to a deposit account isthe branch the address or name of which appears on the specimen signature card or other signing authority signed by a depositor with respect to the deposit account or that is designated by agreement between the authorized foreign bank and the depositor at the time of opening of the deposit account; orif no branch has been identified or agreed on as provided in paragraph (a), the branch that is designated as the branch of account with respect to the deposit account by the authorized foreign bank by notice in writing to the depositor.Where debt payableThe amount of any debt owing by an authorized foreign bank by reason of a deposit in a deposit account in the authorized foreign bank is payable to the person entitled to the amount only at the branch of account and the person is not entitled to demand payment or to be paid at any other branch of the authorized foreign bank.Exception where authorizationNotwithstanding subsection (2), an authorized foreign bank may permit either occasionally or as a regular practice, the person to whom it is indebted by reason of a deposit in a deposit account in the authorized foreign bank to withdraw money owing by reason of the deposit at a branch of the authorized foreign bank other than the branch of account or to draw cheques or other orders for the payment of the money at a branch other than the branch of account.Situs of indebtednessThe indebtedness of an authorized foreign bank by reason of a deposit in a deposit account in the authorized foreign bank is deemed for all purposes to be situated at the place where the branch of account is situated.Non-application of subsection (2)Subsection (2) does not apply where the business in Canada of the authorized foreign bank is being wound up under the Winding-up and Restructuring Act.1991, c. 46, s. 578; 1999, c. 28, s. 35
Effect of writ, etc.Subject to subsections (3) and (4), the following documents are binding on property belonging to a person and in the possession of an authorized foreign bank, or on money owing to a person by reason of a deposit account in an authorized foreign bank, only if the document or a notice of it is served at the branch of the authorized foreign bank that has possession of the property or that is the branch of account in respect of the deposit account, as the case may be:a writ or process originating a legal proceeding or issued in or pursuant to a legal proceeding;an order or injunction made by a court;an instrument purporting to assign, perfect or otherwise dispose of an interest in the property or the deposit account; oran enforcement notice in respect of a support order or support provision.NoticesAny notification sent to an authorized foreign bank with respect to a customer of the authorized foreign bank, other than a document referred to in subsection (1) or (3), constitutes notice to the authorized foreign bank and fixes the authorized foreign bank with knowledge of its contents only if sent to and received at the branch of the authorized foreign bank that is the branch of account of an account held in the name of that customer.Notices: Minister of National RevenueDespite subsections (1) and (2), a notice, demand, order or other document issued with respect to a customer of an authorized foreign bank constitutes notice to the authorized foreign bank and fixes the authorized foreign bank with knowledge of its contents and, where applicable, is binding on property belonging to the customer and in the possession of the authorized foreign bank or on money owing to the customer by reason of an account in the authorized foreign bank, if it is sent to the branch of the authorized foreign bank referred to in subsection (1) or (2), an office of the authorized foreign bank referred to in paragraph (3)(a) or any other office agreed to by the authorized foreign bank and the Minister of National Revenue and it relates tothe administration of an Act of Parliament by the Minister of National Revenue; orthe administration of an Act of the legislature of a province or legislation made by an aboriginal government, where the Minister or the Minister of National Revenue has entered into a tax collection agreement under an Act of Parliament with the government of the province or the aboriginal government.ExceptionSubsections (1) and (2) do not apply in respect of an enforcement notice in respect of a support order or support provision ifthe enforcement notice, accompanied by a written statement containing the information required by the regulations, is served at an office of an authorized foreign bank designated in accordance with the regulations in respect of a province; andthe order or provision can be enforced under the laws of that province.Time of applicationSubsection (3) does not apply in respect of an enforcement notice in respect of a support order or support provision until the second business day following the day of service referred to in that subsection.RegulationsThe Governor in Council may make regulationsrespecting the designation by an authorized foreign bank, for the purpose of subsection (3), of a place in any province for the service of enforcement notices in respect of support orders and support provisions;prescribing the manner in which an authorized foreign bank shall publicize the locations of designated offices of the authorized foreign bank; andrespecting the information that must accompany enforcement notices in respect of support orders and support provisions.DefinitionsThe following definitions apply in this section.designated office means a place designated in accordance with regulations made for the purpose of subsection (3). (bureau désigné)enforcement notice, in respect of a support order or support provision, means a garnishee summons or other instrument issued under the laws of a province for the enforcement of the support order or support provision. (avis d’exécution)support order means an order or judgment or interim order or judgment for family financial support. (ordonnance alimentaire)support provision means a provision of an agreement relating to the payment of maintenance or family financial support. (disposition alimentaire)1991, c. 46, s. 579; 1999, c. 28, s. 35; 2001, c. 9, s. 160; 2005, c. 19, s. 58
Deemed loanFor the purposes of sections 425 to 436, as incorporated by section 555, where an authorized foreign bank accepts a bill of exchange drawn on it and not payable on demand or pays or makes money available for the payment of such a bill of exchange, or issues a guarantee, or otherwise makes a promise to effect a payment, the authorized foreign bank is deemed to lend money or make an advance.1991, c. 46, s. 580; 1999, c. 28, s. 35
Investment standardsAn authorized foreign bank shall establish and adhere to investment and lending policies, standards and procedures that a reasonable and prudent person would apply in respect of a portfolio of investments and loans to avoid undue risk of loss and obtain a reasonable return.1991, c. 46, s. 581; 1999, c. 28, s. 35
Deposit Requirements
Requirement to maintain assets on depositAn authorized foreign bank shall maintain on deposit in Canada with a Canadian financial institution approved by the Superintendent unencumbered assets of a type approved by the Superintendent the total value of which determined in accordance with the accounting principles referred to in subsection 308(4) shall equalin the case of an authorized foreign bank that is subject to the restrictions and requirements referred to in subsection 524(2), one hundred thousand dollars; andin any other case, the greater offive million dollars, andfive per cent of the liabilities of the authorized foreign bank in respect of its business in Canada.Deposit agreementThe assets referred to in subsection (1) shall be kept with the Canadian financial institution pursuant to a deposit agreement entered into with the prior approval of the Superintendent.1991, c. 46, s. 582; 1999, c. 28, s. 35; 2001, c. 9, s. 161
Financial Year
Financial yearThe financial year of an authorized foreign bank in respect of its business in Canada may end on any of March 31, June 30, September 30 or December 31.First financial yearIf the first financial year of an authorized foreign bank would end less than four months after the authorized foreign bank has obtained an order under subsection 534(1) approving the commencement and carrying on of business in Canada, the first financial year of the authorized foreign bank ends on March 31, June 30, September 30 or December 31, as the case may be, in the next calendar year.1991, c. 46, s. 583; 1999, c. 28, s. 35
AuditorsInterpretation
DefinitionsIn sections 585 to 596, the expressions firm of accountants and member have the meanings assigned to those expressions by section 313.1991, c. 46, s. 584; 1999, c. 28, s. 35
Appointment
Appointment of auditorAn authorized foreign bank shall appoint a firm of accountants as auditor for its business in Canada and shall notify the Superintendent in writing of the name and address and date of appointment of the auditor without delay after making the appointment.Qualification of auditorA firm of accountants is qualified to be an auditor iftwo or more of its members are accountants whoare members in good standing of an institute or association of accountants incorporated by or under an Act of the legislature of a province,have at least five years experience at a senior level in performing audits of a financial institution,are ordinarily resident in Canada, andare independent of the authorized foreign bank; andthe member of the firm jointly designated by the firm and the authorized foreign bank to conduct the audit of the authorized foreign bank on behalf of the firm is qualified in accordance with paragraph (a).IndependenceFor the purposes of subsection (2),independence is a question of fact; anda member of a firm of accountants is deemed not to be independent of an authorized foreign bank if that member, a business partner of that member or the firm of accountantsis a business partner, director, officer or employee of the authorized foreign bank or of any affiliate of the authorized foreign bank or is a business partner of any director, officer or employee of the authorized foreign bank or of any affiliate of the authorized foreign bank,beneficially owns or controls, directly or indirectly, a material interest in the shares of the authorized foreign bank or of any of its affiliates, orhas been a liquidator, trustee in bankruptcy, receiver or receiver and manager of any affiliate of the authorized foreign bank within the two years immediately preceding the proposed appointment of the firm of accountants as auditor, other than an affiliate that is a subsidiary of the authorized foreign bank acquired under section 522.15.Business partnersFor the purposes of subsection (3), a business partner of a member of a firm of accountants includesanother member of the firm; anda shareholder of the firm or of another business partner of the member.Notice of designationWithin 15 days after the appointment of a firm of accountants as auditor, the authorized foreign bank and the firm shall jointly designate a member of the firm who meets the qualifications described in paragraph (2)(a) to conduct an audit under subsection 592(1) on behalf of the firm and the authorized foreign bank shall without delay notify the Superintendent in writing of the designation.New designationWhere for any reason the member designated under subsection (4) to conduct an audit ceases to conduct the audit, the authorized foreign bank and the firm of accountants may jointly designate another member of the same firm who meets the qualifications described in paragraph (2)(a) to conduct the audit and the authorized foreign bank shall without delay notify the Superintendent in writing of the designation.Deemed vacancyIn any case where subsection (5) applies and a designation is not made pursuant to that subsection within thirty days after the designated member ceases to conduct the audit, there shall be deemed to be a vacancy in the office of auditor of the authorized foreign bank.1991, c. 46, s. 585; 1999, c. 28, s. 35; 2005, c. 54, s. 82; 2007, c. 6, s. 94
Disqualification of auditorAn auditor that ceases to be qualified under subsection 585(2) shall resign without delay after any member of the firm of accountants becomes aware that the firm has ceased to be qualified.Disqualification orderAny interested person may apply to a court for an order declaring that an authorized foreign bank’s auditor has ceased to be qualified under subsection 585(2) and declaring the office of auditor to be vacant.1991, c. 46, s. 586; 1999, c. 28, s. 35
Revocation of appointmentAn authorized foreign bank may at any time revoke the appointment of its auditor.Revocation by SuperintendentThe Superintendent may at any time revoke the appointment of an auditor made under subsection 585(1) or 589(1) by notice in writing signed by the Superintendent and sent by registered mail to the auditor and to the principal officer of the authorized foreign bank addressed to the usual place of business of the auditor and to the principal office of the authorized foreign bank, respectively.1991, c. 46, s. 587; 1999, c. 28, s. 35
Ceasing to hold officeAn auditor ceases to hold office whenthe auditor resigns; orthe appointment of the auditor is revoked by the authorized foreign bank or the Superintendent.Effective date of resignationThe resignation of an auditor becomes effective at the time a written resignation is sent to the authorized foreign bank or at the time specified in the resignation, whichever is later.1991, c. 46, s. 588; 1999, c. 28, s. 35
Filling vacancyWhere a vacancy occurs in the office of auditor of an authorized foreign bank under any of sections 585 to 588, the authorized foreign bank shall without delay fill the vacancy and, where it fails to do so, the Superintendent may fill the vacancy.Designation of member of firmWhere the Superintendent has appointed a firm of accountants to fill a vacancy, the Superintendent shall designate the member of the firm who is to conduct the audit on behalf of the firm.1991, c. 46, s. 589; 1999, c. 28, s. 35
Statement of auditorAn auditor of an authorized foreign bank whoresigns, orreceives a notice or otherwise learns that another person is to be appointed in the auditor’s stead, whether because of the auditor’s resignation or revocation of appointment or because the auditor’s term of office has expired or is about to expire,shall submit to the principal officer of the authorized foreign bank and the Superintendent a written statement giving the reasons for the resignation or the reasons why the auditor opposes any proposed action.1991, c. 46, s. 590; 1999, c. 28, s. 35
Duty of replacement auditorWhere an auditor of an authorized foreign bank has resigned or the appointment of an auditor has been revoked, no firm of accountants shall accept an appointment or consent to be appointed as auditor of the authorized foreign bank until the firm has requested and received from the other auditor a written statement of the circumstances and reasons why the other auditor resigned or why, in the other auditor’s opinion, the other auditor’s appointment was revoked.ExceptionNotwithstanding subsection (1), a firm of accountants may accept an appointment or consent to be appointed as auditor of an authorized foreign bank if, within fifteen days after a request under that subsection is made, no reply from the other auditor is received.Effect of non-complianceUnless subsection (2) applies, an appointment as auditor of an authorized foreign bank is void if subsection (1) has not been complied with.1991, c. 46, s. 591; 1999, c. 28, s. 35
Examinations and Reports
Examination of annual returnThe auditor of an authorized foreign bank shall make any examination that the auditor considers necessary to enable the auditor to report on the annual return.Auditing standardsThe auditor’s examination shall, except as otherwise specified by the Superintendent, be conducted in accordance with the auditing standards referred to in subsection 323(2).FilingThe auditor’s report shall be filed with the Superintendent within five months after the end of the financial year of the authorized foreign bank.Report to Superintendent and extended examinationThe Superintendent may, in writing, require that an authorized foreign bank’s auditor report to the Superintendent on the extent of the auditor’s procedures in the examination of the authorized foreign bank’s annual return and may, in writing, require that the auditor enlarge or extend the scope of that examination or direct that any other particular procedure be performed in any particular case, and the auditor shall comply with any requirement of the Superintendent and report to the Superintendent on it.Special examinationThe Superintendent may, in writing, require that the auditor of the authorized foreign bank make a particular examination relating to the adequacy of the procedures adopted by the authorized foreign bank in respect of its business in Canada for the safety of its depositors and creditors, or any other examination that, in the Superintendent’s opinion, the public interest may require, and report to the Superintendent on it.Special auditThe Superintendent may direct that a special audit or report be made if, in the opinion of the Superintendent, it is so required and may appoint for that purpose a firm of accountants qualified under subsection 585(2) to be the auditor.Expenses payable by authorized foreign bankThe expenses entailed by any examination, audit or report referred to in any of subsections (4) to (6) are payable by the authorized foreign bank on being approved in writing by the Superintendent.1991, c. 46, s. 592; 1999, c. 28, s. 35
Right to informationOn the request of the auditor of an authorized foreign bank, the present or former principal officers, directors, officers, employees or representatives of the authorized foreign bank shall, to the extent that they are reasonably able to do so,permit access to any records, assets and security held by the authorized foreign bank, or any entity in which the authorized foreign bank has a substantial investment under Part XII, andprovide any information and explanationsthat are, in the opinion of the auditor, necessary to enable the auditor to perform the duties of auditor of the authorized foreign bank.No civil liabilityA person who in good faith makes an oral or written communication under subsection (1) shall not be liable in any civil action arising from having made the communication.1991, c. 46, s. 593; 1999, c. 28, s. 35
Auditor’s report to principal officerThe auditor of an authorized foreign bank shall make a report to the principal officer of the authorized foreign bank in writing on the annual return not later than five months after the end of the financial year in respect of which the annual return is prepared.Auditor’s opinionIn the report, the auditor shall state whether, in the auditor’s opinion, the annual return presents fairly, in accordance with the accounting principles referred to in subsection 308(4), the financial position of the business in Canada of the authorized foreign bank as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the business in Canada of the authorized foreign bank for that financial year.Auditor’s remarksIn the report, the auditor shall include any remarks that the auditor considers necessary whenthe examination has not been made in accordance with the auditing standards referred to in subsection 592(2);the annual return has not been prepared on a basis consistent with that of the preceding financial year; orthe annual return does not present fairly, in accordance with the accounting principles referred to in subsection 308(4), the financial position of the business in Canada of the authorized foreign bank as at the end of the financial year to which it relates or the results of the operations or changes in the financial position of the authorized foreign bank for that financial year.1991, c. 46, s. 594; 1999, c. 28, s. 35; 2001, c. 9, s. 162
Additional reports to principal officerIt is the duty of the auditor of an authorized foreign bank to report in writing to the principal officer of the authorized foreign bank any transactions or conditions in respect of the business in Canada of the authorized foreign bank that have come to the auditor’s attention affecting the well-being of the authorized foreign bank that in the auditor’s opinion are not satisfactory and require rectification and, without restricting the generality of the foregoing, the auditor shall, as occasion requires, make a report to the principal officer in respect of transactions in respect of the business in Canada of the authorized foreign bank that have come to the auditor’s attention and that in the auditor’s opinion have not been within the powers of the authorized foreign bank.Transmission of reportThe auditor shall, at the time of transmitting the report to the principal officer, provide the Superintendent with a copy of it.1991, c. 46, s. 595; 1999, c. 28, s. 35
Qualified privilege for statementsAny oral or written statement or report made under this Act by the auditor or a former auditor of an authorized foreign bank has qualified privilege.1991, c. 46, s. 596; 1999, c. 28, s. 35
Records
RecordsAn authorized foreign bank shall prepare and maintainrecords containing copies of all orders of the Minister or the Superintendent in relation to the authorized foreign bank;accounting records respecting its business in Canada;with respect to its business in Canada, records showing, for each of its customers, on a daily basis, particulars of the transactions with that customer and the balance owing to or by the authorized foreign bank in respect of that customer;records containing information set out in Schedule III, as that information exists from time to time, in relation to the authorized foreign bank; andrecords containing the name, address and date of appointment of the authorized foreign bank’s auditor.Place of recordsThe records described in subsection (1) shall be kept at the principal office of the authorized foreign bank or at any other place in Canada that its principal officer thinks fit.ExceptionSubject to subsection 245(1.1), subsection (2) does not apply to an authorized foreign bank that is:incorporated in a country or territory other than Canada in which a trade agreement listed in Schedule IV is applicable; ora subsidiary of a foreign bank incorporated or formed otherwise in a country or territory other than Canada in which a trade agreement listed in Schedule IV is applicable or of a regulated foreign entity.Notice of place of recordsWhere any of the records described in subsection (1) are not kept at the principal office of an authorized foreign bank, the authorized foreign bank shall notify the Superintendent of the place where they are kept.Form of recordsRecords required by this Act to be prepared and maintained by an authorized foreign bankmay be in a bound or loose-leaf form or in a photographic film form; ormay be entered or recorded by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.Conversion of recordsRecords kept in one form may be converted to any other form and, notwithstanding section 246, an authorized foreign bank may destroy the record at any time after it has been converted.Access to recordsCreditors in respect of the business in Canada of an authorized foreign bank and their personal representatives may examine a record referred to in any of paragraphs (1)(a), (d) or (e) during the usual business hours of the authorized foreign bank, and may take extracts from it, free of charge, or have copies made of it on payment of a reasonable fee.Electronic accessAn authorized foreign bank may make the information contained in records referred to in subsection (1) available to persons by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing the records in intelligible written form within a reasonable time.1991, c. 46, s. 597; 1999, c. 28, s. 35; 2001, c. 9, s. 1632020, c. 1, s. 164
Application of sections 244 to 247Sections 244 to 247 apply, with any modifications that the circumstances require, to an authorized foreign bank, and in the application of those sections,the reference in subsections 245(1) and (1.1) to “records referred to in section 238” shall be read as a reference to “records referred to in subsection 597(1)”;the reference in subsection 245(1.1) to “subsection 239(3.1)” shall be read as a reference to “subsection 597(2.1)”;the reference in subsection 245(1.1) to “directors” shall be read as a reference to “principal officer”; andthe reference in paragraph 246(1)(a) to “records of the bank referred to in subsection 238(1)” shall be read as a reference to “records of the authorized foreign bank” referred to in subsection 597(1)”.1991, c. 46, s. 598; 1999, c. 28, s. 35; 2007, c. 6, s. 952020, c. 1, s. 165
Termination of Business in Canada
Release of assets in CanadaAn authorized foreign bank that discontinues its business in Canada may apply in writing to the Superintendent for the release of its assets maintained on deposit under paragraph 534(3)(a) or subsection 582(1).Conditions of releaseExcept as otherwise provided in this Act, the assets may not be released unlessthe authorized foreign bank discharges, provides for the discharge of, or transfers, all its liabilities in respect of its business in Canada to a bank, to another authorized foreign bank in respect of its business in Canada or to a body corporate to which the Trust and Loan Companies Act applies; andthe authorized foreign bank provides the Superintendent with proof of the publication, for four consecutive weeks, in at least one newspaper of general circulation at or near the place where the principal office of the authorized foreign bank is situated and the Canada Gazette of a notice that it will apply to the Superintendent for the release of its assets on a day specified in the notice, which must be at least six weeks after the date of the notice, and calling on any of its depositors or creditors opposing that release to file their opposition with the Superintendent on or before the day.Superintendent may release assetsAfter the day specified in the notice, the Superintendent may authorize the release of the assets if the Superintendent is satisfied that the authorized foreign bank has discharged, provided for the discharge of, or transferred, all of its liabilities in respect of its business in Canada.Release of assets to liquidatorNotwithstanding subsections (1) to (3), the assets on deposit of an authorized foreign bank that is in liquidation may, on the order of any court having jurisdiction under the Winding-up and Restructuring Act, be released to the liquidator.Order deemed to be revokedAn order made under subsection 524(1), 528(1) or (1.1) or 534(1) in respect of an authorized foreign bank is deemed to be revoked when the Superintendent authorizes the release of the assets of the authorized foreign bank under subsection (3).1991, c. 46, s. 599; 1999, c. 28, s. 35; 2007, c. 6, s. 96
SupervisionReturns
Required informationAn authorized foreign bank shall provide the Superintendent with any information, at the times and in the form, that the Superintendent may require.1991, c. 46, s. 600; 1999, c. 28, s. 35
Annual returnAn authorized foreign bank, in respect of its business in Canada, shall prepare annually a return of the condition and affairs of the authorized foreign bank as at the end of each financial year, showing its assets and liabilities and its income and expenditures during that financial year together with any other information that the Superintendent considers appropriate.[Repealed, 2007, c. 6, s. 97]Accounting principlesThe annual return shall be prepared in accordance with the accounting principles referred to in subsection 308(4).1991, c. 46, s. 601; 1999, c. 28, s. 35; 2007, c. 6, s. 97
[Repealed, 2007, c. 6, s. 98]
[Repealed, 2007, c. 6, s. 98]
[Repealed, 2007, c. 6, s. 98]
Production of information and documentsThe Superintendent may, by order, direct a person who controls an authorized foreign bank or any entity that is affiliated with an authorized foreign bank to provide the Superintendent with any information or documents that may be specified in the order if the Superintendent believes that the production of the information or documents is necessary in order to be satisfied that the provisions of this Act are being duly observed.TimeA person to whom an order is issued shall provide the information or documents specified in the order within the time specified in the order and, where the order does not specify a time, the person shall provide the information or documents within a reasonable time.ExemptionSubsection (1) does not apply in respect of an entity that is affiliated with an authorized foreign bank where that entity is a financial institution regulatedby or under an Act of Parliament; orby or under an Act of the legislature of a province where the Superintendent has entered into an agreement with the appropriate official or public body responsible for the supervision of financial institutions in that province concerning the sharing of information on those financial institutions.1991, c. 46, s. 605; 1999, c. 28, s. 35
Confidential informationSubject to section 609, all information regarding the business or affairs of an authorized foreign bank, or regarding a person dealing with an authorized foreign bank, that is obtained by the Superintendent, or by any person acting under the direction of the Superintendent, as a result of the administration or enforcement of any Act of Parliament, and all information prepared from that information, is confidential and shall be treated accordingly.Disclosure permittedNothing in subsection (1) prevents the Superintendent from disclosing any informationto any government agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision,to any other agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision,to the Canada Deposit Insurance Corporation for purposes related to its operation, andto the Deputy Minister of Finance or any officer of the Department of Finance authorized in writing by the Deputy Minister of Finance or to the Governor of the Bank of Canada or any officer of the Bank of Canada authorized in writing by the Governor of the Bank of Canada, for the purposes of policy analysis related to the regulation of financial institutions,if the Superintendent is satisfied that the information will be treated as confidential by the agency, body or person to whom it is disclosed.1999, c. 28, s. 35; 2001, c. 9, s. 164; 2007, c. 6, s. 99
RegulationsThe Governor in Council may make regulations prohibiting, limiting or restricting the disclosure by authorized foreign banks of prescribed supervisory information.1999, c. 28, s. 35
Evidentiary privilegePrescribed supervisory information shall not be used as evidence in any civil proceedings and is privileged for that purpose.No testimony or productionNo person shall by an order of any court, tribunal or other body be required in any civil proceedings to give oral testimony or to produce any document relating to any prescribed supervisory information.Exceptions to subsection (1)Despite subsection (1),the Minister, the Superintendent or the Attorney General of Canada may, in accordance with the regulations, if any, use prescribed supervisory information as evidence in any proceedings; andan authorized foreign bank may, in accordance with the regulations, if any, use prescribed supervisory information as evidence in any proceedings in relation to the administration or enforcement of this Act or the Winding-up and Restructuring Act that are commenced by the authorized foreign bank, the Minister, the Superintendent or the Attorney General of Canada.Exceptions to subsections (1) and (2)Despite subsections (1) and (2) and section 39.1 of the Office of the Superintendent of Financial Institutions Act, a court, tribunal or other body may, by order, require the Minister, the Superintendent or an authorized foreign bank to give oral testimony or to produce any document relating to any prescribed supervisory information in any civil proceedings in relation to the administration or enforcement of this Act that are commenced by the Minister, the Superintendent, the Attorney General of Canada or the authorized foreign bank.No waiverThe disclosure of any prescribed supervisory information, other than under subsection (3) or (4), does not constitute a waiver of the privilege referred to in subsection (1).RegulationsThe Governor in Council may, for the purposes of subsection (3), make regulations respecting the circumstances in which prescribed supervisory information may be used as evidence.1999, c. 28, s. 35; 2007, c. 6, s. 100; 2015, c. 36, s. 233
No waiverFor greater certainty, the disclosure by an authorized foreign bank — or by a person who controls an authorized foreign bank or by an entity that is affiliated with an authorized foreign bank — to the Superintendent of any information that is subject to a privilege under the law of evidence, solicitor-client privilege or the professional secrecy of advocates and notaries or to litigation privilege does not constitute a waiver of any of those privileges or that secrecy.No disclosureThe Superintendent shall not disclose any information referred to in subsection (1) to any person whose powers, duties or functions includethe investigation or prosecution of an offence under any Act of Parliament or of the legislature of a province; orthe investigation of, or conduct of proceedings in respect of, a violation under an Act referred to in paragraph (a).2018, c. 27, s. 169
Disclosure by SuperintendentThe Superintendent shall disclose, at the times and in the manner that the Minister may determine, any information obtained by the Superintendent under this Act that the Minister considers ought to be disclosed for the purposes of the analysis of the business in Canada of an authorized foreign bank and thatis contained in returns filed pursuant to the Superintendent’s financial regulatory reporting requirements in respect of authorized foreign banks; orhas been obtained as a result of an industry-wide or sectoral survey conducted by the Superintendent in relation to an issue or circumstances that could have an impact on the business in Canada of authorized foreign banks.Prior consultation requiredThe Minister shall consult with the Superintendent before making any determination under subsection (1).1999, c. 28, s. 35
Disclosure by an authorized foreign bankAn authorized foreign bank shall make available to the public any information concerningthe compensation of its executives, as that expression is defined by the regulations, andits business and affairs for the purposes of the analysis of its business in Canada,in the form and manner and at the times that may be required by or under regulations that the Governor in Council may make for the purpose.Exemption by regulationParagraph (1)(a) does not apply to an authorized foreign bank that is within any class or classes of authorized foreign banks that may be prescribed.1999, c. 28, s. 35
Exceptions to disclosureSubject to any regulations made under paragraph 627.998(n), information obtained by an authorized foreign bank regarding any of its customers shall not be disclosed or made available under subsection 609(1) or section 610.1999, c. 28, s. 352018, c. 27, s. 328
Report respecting disclosureThe Superintendent shall prepare a report respecting the disclosure of information by authorized foreign banks and describing the state of progress made in enhancing the disclosure of information in the financial services industry. The report is to be included in the report referred to in section 40 of the Office of the Superintendent of Financial Institutions Act.1999, c. 28, s. 35; 2001, c. 9, s. 165
Inspection of Authorized Foreign Banks
Examination of authorized foreign banksThe Superintendent, from time to time, but, in the case of an authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2), at least once in each calendar year, shall make or cause to be made any examination and inquiry into the business and affairs of each authorized foreign bank that the Superintendent considers to be necessary or expedient to determine whether the authorized foreign bank is complying with the provisions of this Act and whether the authorized foreign bank has adequate policies and procedures to protect itself against threats to its integrity or security in relation to its business in Canada. After the conclusion of each examination and inquiry, the Superintendent shall report on it to the Minister.[Repealed, 2023, c. 26, s. 544]Access to records of authorized foreign bankThe Superintendent or a person acting under the Superintendent’s directionhas a right of access to any records, cash, assets and security held by or on behalf of an authorized foreign bank; andmay require the directors, officers and the auditor of an authorized foreign bank to provide information and explanations, to the extent that they are reasonably able to do so, in respect of the condition and affairs of the authorized foreign bank or any entity in which it has a substantial investment under Part XII.1999, c. 28, s. 35; 2001, c. 9, s. 166; 2012, c. 5, s. 742023, c. 26, s. 544
Power of Superintendent on inquiryThe Superintendent has all the powers of a person appointed as a commissioner under Part II of the Inquiries Act for the purpose of obtaining evidence under oath, and may delegate those powers to any person acting under the Superintendent’s direction.1999, c. 28, s. 35
Remedial PowersPrudential Agreements
Prudential agreementThe Superintendent may enter into an agreement, called a “prudential agreement”, with an authorized foreign bank for the purposes of implementing any measure designed to protect the interests of its depositors and creditors or establishing adequate policies and procedures to protect it against threats to its integrity or security in relation to its business in Canada.2001, c. 9, s. 1672023, c. 26, s. 545
Directions of Compliance
Superintendent’s directions to authorized foreign bankWhere, in the opinion of the Superintendent, an authorized foreign bank, or a person with respect to an authorized foreign bank, is committing, or is about to commit, an act that is an unsafe or unsound practice in relation to the business in Canada of the authorized foreign bank, or is pursuing or is about to pursue any course of conduct that is an unsafe or unsound practice in relation to that business, the Superintendent may direct the authorized foreign bank or person tocease or refrain from committing the act or pursuing the course of conduct; andperform any acts that in the opinion of the Superintendent are necessary to remedy the situation.Directions — policies and proceduresIf, in the opinion of the Superintendent, an authorized foreign bank does not have adequate policies and procedures to protect itself against threats to its integrity or security in relation to its business in Canada, the Superintendent may direct the authorized foreign bank to take any measures that in the opinion of the Superintendent are necessary to remedy the situation.Opportunity for representationsSubject to subsection (3), no direction shall be issued under subsection (1) or (1.1) to an authorized foreign bank or person unless the authorized foreign bank or person is provided with a reasonable opportunity to make representations in respect of the matter.Temporary directionIf, in the opinion of the Superintendent, the length of time required for representations to be made might be prejudicial to the public interest, the Superintendent may make a temporary direction with respect to the matters referred to in paragraphs (1)(a) and (b) or subsection (1.1) having effect for a period of not more than 15 days.Continuing effectA temporary direction continues to have effect after the expiration of the fifteen day period referred to in subsection (3) if no representations are made to the Superintendent within that period or, if representations have been made, the Superintendent notifies the authorized foreign bank or person that the Superintendent is not satisfied that there are sufficient grounds for revoking the direction.1999, c. 28, s. 352023, c. 26, s. 546
Court enforcementWhere an authorized foreign bank or a personis contravening or has failed to comply with a prudential agreement entered into under section 614.1 or a direction of the Superintendent made under subsection 615(1), (1.1) or (3),is contravening this Act, orhas omitted to do any thing under this Act that is required to be done by or on the part of the authorized foreign bank or person,the Superintendent may, in addition to any other action that may be taken under this Act, apply to a court for an order requiring the authorized foreign bank or person to comply with the prudential agreement or the direction, cease the contravention or do any thing that is required to be done, and on the application the court may so order and make any other order it thinks fit.AppealAn appeal from a decision of a court under subsection (1) lies in the same manner, and to the same court, as an appeal from any other order of the court.1999, c. 28, s. 35; 2001, c. 9, s. 1682023, c. 26, s. 547
Asset Maintenance
Order re: asset maintenanceWhere, in the opinion of the Superintendent, it is necessary for the protection of rights of depositors and creditors of the authorized foreign bank in respect of its business in Canada, the Superintendent may, by order,subject to any terms and conditions that the Superintendent considers necessary, direct an authorized foreign bank to maintain in Canada assets of any type and in any amount that the Superintendent may specify; andrequire that the assets referred to in paragraph (a) be deposited with a Canadian financial institution approved by the Superintendent under a deposit agreement approved by the Superintendent.1999, c. 28, s. 35
Disqualification and Removal of Principal Officers
ApplicationThis section applies only in respect of an authorized foreign bankthat has been notified by the Superintendent that this section applies to it where the authorized foreign bank is subject to measures designed to protect the interests of its depositors and creditors in respect of its business in Canada, which measureshave been specified by the Superintendent by way of conditions or limitations in respect of the order approving the commencement and carrying on of business in Canada by the authorized foreign bank, orare contained in a prudential agreement entered into under section 614.1 or an undertaking given by the authorized foreign bank to the Superintendent; orthat is the subject of a direction made under section 615 or an order made under section 617.Information to be providedAn authorized foreign bank shall provide the Superintendent with the name of any person who has been selected by the authorized foreign bank for appointment as principal officer, together with such other information about the background, business record and experience of the person as the Superintendent may require.When information to be providedThe information required by subsection (2) shall be provided to the Superintendent at least 30 days prior to the date of the appointment or within any shorter period that the Superintendent may allow.DisqualificationIf the Superintendent is of the opinion that, on the basis of the competence, business record, experience, conduct or character of a person, he or she is not suitable to hold the position of principal officer, the Superintendent may, by order, disqualify the person from being appointed to that office.Risk of prejudiceIn forming an opinion under subsection (4), the Superintendent must consider whether the interests of the depositors and creditors of the authorized foreign bank in respect of its business in Canada would likely be prejudiced if the person were to take office.Representations may be madeThe Superintendent must in writing notify the person concerned and the authorized foreign bank of an order that the Superintendent proposes to make under subsection (4) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.ProhibitionIf an order is made under subsection (4) disqualifying a person from being appointed as principal officer, the person shall not be, and the authorized foreign bank shall not permit the person to be, appointed to that position.2001, c. 9, s. 169
RemovalThe Superintendent may, by order, remove a person from office as the principal officer of an authorized foreign bank if the Superintendent is of the opinion that the person is not suitable to hold that officeon the basis of the competence, business record, experience, conduct or character of the person; orbecause the person has contravened or, by action or negligence, has contributed to the contravention ofthis Act or the regulations made under it,a direction made under section 615,an order made under section 617,a condition or limitation in respect of the order approving the commencement and carrying on of business in Canada by the authorized foreign bank, ora prudential agreement entered into under section 614.1 or an undertaking given by the authorized foreign bank to the Superintendent.Risk of prejudiceIn forming an opinion under subsection (1), the Superintendent must consider whether the interests of the depositors and creditors of the authorized foreign bank in respect of its business in Canada have been or are likely to be prejudiced by the person’s holding office as principal officer.Representations may be madeThe Superintendent must in writing notify the principal officer and the authorized foreign bank of any removal order that the Superintendent proposes to make under subsection (1) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.SuspensionIf the Superintendent is of the opinion that the public interest is likely to be prejudiced by the principal officer continuing to exercise the powers or carry out the duties and functions of that office during the period for making representations, the Superintendent may make an order suspending the principal officer. The suspension may not extend beyond 10 days after the expiration of that period.Notice of orderThe Superintendent shall, without delay, notify the principal officer and the authorized foreign bank of a removal order or suspension order.Consequences of removal orderThe principal officer ceases to hold that office as of the date the removal order is made or any later date specified in the order.AppealThe principal officer or the authorized foreign bank may, within 30 days after the date of receipt of notice of the removal order under subsection (5), or within any longer period that the Court allows, appeal the matter to the Federal Court.Powers of Federal CourtThe Federal Court, in the case of an appeal, may dismiss the appeal or set aside the removal order.Order not stayed by appealA removal order is not stayed by an appeal.2001, c. 9, s. 169
Supervisory Intervention
Meaning of assetsFor the purposes of sections 619 to 627, assets, in relation to an authorized foreign bank, meansany asset in respect of its business in Canada, including the assets referred to in subsection 582(1) and section 617 and the assets under its administration; andany other asset in Canada of the authorized foreign bank.1999, c. 28, s. 35
Superintendent may take controlSubject to this Act, where any of the circumstances described in subsection (2) exist in respect of an authorized foreign bank or the business in Canada of an authorized foreign bank, the Superintendent maytake control, for a period not exceeding sixteen days, of the assets of the authorized foreign bank; orunless the Minister advises the Superintendent that the Minister is of the opinion that it is not in the public interest to do so,take control, for a period exceeding sixteen days, of the assets of the authorized foreign bank, orwhere control of assets has been taken under paragraph (a), continue the control beyond the sixteen days referred to in that paragraph.Circumstances for taking controlControl by the Superintendent under subsection (1) may be taken in respect of an authorized foreign bank wherethe authorized foreign bank has failed to pay its liabilities or, in the opinion of the Superintendent, will not be able to pay its liabilities as they become due and payable;the authorized foreign bank in respect of its business in Canada has failed to pay its liabilities or, in the opinion of the Superintendent, will not be able to pay its liabilities as they become due and payable;[Repealed, 2001, c. 9, s. 170]the assets of the authorized foreign bank in relation to its business in Canada are not, in the opinion of the Superintendent, sufficient to give adequate protection to the depositors and creditors of the authorized foreign bank in respect of its business in Canada;an asset appearing on the books or records of the authorized foreign bank in respect of its business in Canada or held under its administration is not, in the opinion of the Superintendent, satisfactorily accounted for;the authorized foreign bank has failed to comply with an order of the Superintendent under section 617;in the opinion of the Superintendent, any other state of affairs exists in respect of the authorized foreign bank that may be materially prejudicial to the interests of the authorized foreign bank’s depositors or creditors in respect of its business in Canada or to those of the owners of any assets under the authorized foreign bank’s administration in respect of its business in Canada, including where proceedings under a law relating to bankruptcy or insolvency have been commenced in Canada or elsewhere in respect of the authorized foreign bank or its holding body corporate;in the opinion of the Superintendent, the continued operation of the authorized foreign bank in Canada would be materially prejudicial to its integrity or security in relation to its business in Canada; orin the opinion of the Superintendent, the continued operation of the authorized foreign bank in Canada would pose a risk to national security.Minister’s powersSubject to this Act, the Minister may, for reasons related to national security, direct the Superintendent totake control, for a period not exceeding 16 days, of the assets of the authorized foreign bank;take control, for a period exceeding 16 days, of the assets of the authorized foreign bank; orif control of assets has been taken under paragraph (a), continue the control beyond the 16 days referred to in that paragraph.Notice of proposed actionThe Superintendent shall notify an authorized foreign bank of any action proposed to be taken in respect of it under paragraph (1)(b) and of its right to make written representations to the Superintendent within the time specified in the notice, not exceeding ten days after it receives the notice.Notice — up to 16 daysIf the Superintendent takes control of the assets of an authorized foreign bank under paragraph (2.1)(a), the Superintendent shall notify the authorized foreign bank that control has been taken at the direction of the Minister.Notice — more than 16 daysIf the Minister is considering whether to exercise the powers under paragraph (2.1)(b) or (c), the Superintendent shall notify the authorized foreign bank of the action that is being considered and of its right to make written representations to the Minister within the time specified in the notice, not exceeding 10 days after it receives the notice.Notice — Committee and Review AgencyWithin 30 days after exercising any of the powers under subsection (2.1), the Minister shall notifythe Committee, as defined in section 2 of the National Security and Intelligence Committee of Parliamentarians Act; andthe Review Agency, as defined in section 2 of the National Security and Intelligence Review Agency Act.Objectives of SuperintendentIf the Superintendent has control under subsection (1) or (2.1) of the assets of an authorized foreign bank referred to in that subsection, the Superintendent may do all things necessary or expedient to protect the rights and interests of the depositors and creditors of the authorized foreign bank in respect of its business in Canada.Powers of SuperintendentIf the Superintendent has control under subsection (1) or (2.1) of the assets of an authorized foreign bank referred to in that subsection,neither the authorized foreign bank nor any person acting on its behalf shall deal in any way with any of the assets without the prior approval of the Superintendent or a representative designated by the Superintendent; andno person acting on behalf of the authorized foreign bank shall have access to any cash or securities held in Canada by the authorized foreign bank without the prior approval of the Superintendent or a representative designated by the Superintendent.Persons to assistIf the Superintendent takes control of the assets of an authorized foreign bank under subparagraph (1)(b)(i) or (ii) or paragraph (2.1)(b) or (c), the Superintendent may appoint one or more persons to assist in the control of the assets.1999, c. 28, s. 35; 2001, c. 9, s. 170; 2007, c. 6, s. 1012023, c. 26, s. 548
Expiration of controlControl by the Superintendent under subsection 619(1) of the assets of an authorized foreign bank expires on the day on which a notice by the Superintendent is sent to the principal officer of the authorized foreign bank stating that the Superintendent is of the opinion that the circumstances leading to the taking of control of the assets by the Superintendent have been substantially rectified and that the authorized foreign bank can resume control of its assets.Expiration of control — Minister’s directionControl by the Superintendent under subsection 619(2.1) of the assets of an authorized foreign bank expires on the day on which a notice by the Superintendent is sent to the principal officer of the authorized foreign bank stating that the Minister is of the opinion, on the recommendation of the Superintendent, that corrective measures have been taken in response to the reasons related to national security and that the authorized foreign bank can resume control of its assets.1999, c. 28, s. 352023, c. 26, s. 549
Superintendent may request winding-upThe Superintendent may, at any time before the receipt of a request under section 622 to relinquish control of the assets of an authorized foreign bank, request the Attorney General of Canada to apply for a winding-up order under section 10.1 of the Winding-up and Restructuring Act in respect of the authorized foreign bank, if the assets of the authorized foreign bank are under the control of the Superintendent under subparagraph 619(1)(b)(i) or (ii) or paragraph 619(2.1)(b) or (c).1999, c. 28, s. 352023, c. 26, s. 550
Requirement to relinquish controlIf no action has been taken by the Superintendent under section 621 and, after 30 days following the taking of control by the Superintendent under subsection 619(1) or (2.1) of the assets of an authorized foreign bank, the Superintendent receives from the principal officer of the authorized foreign bank a notice in writing requesting the Superintendent to relinquish control, the Superintendent shall, not later than 12 days after receipt of the notice,comply with the request; orrequest the Attorney General of Canada to apply for a winding-up order under section 10.1 of the Winding-up and Restructuring Act in respect of the authorized foreign bank.1999, c. 28, s. 352023, c. 26, s. 551(E)
Advisory committeeThe Superintendent may appoint a committee of not more than six members to advise the Superintendent in respect of the assets and all other matters pertinent to the duties and responsibilities of the Superintendent in exercising control of the assets. The committee shall be appointed from among the banks and authorized foreign banks that are subject to an assessment under section 23 of the Office of the Superintendent of Financial Institutions Act and required to share in the expenses resulting from the taking of control of the assets of the authorized foreign bank under subsection 619(1) or (2.1).1999, c. 28, s. 352023, c. 26, s. 552
Expenses payable by authorized foreign bankIf control of the assets of an authorized foreign bank has been taken under subparagraph 619(1)(b)(i) or (ii) or paragraph 619(2.1)(b) or (c) and the control expires or is relinquished under section 620 or paragraph 622(a), the Superintendent may direct that the authorized foreign bank be liable for repayment of all or part of the expenses resulting from the taking of control of the assets and assessed against and paid by other authorized foreign banks and by banks under section 23 of the Office of the Superintendent of Financial Institutions Act, together with any interest in respect of the expenses at any rate that is specified by the Superintendent.Debt due to Her MajestyWhere any direction is made under subsection (1), the amount for which the authorized foreign bank is liable is a debt due to Her Majesty in right of Canada payable on demand and is recoverable in the Federal Court or any other court of competent jurisdiction.1999, c. 28, s. 352023, c. 26, s. 553(E)
Priority of claim in liquidationIn the case of the winding-up of the business in Canada of an authorized foreign bank, the expenses resulting from the taking of control of the assets of the authorized foreign bank under subsection 619(1) or (2.1) and assessed against and paid by other authorized foreign banks and by banks under section 23 of the Office of the Superintendent of Financial Institutions Act and interest in respect of the expenses at any rate that is specified by the Superintendent, constitute a claim of His Majesty in right of Canada against the assets of the authorized foreign bank that ranks after any claim referred to in paragraph 627(1)(d).1999, c. 28, s. 352023, c. 26, s. 554(E)
Application of assessmentAny amount recovered under section 624 or 625 shall be applied to reduce the total amount of expenses incurred for or in connection with the administration of this Act.1999, c. 28, s. 35
Order of priority for payment of claimsSubject to sections 72 and 94 of the Winding-up and Restructuring Act, where a winding-up order under that Act is made in respect of an authorized foreign bank,the payment of any amount due to Her Majesty in right of Canada, in trust or otherwise, in respect of the business in Canada of the authorized foreign bank is a first charge on the assets of the authorized foreign bank;the payment of any amount due to Her Majesty in right of a province, in trust or otherwise, in respect of the business in Canada of the authorized foreign bank is a second charge on the assets of the authorized foreign bank;the payment of the deposit liabilities of the authorized foreign bank and all other liabilities of the authorized foreign bank in respect of its business in Canada, except the liabilities referred to in paragraph (d) and section 625, is a third charge on the assets of the authorized foreign bank; andthe payment of any fines and penalties for which the authorized foreign bank is liable in respect of its business in Canada is a last charge on the assets of the authorized foreign bank.Priority not affectedNothing in subsection (1) prejudices or affects the priority of any holder of any security interest in any property of an authorized foreign bank.PrioritiesPriorities within each of paragraphs (1)(a) to (d) shall be determined in accordance with the laws governing priorities and, where applicable, by the terms of the liabilities referred to in those paragraphs.1999, c. 28, s. 35; 2001, c. 9, s. 171
Dealings with Customers and the PublicInterpretation
DefinitionsThe following definitions apply in this Part.business day does not include a Saturday or a holiday. (jour ouvrable)charge includes interest and, for greater certainty, a fee. (frais)complaint means dissatisfaction, whether justified or not, expressed to an institution with respect toa product or service in Canada that is offered, sold or provided by the institution; orthe manner in which a product or service in Canada is offered, sold or provided by the institution. (plainte)credit agreement includes an agreement for a line of credit, a credit card or any other kind of loan that is repayable in Canada. (convention de crédit)deposit-type instrument means a product that is issued in Canada by an institution, that is related to a deposit and that specifies a fixed investment period and eithera fixed rate of interest; ora variable rate of interest that is calculated on the basis of the institution’s prime lending rate or an interest rate benchmark. (instrument de type dépôt)eligible enterprise means a business with authorized credit of less than $1,000,000, fewer than 500 employees and annual revenues of less than $50,000,000. (entreprise admissible)institution means a bank or an authorized foreign bank. (institution)interest, in relation to an agreement for a deposit-type instrument, a principal-protected note or a prescribed product, includes any return payable by an institution under the agreement. (intérêt)interest rate benchmark means a rate that is determined from time to time by reference to an assessment of one or more underlying interests, is made available to the public, either free of charge or on payment, and is used for reference for determining the interest payable, or other sums that are due, under loan agreements or other financial contracts or instruments. (taux d’intérêt de référence)maintenance charge means a charge in relation to a prepaid payment product that is imposed after the product has been purchased, other than a charge associated with the use of the product or of any service related to it. (frais de tenue de compte)member bank means a bank that is a member institution as defined in section 2 of the Canada Deposit Insurance Corporation Act. (banque membre)optional product or service means a product or service that is provided in Canada by an institution, an affiliate that the institution controls or an agent or representative of the institution or affiliate, for an additional charge, as a supplement to another product or service that is offered or provided by the institution. (produit ou service optionnel)personal authentication information means a personal identification number or any other password or information that a borrower creates or adopts to be used to authenticate their identity in relation to a credit card or credit card account. (authentifiant personnel)personal deposit account means a deposit account in the name of one or more natural persons that is kept by that person or those persons other than for business purposes. (compte de dépôt personnel)point of service means a physical location to which the public has access and at which an institution carries on business with the public through natural persons in Canada. (point de service)prepaid payment product means a physical or electronic product that is issued in Canada by an institution, that is or can be loaded with funds and that can be used to make withdrawals or purchase goods or services. (produit de paiement prépayé)principal-protected note means a financial instrument that is issued in Canada by an institution to a person and thatprovides for one or more payments to be made by the institution that are determined, in whole or in part, by reference to an index or reference point, includingthe market price of a security, commodity, investment fund or other financial instrument, andthe exchange rate between any two currencies; andprovides that the principal amount that the institution is obligated to repay at or before the note’s maturity is equal to or greater than the total paid by the person for the note.A principal-protected note does not include a financial instrument that specifies that the interest or return on the instrument is determined solely on the basis of a fixed rate of interest or return or a variable rate of interest or return that is calculated on the basis of the institution’s prime lending rate or an interest rate benchmark. (billet à capital protégé)promotional product means a prepaid payment product that is purchased by an entity and distributed as part of a promotional, loyalty or award program. (produit promotionnel)registered product means a registered education savings plan, a registered retirement savings plan, a registered retirement income fund, a registered disability savings plan or any other plan, arrangement or fund to which Division G of Part I of the Income Tax Act applies that is provided by an institution to a natural person. (produit enregistré)residential mortgage means a loan made in Canada on the security of residential property that has four or fewer residential units. (hypothèque résidentielle)retail deposit account means a personal deposit account that is opened with a deposit of less than $150,000 or of less than any greater prescribed amount. (compte de dépôt de détail)retail deposit-taking branch means a branch or office in Canada of a financial institution at which the financial institution, through a natural person, opens retail deposit accounts and disburses cash to customers. (succursale de dépôt de détail)rural area means an area located in Canada outside an urban area. (zone rurale)undue pressure means any pressure, imposed in the form of a practice or communication or otherwise, that could be reasonably considered to be excessive or persistent in the circumstances. (pressions indues)urban area, on a particular day, means a population centre, as defined in the census dictionary published by Statistics Canada for the purpose of the most recent general census whose results have been published before that day, that has a minimum population of 10,000 natural persons on the basis of that census. (zone urbaine)Business purposesFor greater certainty, a reference to “business purposes” in a provision of this Part is a reference to the business purposes of the natural person referred to in the provision.2018, c. 27, s. 3292024, c. 17, s. 228
Fair and Equitable DealingsResponsible Business ConductGeneral Requirements
TrainingAn institution shall ensure that its officers and employees in Canada, and any person who offers or sells the institution’s products or services in Canada, are trained with respect to the policies and procedures that it has established for complying with the consumer provisions.2018, c. 27, s. 329
False or misleading informationNo institution shall communicate or otherwise provide false or misleading information to a customer, the public or the Commissioner.2018, c. 27, s. 329
Prohibited conductAn institution shall not, in its dealings in Canada with its customers and the public,impose undue pressure on a person, or coerce a person, for any purpose, including to obtain a product or service from a particular person — including the institution and any of its affiliates — as a condition for obtaining another product or service from the institution;take advantage of a person; orengage in any prescribed conduct.2018, c. 27, s. 329
For greater certaintyFor greater certainty, an institution may offer a product or service to a person on more favourable terms or conditions than it would otherwise offer, if the more favourable terms and conditions are offered on the condition that the person obtain another product or service from any particular person.For greater certaintyFor greater certainty, an affiliate of an institution may offer a product or service to a person on more favourable terms or conditions than the affiliate would otherwise offer, if the more favourable terms and conditions are offered on the condition that the person obtain another product or service from the institution.Approval by institutionIf a product or service is obtained by a borrower from a particular person as security for a loan from an institution, the institution may require that the product or service meet with its approval. That approval shall not be unreasonably withheld.2018, c. 27, s. 329
Policies and procedures — appropriate products or servicesAn institution shall establish and implement policies and procedures to ensure that the products or services in Canada that it offers or sells to a natural person other than for business purposes are appropriate for the person having regard to their circumstances, including their financial needs.2018, c. 27, s. 329
Remuneration, payment or benefitAn institution shall ensure that the remuneration of its officers and employees in Canada — and of any person who offers or sells its products or services in Canada — as well as any payment or benefit that the institution offers to them, does not interfere with the person’s ability to comply with the policies and procedures referred to in section 627.06.2018, c. 27, s. 329
No provision without express consent and agreementSubject to any regulations, an institution shall not provide a person with a product or service in Canada without firstobtaining the person’s express consent to do so;entering into an agreement with the person for it to be provided; andproviding the person with a copy of the agreement, if the agreement is for a product or service to be provided on an ongoing basis.Oral consent — written confirmationIf the consent is given orally, the institution shall provide the person with written confirmation of that consent without delay.Use not consentUse by the person of the product or service does not constitute express consent for the purpose of subsection (1).2018, c. 27, s. 329
Obtaining express consentAny communication from an institution seeking a person’s express consent shall be made in a manner, and using language, that is clear, simple and not misleading.2018, c. 27, s. 329
Cancellation periods — products or servicesSubject to subsection (1.1), if an institution enters into an agreement with a person in respect of a product or service in Canada — other than a prescribed product or service or a product or service referred to in section 627.11 — to be provided on an ongoing basis, the institution shall allow the person to cancel the agreement,if it was entered into by mail or orally by telephone, within the prescribed period or, if there is no prescribed period, until the end of the 14th business day after the day on which the agreement is entered into; orif it was entered into in any other manner, within the prescribed period or, if there is no prescribed period, until the end of the third business day after the day on which the agreement is entered into.ExceptionSubsection (1) does not apply to a body corporate, trust or partnership if it is a business that is not an eligible enterprise.Obligations of institutionIf a person notifies an institution that they are cancelling an agreement within the applicable period referred to in subsection (1), the institution shallin writing and without delay, acknowledge receipt of the person’s notice of cancellation and confirm what it intends to recover under subsection (3); andwithout delay, refund to the person any amount that it received in respect of the provision of the product or service.Limited recoveryIn the event of a cancellation within the applicable period referred to in subsection (1), an institution shall waive any cancellation charge and may recover onlyany amounts related to the person’s use of the product or service prior to the cancellation;any expense that the institution has reasonably incurred in providing the product or service; andany prescribed amount.2018, c. 27, s. 3292021, c. 23, s. 151
Cancellation — certain products or servicesIf an institution enters into an agreement with a person in respect of a retail deposit account, deposit-type instrument, credit card account or any prescribed product or service in Canada, the institution shall allow the person to cancel the agreement in accordance with any prescribed requirements.Obligation of institutionIf the person cancels the agreement, the institution shall meet any prescribed requirements.2018, c. 27, s. 329
Imposition of charges or penaltiesAn institution shall not impose on a person a charge or penalty in relation to a product or service in Canada unlessthe institution has obtained from the person the express consent referred to in paragraph 627.08(1)(a);the agreement in respect of the product or service provides for its imposition; andthe institution discloses the charge or penalty in accordance with this Part.Court orderSubsection (1) does not preclude the institution from receiving an amount in relation to a product or service that is determined under an order of a court.2018, c. 27, s. 329
AlertAn institution shall, without delay, send to a natural person an alert, by electronic means,if the balance of the person’s personal deposit account that is opened in Canada falls below any amount that the person communicates to the institution or, if the person does not communicate an amount, below the prescribed amount or, if there is no prescribed amount, $100; orif the amount of credit available on the person’s line of credit that is extended — or credit card account that is opened — in Canada other than for business purposes falls below any amount that the person communicates to the institution or, if the person does not communicate an amount, below the prescribed amount or, if there is no prescribed amount, $100.ExceptionSubsection (1) does not apply if the person has opted out, in writing, of receiving the alert or does not provide the contact information required to receive the alert.ContentThe alert shall indicate that the balance of the personal deposit account, or the amount of credit available on the line of credit or credit card account, has fallen below the amount communicated to the institution, below the prescribed amount or below $100, as the case may be, and that, in accordance with the agreement in respect of the product or service, charges or penalties may be imposed for the most recent transaction, or for any subsequent transaction, made on the account or line of credit. The alert shall also indicate what the person may do to avoid charges or penalties and the time within which it is to be done, and include any prescribed information.2018, c. 27, s. 329
AdvertisementsAny advertisement in Canada that is made by an institution shall be accurate, clear and not misleading.2018, c. 27, s. 329
Arrangements with affiliates, etc.An institution shall not enter into any arrangement or otherwise cooperate with any of its representatives, agents or other intermediaries, with any of its affiliates that are controlled by a bank or a bank holding company and that are a finance entity as defined in subsection 464(1) or other prescribed entity, or with any of the representatives, agents or other intermediaries of such an affiliate, to sell or further the sale of a product or service of the institution or the affiliate unlessthe affiliate or the representative, agent or other intermediary of the institution or the affiliate, as the case may be, complies, with respect to the product or service, with the consumer provisions that apply to institutions, as if it were an institution, to the extent that those provisions are applicable to its activities;the persons who request or receive the product or service have access to the institution’s procedures established for dealing with complaints under paragraph 627.43(1)(a) as if the product or service had been requested or received from the institution;the employees of the affiliate or the representative, agent or other intermediary of the institution or the affiliate, as the case may be,may report particulars under subsection 979.2(1) to the affiliate or the representative, agent or other intermediary of the institution or the affiliate as if they were an employee of a bank, andhave access to the procedures established under section 979.3; andthe affiliate or the representative, agent or other intermediary of the institution or the affiliate, as the case may be, complies with section 979.4 as if it were a bank.2018, c. 27, s. 329
Intermediary for another entityIf an institution is acting in the capacity of a representative, agent or other intermediary for another entity in respect of a product or service provided by the entity, the institution shall ensure that an agreement in respect of that product or service complies with the prescribed requirements.2018, c. 27, s. 329
Access to Basic Banking ServicesRetail Deposit Accounts
OpeningSubject to subsection (2), a member bank shall, at any point of service or any branch in Canada at which it opens retail deposit accounts through natural persons, open a retail deposit account on the request, made there in person, of a natural person whopresents to the member banktwo documents from a reliable source — one of which indicates the person’s name and address and the other the person’s name and date of birth — includingidentification issued by the Government of Canada or the government of a province,recent notices of tax assessments issued by the Government of Canada or the government of a province or municipality,recent statements of benefits from the Government of Canada or the government of a province,recent Canadian public utility bills,recent bank account or credit card statements,foreign passports, andany prescribed document, orany document from a reliable source that indicates the person’s name and date of birth, if the person’s identity is also confirmed by a customer in good standing with the member bank or by a natural person of good standing in the community where the point of service or branch is located;if the member bank so requests, consents to the member bank’s verifying whether any of the circumstances set out in paragraphs 627.18(1)(a) to (d) applies to the person, and to the member bank’s verifying the documents presented by the person;if the member bank — based on its verification of the circumstances set out in paragraphs 627.18(1)(a) to (d) or of the documents presented by the person or based on any information provided by the person in connection with the request — has reasonable grounds to suspect that the person is misrepresenting their identity, presents to the member bank one piece of identification issued by the Government of Canada or the government of a province that bears the person’s photograph and signature;if the member bank is a federal credit union and so requests, becomes a member of the bank; andmeets any prescribed condition.Opening at another locationIf a natural person who meets the conditions set out in subsection (1) requests the opening of a retail deposit account at a point of service at which the opening of such an account can only be initiated, the member bank is not required to open the account at that point of service; however, the bank shall open the account at another physical location.Request made in other mannerA member bank shall open a retail deposit account for any natural person who requests it in any prescribed manner and who meets any prescribed condition.No minimum deposit or balance requiredA member bank shall not require the natural person to make an initial minimum deposit or maintain a minimum balance.2018, c. 27, s. 329
Non-applicationSubsections 627.17(1) to (3) do not applyif the member bank has reasonable grounds to believe that the retail deposit account will be used for illegal or fraudulent purposes;if the natural person has a history of illegal or fraudulent activity in relation to providers of financial services and the most recent instance of such an activity occurred less than seven years before the day on which the request to open a retail deposit account is made;if the member bank has reasonable grounds to believe that the natural person, for the purpose of opening the retail deposit account, knowingly made a material misrepresentation in the information provided to the member bank;if the member bank has reasonable grounds to believe that it is necessary to refuse to open the retail deposit account in order to protect the customers or employees of the member bank from physical harm, harassment or other abuse;if the request is made at a branch or point of service of a member bank at which the only retail deposit accounts offered are those that are linked to an account at another financial institution; orin any prescribed circumstances.BankruptcyFor greater certainty and for the purpose of paragraph (1)(a), the fact that the natural person is or has been a bankrupt does not, by itself without any evidence of fraud or any other illegal activity in relation to the bankruptcy, constitute reasonable grounds for a member bank to believe that an account for the person will be used for illegal or fraudulent purposes.2018, c. 27, s. 329
Refusal to openA member bank that refuses to open a retail deposit account for a natural person shall provide the person witha written statement that indicates that it will not be opening the account; andthe information referred to in paragraphs 627.65(a) to (c).2018, c. 27, s. 329
Funds
ApplicationSections 627.21 and 627.22 apply only with respect to paper-based cheques or other paper-based instruments deposited in Canada that areencoded with magnetic ink to allow for character recognition;not damaged or mutilated to the extent that they are unreadable by cheque-clearing systems;drawn on an institution’s branch in Canada; andissued in Canadian dollars.2018, c. 27, s. 329
AvailabilityAn institution shall make available for withdrawal any funds deposited by cheque or other instrument into a retail deposit account or into a deposit account held by an eligible enterprisein the case of a cheque or other instrument in an amount that is not greater than the prescribed amount,if the deposit is made in person with an employee at one of the institution’s branches or points of service, within the prescribed period or, if there is no prescribed period, no later than four business days after the day of the deposit, orif the deposit is made in any other manner, within the prescribed period or, if there is no prescribed period, no later than five business days after the day of the deposit; andin the case of a cheque or other instrument in an amount that is greater than the prescribed amount,if the deposit is made in person with an employee at one of the institution’s branches or points of service, within the prescribed period or, if there is no prescribed period, no later than seven business days after the day of the deposit, orif the deposit is made in any other manner, within the prescribed period or, if there is no prescribed period, no later than eight business days after the day of the deposit.2018, c. 27, s. 329
First amount availableAn institution shall make the prescribed amount of funds deposited or, if there is no prescribed amount, the first $100 of all funds deposited by a cheque or other instrument into a retail deposit account available for withdrawalimmediately, if the deposit is made in person with an employee at one of the institution’s branches or points of service; oron the business day following the day of the deposit, if the deposit is made in any other manner.2018, c. 27, s. 329
Non-applicationSection 627.21 does not apply in respect of a deposit that is made by an eligible enterprise if the institution has reasonable grounds to believe that there is a material increased credit risk, having regard to the following factors, among others:an escalating overdraft balance that is not being reduced by deposits received;a negative change in the credit score or other behaviour scores that may impact the enterprise’s credit risk;an unexplained change in the history of cheques or other instruments deposited into the account;a high number of cheques or other instruments deposited that are returned as dishonoured items from other institutions, which may impact the available balance in the account;notice of bankruptcy or of creditor action against the enterprise; andany prescribed factor.2018, c. 27, s. 329
Non-applicationSections 627.21 and 627.22 do not applyif the institution has reasonable grounds to believe that the deposit is being made for illegal or fraudulent purposes in relation to the depositor’s account;if the account has been open for fewer than 90 days;if the cheque or other instrument has been endorsed more than once;if the cheque or other instrument is deposited at least six months after the date of the cheque or other instrument; orin any prescribed circumstances.Refusal to make funds availableAn institution that relies on subsection (1) as grounds for not complying with section 627.21 or 627.22 shall — immediately, if the deposit is made in person with an employee at one of the institution’s branches or points of service or on request of the depositor if the deposit is made in any other manner — provide the depositor witha written statement that indicates that it will not be making the funds available; andthe information referred to in paragraphs 627.65(a) to (c).2018, c. 27, s. 329
Cashing Government Cheques or Other Instruments
CashingA member bank shall, at any branch in Canada at which it, through natural persons, opens retail deposit accounts and disburses cash to customers, cash a cheque or other instrument on the request of a natural person made there in person ifthe cheque or other instrument is drawn on the Receiver General or on the Receiver General’s account in the Bank of Canada or in any bank or other deposit-taking Canadian financial institution incorporated by or under an Act of Parliament, or is any other instrument issued as authority for the payment of money out of the Consolidated Revenue Fund;the person presents to the member bankthe documents referred to in subparagraph 627.17(1)(a)(i),one piece of identification that is issued by the Government of Canada or the government of a province and that bears the person’s signature and photograph, orany document from a reliable source that indicates the person’s name and date of birth, if the person’s identity is also confirmed by a customer in good standing with the member bank or by a natural person of good standing in the community where the branch is located;the amount of the cheque or other instrument is not greater than the prescribed amount; andany prescribed condition is met.Non-applicationSubsection (1) does not applyif there is evidence that the cheque or other instrument has been altered in any way or is counterfeit;if the member bank has reasonable grounds to believe that there has been illegal or fraudulent activity in relation to the cheque or other instrument; orin any prescribed circumstances.Refusal to cashA member bank that refuses to cash for a natural person a cheque or other instrument that meets the conditions set out in paragraphs (1)(a), (c) and (d) shall provide the person witha written statement that indicates that it will not be cashing the cheque or other instrument; andthe information referred to in paragraphs 627.65(a) to (c).2018, c. 27, s. 329
No chargesAn institution shall not impose a chargefor cashing a cheque or other instrument drawn on the Receiver General or on the Receiver General’s account in the Bank of Canada, in any bank or other deposit-taking Canadian financial institution incorporated by or under an Act of Parliament or in any authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2), in respect of its business in Canada;for cashing any other instrument issued as authority for the payment of money out of the Consolidated Revenue Fund; orin respect of any cheque or other instrument that isdrawn in favour of the Receiver General, the Government of Canada or any department of it or any public officer acting in the capacity of a public officer, andtendered for deposit to the credit of the Receiver General.Deposits of Government of CanadaNothing in subsection (1) precludes any arrangement between the Government of Canada and an institution concerningcompensation for services performed by the institution for the Government of Canada; orinterest to be paid on any or all deposits of the Government of Canada with the institution.2018, c. 27, s. 329
Documents
GeneralFor greater certainty, any documents required to be presented by a natural person under any of sections 627.17 to 627.26 and subsection (2) shall beoriginal, valid and not substantially defaced; andin the case of a piece of identification issued by the government of a province, usable for identification purposes under the law of the province.Different namesIf any document presented by a natural person bears a former name of the person, the person shall present a certificate evidencing the change of name that has occurred or a certified copy of that certificate.2018, c. 27, s. 329
Credit
PrepaymentAn institution shall not make a loan to a natural person that is repayable in Canada, the terms of which prohibit prepayment of the money advanced or any instalment on the money advanced before its due date.Non-applicationSubsection (1) does not apply in respect of a loan thatis secured by a mortgage on real property; oris made for business purposes and has a principal amount of more than the prescribed amount or, if there is no prescribed amount, $100,000.Prepayment of certain loansIf an institution enters into a credit agreement with a natural person other than for business purposes, the institution shall allow the personin the case of a loan for a fixed amount, other than a loan that is secured by a mortgage on real property,to prepay the outstanding balance under the agreement, at any time, without incurring any charge or penalty for making the prepayment, orto prepay a part of the outstanding balanceon the date of any scheduled payment, if payments are scheduled once a month or more often, orat any time but only once a month, in any other case; andin the case of any prescribed credit agreement, to prepay any prescribed amount at any prescribed time if the person meets any prescribed requirements.Refund or creditIf a person makes a prepayment referred to in paragraph (3)(a) or (b), the institution shall refund or credit to the person the prescribed amount of any prescribed charge other than any interest or discount applicable to the loan.2018, c. 27, s. 329
No minimum credit balance without express consentAn institution shall not make a loan or advance in Canada to a natural person subject to the condition that the person maintain a minimum credit balance with the institution without first obtaining the person’s express consent to do so.2018, c. 27, s. 329
Default chargesIf a natural person fails to make a payment when it becomes due under a credit agreement that the person entered into other than for business purposes or fails to comply with any other obligation in the agreement an institution may impose, in addition to interest, other charges for the sole purpose of recovering the costs reasonably incurredfor legal services retained to collect or attempt to collect the payment;in realizing on any security interest taken under the credit agreement or in protecting such a security interest, including the cost of legal services retained for that purpose;in processing a cheque or other instrument that the person used to make a payment under the loan but that was dishonoured; orfor any prescribed purpose.2018, c. 27, s. 329
Renewal of mortgagesIf a natural person enters into a credit agreement other than for business purposes with an institution for a loan that is secured by a mortgage on real property and that is to be renewed on a specified day,the institution shall not, during any prescribed period, make a change to the agreement that increases the cost of borrowing; andthe person’s rights under the agreement continue, and the renewal does not take effect, until the prescribed day.2018, c. 27, s. 329
No increase or provision without express consentSubject to any regulations, an institution shall notincrease the credit limit on a line of credit that is extended — or a credit card account that is opened — in Canada for a natural person other than for business purposes without first obtaining the person’s express consent to do so; orprovide cheques that are issued on a credit card account that is opened in Canada for a natural person other than for business purposes without first obtaining the person’s express consent to do so.Oral consent — written confirmationIf the consent is given orally, the institution shall provide the person with written confirmation of the consent not later than the date of the first statement of account that is provided after the date of that consent.Use not consentUse by the person of the line of credit or the credit card account, or of any service related to the line of credit or credit card account, does not constitute express consent for the purpose of subsection (1).2018, c. 27, s. 329
Liability for unauthorized useThe maximum liability of a borrower for the unauthorized use of a credit card issued to them in Canada, the account information of the credit card or the personal authentication information created or adopted in relation to the credit card or credit card account is $50, unless the borrower has demonstrated gross negligence or, in Quebec, gross fault, in safeguarding the credit card, the account information or the personal authentication information.Report of unauthorized useIf a borrower reports to an institution that a credit card issued to them in Canada, the account information of the credit card or the personal authentication information created or adopted in relation to the credit card or credit card account has been lost or stolen or is otherwise at risk of being used in an unauthorized manner, the borrower shall not be liable for any unauthorized use of the credit card, the account information or the personal authentication information after the report is received.Personal authentication informationThe unauthorized use of a credit card issued to a borrower in Canada, or of account information of the credit card, by means of the personal authentication information created or adopted in relation to the credit card or credit card account does not by itself establish that the borrower demonstrated gross negligence or, in Quebec, gross fault, in safeguarding the personal authentication information.2018, c. 27, s. 329
Credit card statementSubject to any regulations, an institution shall, for a credit card issued in Canada to a natural person other than for business purposes, send a statement of account in respect of each billing cycle to the person. The statement is to be sent without delay after the last day of the billing cycle.Minimum payment — due dateAn institution shall not require a minimum payment in respect of the outstanding balance owing for a particular billing cycle on the credit card account to be made by the person less than 21 days after the last day of that billing cycle.Non-business dayIf the due date for a minimum payment in respect of the outstanding balance owing on the credit card account does not fall on a business day, the institution shall consider a payment made on the next business day as being made on time.No interest if balance paid in fullAn institution shall not impose interest on purchases of goods or services made during a particular billing cycle on the credit card account if the person pays the outstanding balance owing on the credit card account in full on or before the due date.2018, c. 27, s. 329
Different interest rates — allocation of paymentIf different interest rates apply to different amounts owing for a particular billing cycle on a credit card account that is opened in Canada by a natural person other than for business purposes, the institution shall allocate any payment made by the person that is greater than the required minimum payment for that billing cycle among those amounts using one of the following methods:by allocating that payment first to the amount with the highest interest rate and then allocating any remaining portion of the payment to the other amounts in descending order, based on their applicable interest rates; orby allocating that payment among those amounts in the same proportion as each amount bears to the outstanding balance owing on the credit card account.Rounding and adjustmentsFor the purpose of paragraph (1)(b), if the payment that the institution allocates to an amount owing on a credit card account contains a fraction of a dollar, the institution may round up that amount to the nearest dollar if the fraction of the dollar is equal to or greater than 50 cents, round down that amount to the nearest dollar if the fraction is less than 50 cents and, if necessary, make corresponding adjustments to the other amounts that are being allocated.2018, c. 27, s. 329
No charge — holdsAn institution shall not impose a charge on a natural person for exceeding their credit limit as a result of a hold on a credit card that was issued in Canada to the person other than for business purposes.Non-applicationSubsection (1) does not apply if the person would, in any case, have exceeded their credit limit during the period in which the hold was in effect.2018, c. 27, s. 329
Debt recoveryIn its dealings with a natural person who owes it a debt under a credit agreement entered into other than for business purposes, an institutionshall not communicate or attempt to communicate with the person, any member of the person’s family or household, any relative, neighbour, friend or acquaintance of the person or the person’s employer by any means that constitutes harassment, in a manner that constitutes harassment or with a frequency that constitutes harassment, including byusing threatening, profane, intimidating or coercive language,using undue pressure, ormaking public, or threatening to make public, the person’s failure to pay; andshall comply with any other prescribed debt collection practices.2018, c. 27, s. 329
Prepaid Payment Products
No expiry unless promotional productAn institution shall not impose an expiry date on the right of a person with whom it entered into an agreement for the issuance of a prepaid payment product to use the funds that are loaded on the product unless it is a promotional product.2018, c. 27, s. 329
Maintenance chargesAn institution shall not impose any maintenance charges in respect of a prepaid payment product for the period of 12 months after the day on which the product is activated unless it isa promotional product; ora reloadable product for which the institution has obtained the express consent of the person with whom it entered into an agreement for the issuance of the product to the imposition of the charge.2018, c. 27, s. 329
No overdraft charges without express consentAn institution shall not impose any overdraft charges in respect of a prepaid payment product without first obtaining the express consent of the person with whom it entered into an agreement for the issuance of the product.Use not consentUse by the person of the prepaid payment product does not constitute express consent for the purpose of subsection (1).2018, c. 27, s. 329
Optional Products or Services
Independent agreementAn institution shall not provide an optional product or service to a natural person — other than for business purposes — in an agreement in respect of another product or service.2018, c. 27, s. 329
Express consent — temporary offerIf an optional product or service, or a product or service that would have been an optional product or service if it had been provided for an additional charge, is provided to a natural person — other than for business purposes — under a promotional, preferential, introductory or special offer other than an offer referred to in subsection (2), an institution shall not impose any charges for the use of the product or service as of the day on which the person will no longer benefit from the offer without obtaining, within five business days before that day, the person’s express consent to impose that charge.Express consent — number of usesIf an optional product or service, or a product or service that would have been an optional product or service if it had been provided for an additional charge, is provided to a natural person — other than for business purposes — under a promotional, preferential, introductory or special offer based on a specified number of uses, an institution shall not impose any charges after the last use of the product or service without obtaining, immediately after the last use, the person’s express consent to impose that charge.Use not consentUse by the person of the product or service does not constitute express consent for the purpose of subsections (1) and (2).2018, c. 27, s. 329
Complaints Process
Procedures for dealing with complaintsAn institution shallestablish procedures that are satisfactory to the Commissioner for dealing, within the prescribed period, with complaints;designate one of its officers or employees in Canada to be responsible for implementing those procedures; anddesignate one or more of its officers or employees in Canada to receive and deal with those complaints.Misleading termsAn institution shall not use any misleading term with respect to its procedures or designated officers or employees, including any term that suggests that the procedures, officers or employees are independent of the institution — such as the term “ombudsman” or any other term with a similar meaning — or any prescribed term.Filing with CommissionerAn institution shall file a copy of its procedures as amended from time to time with the Commissioner.Information regarding complaint procedureAn institution shall provide a person who makes a complaint witha written acknowledgment of the date on which it received the complaint;the information referred to in paragraphs 627.65(a) to (c); andany information that is necessary to enable them to meet the requirements of the procedures referred to in paragraph 627.65(a).2018, c. 27, s. 329
Record of complaintAn institution shall make, with respect to a complaint referred to in paragraph 627.43(1)(a), a record that is to be retained for a period of at least seven years and that containsif the complaint was made in writing, the original version of the complaint;if the complaint was made orally,the recording or a transcript of the recording if the complaint was recorded, orthe details of the complaint if the complaint was not recorded;the name of the person who made the complaint;the name of the person who requested or received from the institution the product or service to which the complaint relates;the contact information provided by the person who made the complaint;the date on which the institution received the complaint;a description of the nature of the complaint and the product or service to which the complaint relates;the date on which the complaint was resolved if, in the institution’s opinion, it was resolved to the satisfaction of the person who made the complaint;a description of any actions that were taken by the institution to attempt to resolve the complaint;a description of any compensation provided to the persons referred to in paragraph (c) or (d);confirmation that the institution provided the information referred to in paragraphs 627.65(a) to (c) to the person who made the complaint, if the institution did so; andany prescribed information.2018, c. 27, s. 329
Access to CommissionerThe institution shall ensure that the record retained under section 627.44 is accessible to the Commissioner.2018, c. 27, s. 329
Report to CommissionerWithin 60 days after the end of each quarter, an institution shall submit to the Commissioner in a form satisfactory to him or her, with respect to each complaint received by an officer or employee referred to in paragraph 627.43(1)(c) during that quarter,a copy of the record retained under section 627.44, except the contact information referred to in paragraph 627.44(e) other than the postal code; andany prescribed information.2018, c. 27, s. 329
Annual informationAn institution shall, free of charge and within 135 days after the end of each financial year, make available the following information for that year on each of its websites through which it offers products or services in Canada and provide the information in writing to any person who requests it:the number and nature of any complaints that were dealt with by the officer or employee designated by the institution to deal with complaints who holds the most senior position identified for that purpose in the procedures established by the institution;the average length of time taken to deal with the complaints received by that officer or employee;the number of complaints that, in the institution’s opinion, were resolved by that officer or employee to the satisfaction of the persons who made them; andany prescribed information.2018, c. 27, s. 329
External Complaints Body
PurposeThe purpose of sections 627.48 to 627.54 is to enhance the process for dealing with complaints by establishing a regime comprised of a sole external complaints body that discharges its functions and performs its activities in a transparent, effective, timely and fair manner based on the principles of accessibility, accountability, impartiality and independence.2023, c. 26, s. 129
Designation of body corporateThe Minister may, on the recommendation of the Commissioner, designate a body corporate incorporated under the Canada Not-for-profit Corporations Act or under a provincial statute equivalent to that Act to be the external complaints body to deal with complaints referred to in paragraph 627.43(1)(a) that have not been resolved by its member institutions to the satisfaction of the persons who made the complaints or that have not been dealt with within the prescribed period referred to in that paragraph.Matters for considerationBefore designating a body corporate, the Minister shall take into account all matters that the Minister considers relevant, including whether the body corporate hasthe reputation required under paragraph 627.49(a); andpolicies and procedures and terms of reference that would enable it to discharge its functions and perform its activities in a manner that is consistent with the purpose set out in section 627.471 and to comply with paragraphs 627.49(b) to (m).Obligation to be memberEvery institution shall be a member of the external complaints body.Not an agentThe external complaints body is not an agent of His Majesty.Designation to be publishedA designation made under subsection (1) shall be published in the Canada Gazette.2018, c. 27, s. 3292023, c. 26, s. 129
RequirementsThe external complaints body shallmaintain a reputation for being operated in a manner that is consistent with the standards of good character and integrity;make its services available across Canada in both official languages and offer those services free of charge to persons who make complaints to it;establish policies, procedures and terms of reference that are satisfactory to the Commissioner pertaining to, among other things, dealing with complaints and the consultation, at least once a year, of its member institutions and consumers for the purpose of raising concerns about the external complaints body;establish the manner of calculating, to the satisfaction of the Commissioner, the fees it charges to each of its member institutions for its services;make information available to consumers about their rights and responsibilities in relation to the external complaints handling regime, respond to their inquiries and requests for information and offer them assistance in making a complaint;inform the Commissioner in writing within 30 days after the day on which it determines that a complaint raises a potential systemic issue;if it determines that all or part of a complaint is not within its terms of reference, provide the person who made the complaint with written reasons for that determination, and the name of any entity to whom the person may make a complaint, within 30 days after the day on which it receives the complaint;obtain confirmation from a member institution to which a complaint relates regarding whether the period referred to in paragraph 627.43(1)(a) has ended, unless the person who made the complaint has provided it with the written acknowledgment referred to in paragraph 627.43(4)(a);impartially deal with complaints referred to in paragraph 627.43(1)(a) that have not been resolved by its member institutions to the satisfaction of the persons who made the complaints or that have not been dealt with within the prescribed period referred to in that paragraph;no later than 120 days after the day on which it has all of the information that it requires to deal with a complaint, make a final written recommendation to the parties;without delay, inform the Commissioner in writing of cases in which an institution does not comply with a final recommendation;within 90 days after making a final recommendation, make a summary of the final recommendation available on its website free of charge, which summary is to includea description of the nature of the complaint that is the subject of the final recommendation,the name of the institution that received the complaint,a description of any compensation provided to the persons referred to in paragraph 627.44(c) or (d),the reasons for the final recommendation, andany prescribed information;within 60 days after the end of each quarter, submit to the Commissioner, in a form satisfactory to the Commissioner,in relation to all investigations completed during the quarter, a copy of the record of the complaint, andany prescribed information;within 60 days after the end of each quarter, meet with the Commissioner to discuss, among other things, complaints, operations and market trends and issues with the potential to impact consumers;within 135 days after the end of each financial year, file a written report with the Commissioner on the performance of its functions and activities for that year, which report is to includeinformation aboutits constitution, governance and terms of reference, and the identity of its member institutions,all sources of funding for its functions and activities, including the fees charged to each of its member institutions for its services and the manner in which those fees are calculated, andthe results of the most recent evaluation referred to in paragraph (l),a summary of the results of any consultation with its member institutions and with persons who made complaints to it,in respect of each of its member institutions, the number and nature of complaints that it received, the number of complaints that it determined were within its terms of reference, the number of final recommendations that it made and the number of complaints that, in its opinion, were resolved to the satisfaction of the persons who made them,the average length of time taken to deal with complaints,the number of complaints that it determined were not within its terms of reference and the reasons for that determination,the number of complaints for which an institution did not comply with a final recommendation,the number of final recommendations that it made in which compensation was recommended, andthe average and total compensation provided with respect to complaints that it determined were within its terms of reference;meet with the Commissioner annually;without delay after it is filed with the Commissioner, make the report available on its website free of charge and provide it to any person who requests it;submit, every five years, to an evaluation of the performance of its functions and activities that is conducted, at the discretion of the Commissioner, by the Commissioner or a third party in accordance with terms of reference that are established by the external complaints body in consultation with the Commissioner; andmeet any prescribed requirement.2018, c. 27, s. 3292023, c. 26, s. 130
[Repealed, 2023, c. 26, s. 131]
[Repealed, 2023, c. 26, s. 131]
Provision of information — external complaints bodyAn institution shall provide the external complaints body with all information in its possession or control that relates to a complaint in respect of the institution without delay after the external complaints body notifies it that the complaint has been received.2018, c. 27, s. 3292023, c. 26, s. 131
Provision of informationIf an institution or a body corporate is required under sections 627.43 to 627.52 to provide information, it shall do so in a manner, and using language, that is clear, simple and not misleading.2018, c. 27, s. 329
Content of Commissioner’s reportThe Commissioner shall include in the report referred to in section 34 of the Financial Consumer Agency of Canada Actthe procedures for dealing with complaints established by institutions under paragraph 627.43(1)(a);the number and nature of complaints that have been made to the Agency; anda summary of the information referred to in section 627.47 and the information in the report referred to in paragraph 627.49(j).2018, c. 27, s. 329
Disclosure and Transparency for Informed DecisionsKey Product InformationGeneral Requirements
Disclosure of informationIf an institution is required under this Division to disclose information, it shall do so in a manner, and using language, that is clear, simple and not misleading, and shall do so in writing, unless otherwise provided for under this Division.Agreement by telephoneSubject to the regulations, an institution that enters into an agreement with a person orally by telephone in respect of a product or service in Canada is deemed to have disclosed in writing the information referred to in subsection (1) if itdiscloses orally to the person, before entering into the agreement by telephone,the information or any prescribed portion of the information, andany prescribed information; andprovides the information in writing to the person without delay after entering into the agreement.2018, c. 27, s. 329
Disclosure — customers and the publicIf an institution is required under this Division to disclose information to its customers and to the public, it shall do so bydisplaying the information prominentlyat each of its branches in Canada where it offers products or services and at each of its points of service, andon each of its websites through which it offers products or services in Canada; andproviding the information in writing to any person who requests it.2018, c. 27, s. 329
Information boxIf an institution is required under this Division to disclose information in an application form or before entering into an agreement in respect of a product or service, it shall, at the time of that disclosure, disclose the information that is prescribed by presenting it prominently in a single prominently displayed information box.Information box — disclosure by telephoneAn institution shall orally draw attention to the information that is required to be disclosed in the information box whenthe institution solicits applications for the product or service from a person orally by telephone; ora person contacts the institution orally by telephone for the purpose of applying for the product or service.2018, c. 27, s. 329
Resource personSubject to the regulations, an institution shall, before entering into an agreement with a person by electronic means or by mail in respect of a product or service in Canada, provide the person with the local or toll-free telephone number of a natural person who is an employee or agent of the institution and who is knowledgeable about the terms and conditions of the agreement.2018, c. 27, s. 329
Other products or servicesAn institution shall, before entering into an agreement with a natural person in respect of any product or service in Canada to be provided on an ongoing basis and for which disclosure obligations are not otherwise provided under this Division, disclose to that personthe features of the product or service;a list of all charges and penalties applicable to the product or service;particulars of the person’s rights and obligations in respect of the product or service;the information referred to in paragraphs 627.65(a) to (c); andany prescribed information.2018, c. 27, s. 329
Renewal or rolloverIf an institution enters into an agreement with a natural person other than for business purposes in respect of a product or service in Canada — other than a loan that is secured by a mortgage on real property — and the agreement provides that a product or service may be renewed or that, after the end of the term of the product or service, a new product or service may be provided to the person without a further agreement being entered into, the institution shall disclose to the person the information set out in subsection (2),in the case of a product or service that is provided for a term of more than 30 days, 21 days before, and five days before, the last day of the term; andin the case of a product or service that is provided for a term of 30 days or less, five days before the last day of the term.ContentThe information to be disclosed is the following:the interest rate that will be applicable to the product or service on its renewal, or to the new product or service;any charges or penalties that may be imposed on the person in relation to the product or service on its renewal, or to the new product or service;particulars of the person’s rights and obligations in relation to the product or service on its renewal, or to the new product or service;the period within which the institution shall allow the person to cancel the agreement in respect of the product or service that may be renewed, or in respect of the new product or service; andany prescribed information.2018, c. 27, s. 329
Promotional and other offersIf a natural person accepts, other than for business purposes, a promotional, preferential, introductory or special offer with respect to a product or service other than an optional product or service, the institution shall disclose to the person the information set out in subsection (2),if the period during which the person will benefit from the offer is more than 30 days, 21 days before, and five days before, the last day of the period; andif the period during which the person will benefit from the offer is 30 days or less, five days before the last day of the period.ContentThe information to be disclosed is the following:the interest rate that will be applicable to the product or service after the day on which the person will no longer benefit from the offer;any charges or penalties that may be imposed on the person in relation to the product or service after the day on which the person will no longer benefit from the offer;particulars of the person’s rights and obligations in relation to the product or service after the day on which the person will no longer benefit from the offer;the period within which the institution shall allow the person to cancel the agreement in respect of the product or service after the day on which the person will no longer benefit from the offer; andany prescribed information.2018, c. 27, s. 329
Prescribed amendments to agreementsAn institution shall, before any prescribed amendment that it makes to a term or condition of an agreement with a person in respect of a product or service in Canada takes effect, disclose prescribed information to the person or any other person as directed by that person.2018, c. 27, s. 329
AdvertisementsIf an institution is required under this Division to disclose information in an advertisement, it shall do so by presenting it prominently — as specified in any regulations — within the advertisement.2018, c. 27, s. 329
Prohibited conductAn institution shall disclose to its customers and to the public the fact that it shall not, under section 627.04,impose undue pressure on a person, or coerce a person, for any purpose, including to obtain a product or service from a particular person, as a condition for obtaining another product or service from the institution; ortake advantage of a person.2018, c. 27, s. 329
Complaints proceduresAn institution shall disclose to its customers and to the publicits procedures for dealing with complaints established under paragraph 627.43(1)(a);the name of the external complaints body and the manner in which that body may be contacted; andthe Agency’s mailing address, website address and telephone number.2018, c. 27, s. 3292023, c. 26, s. 132
Voluntary codes of conduct and public commitmentsAn institution shall disclose the voluntary codes of conduct that it has adopted, that are designed to protect the interests of its customers and that are publicly available — and the public commitments that it has made and that are designed to protect the interests of its customers — bymaking the voluntary codes and commitments availableat each of its branches in Canada where it offers products or services and at each of its points of service, andon each of its websites through which it offers products or services in Canada; andproviding the voluntary codes and commitments in writing to any person who requests them.2018, c. 27, s. 329
Deposit Accounts, Financial Instruments and NotesDeposit Accounts
Member banks — customers and the publicA member bank shall disclose to its customers and to the publicthe conditions to be met for the opening of a retail deposit account by a natural person under subsections 627.17(1) and (3);the personal identification requirements set out in paragraph 627.25(1)(b); andany prescribed information.2018, c. 27, s. 329
Institutions — customers and the publicAn institution shall disclose to its customers and to the publica list of all charges applicable to personal deposit accounts in Canada with the institution and the usual amount, if any, charged by the institution for services normally provided in Canada to its customers and to the public;for a deposit account in Canada other than a personal deposit account,a list of all charges applicable to any prescribed services that it provides in respect of the account and the fact that the list sets out all such charges, ora partial list of those charges and the manner in which information regarding charges not included in the list can be obtained;the maximum periods during which the institution may hold funds deposited by cheque or other instrument before making them available for withdrawal, as set out in section 627.21; andthe institution’s policies concerning the maximum period during which the institution may hold funds deposited by cheque or other instrument in any situation to which section 627.21 does not apply.2018, c. 27, s. 329
Opening of deposit accountAn institution shall, before entering into an agreement with a person for the opening of a deposit account in Canada, disclose to the personsubject to subsection (2), a list of all charges applicable to the account;in the case of a personal deposit account, the circumstances in which the institution shall send the person an alert, in accordance with section 627.13;in the case of a retail deposit account,the rate of interest and the manner in which the amount of interest is calculated,the maximum periods during which the institution may hold funds deposited by cheque or other instrument before making them available for withdrawal, as set out in section 627.21, andthe institution’s policies concerning the maximum period during which the institution may hold funds deposited by cheque or other instrument in any situation to which section 627.21 does not apply; andany prescribed information.If amount of charge cannot be determinedIf the amount of a charge referred to in paragraph (1)(a) cannot be determined before an agreement is entered into for the opening of a deposit account other than a personal deposit account, the institution shall, without delay after the amount is determined, disclose that amount to the person in whose name the account is kept.2018, c. 27, s. 329
Changes to holding periodsAn institution shall disclose any changes to the information referred to in paragraph 627.68(c) or (d) to its customers and to the public for a period of at least 60 days ending on the effective date of the change, and disclose any changes to the information referred to in subparagraph 627.69(1)(c)(ii) or (iii) to each person in whose name the retail deposit account is kept and to whom a statement of account is provided — or to any other person as directed by that person — at least 30 days before the effective date of the change.Shortened holding periodIf the change results in a shortened period during which an institution may hold funds deposited by cheque or other instrument, the institution may meet the obligations set out in subsection (1) after the effective date of the change.2018, c. 27, s. 329
Change in rate of interest or manner of calculationIf there is a change in the rate of interest that is applicable to a deposit account in Canada or in the manner in which the amount of interest for such an account is calculated, an institution shall, without delay, disclose the changeto the person in whose name the account is kept or to any other person as directed by that person; orto the public by displaying it prominentlyat each of its branches in Canada where it offers deposit accounts and at each of its points of service, andon each of its websites through which it offers deposit accounts in Canada.2018, c. 27, s. 329
Increase or new chargeAn institution shall disclose to a person to whom a statement of account is provided — or to any other person as directed by that person — any increase to a charge applicable to a personal deposit account in Canada — or applicable to a prescribed service in relation to deposit accounts in Canada, other than personal deposit accounts — or any new charge applicable to a personal deposit account in Canada at least 30 days before the effective date of the increase or new charge.Statement of account not providedIf there is a person in whose name the account is kept to whom a statement of account is not provided, an institution shall disclose to its customers and to the public any increase referred to in subsection (1) for a period of at least 60 days ending on the effective date of the increase or new charge, and if the increase or new charge is applicable to a personal deposit account, by displaying the increase or new charge prominently at each automated teller machine on which the name of the institution or information identifying the machine with the institution is displayed.Manner of obtaining further informationAn institution shall, to meet its obligations under subsection (2), also disclose the manner in which further details with respect to the increase or new charge can be obtained.2018, c. 27, s. 329
Deposit Insurance
Authorized foreign banks — customers and the publicAn authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2) and a bank referred to in paragraph 413(1)(b) or (c) shall disclose to their customers and to the public that deposits with them are not insured by the Canada Deposit Insurance Corporation.2018, c. 27, s. 329
Authorized foreign banks — customers and the publicAn authorized foreign bank that is subject to this section under an order referred to in subsection 524(2) shall disclose to its customers and to the public that it does not accept deposits in Canada and that it is not a member institution of the Canada Deposit Insurance Corporation.2018, c. 27, s. 329
Authorized foreign banks — deposit accounts and agreements for prescribed productsAn authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2) shall, before entering into an agreement with a person for the opening of a deposit account in Canada or in respect of a prescribed product that relates to a deposit,disclose to the person the fact that deposits to the deposit account or in relation to the prescribed product, as the case may be, are not insured by the Canada Deposit Insurance Corporation, as well as any prescribed information; andobtain the person’s signature immediately next to the disclosure statement.2018, c. 27, s. 329
Certain banks — deposit accounts and agreements for prescribed productsA bank referred to in paragraph 413(1)(b) or (c) shall, before entering into an agreement with a person for the opening of a deposit account in Canada or in respect of a prescribed product that relates to a deposit, disclose to the person the fact that deposits to the deposit account or in relation to the prescribed product are not insured by the Canada Deposit Insurance Corporation.Shared premisesA bank referred to in paragraph 413(1)(b) or (c) that shares premises with a member institution as defined in section 2 of the Canada Deposit Insurance Corporation Act shall, before entering into an agreement with a person for the opening of a deposit account in Canada or in respect of a prescribed product that relates to a deposit,disclose to the personthe fact that the bank’s business is separate and distinct from that of the member institution, andthe fact that deposits to the deposit account or in relation to the prescribed product are not insured by the Canada Deposit Insurance Corporation;orally explain to the person the information that is to be disclosed under paragraph (a); andobtain from the person a signed declaration stating thatthe person has been given all of the information that is to be disclosed under paragraph (a) and has read it,the bank has orally explained all the information that is to be disclosed under paragraph (a), andthe person understands all of the information that is to be disclosed under paragraph (a).2018, c. 27, s. 329
Financial Instruments and Notes
Availability of informationAn institution shall disclose prescribed information with respect to a deposit-type instrument, a principal-protected note or a prescribed product bymaking the information availableat each of its branches in Canada and points of service where it offers any of these products, andon each of its websites through which it offers these products in Canada; andproviding the information to any person who requests it.2018, c. 27, s. 329
IssuanceAn institution shall, before entering into an agreement with a person for the issuance of a deposit-type instrument, a principal-protected note or a prescribed product, disclose to the personthe term of the product, how and when the principal is to be repaid and how and when the interest, if any, is to be paid;if the rate of interest in respect of the product is fixed, the annual rate of interest or, if the rate of interest is variable,how the rate of interest is determined,the prime lending rate or the interest rate benchmark, as the case may be, that is used for the calculation of the rate of interest,the prime lending rate or the interest rate benchmark in effect when the information is disclosed, andhow the person may obtain the rate of interest from the institution during the investment period;any charges applicable to the product and their impact on the interest payable;how interest is accrued and any limitations in respect of the interest payable;any risks associated with the product, including, if applicable, the risk that no interest may accrue;if the product relates to a deposit that is not eligible for deposit insurance coverage by the Canada Deposit Insurance Corporation, the fact that it is not eligible;whether the person may cancel their purchase of the product and, if so, how the purchase may be cancelled;whether the proposed agreement provides that the institution may amend a term or condition with respect to the product and, if so, in what circumstances;whether the manner in which the product is structured or administered may place the institution in a conflict of interest;any other information that could reasonably be expected to affect the person’s decision to enter into the agreement; andany prescribed information.New instrument issued without further agreementIf, after the maturity of a deposit-type instrument issued under an agreement referred to in subsection (1), an institution issues a new deposit-type instrument under that agreement, the institution shall disclose prescribed information to the person without delay after the instrument is issued.2018, c. 27, s. 3292024, c. 17, s. 229
Principal-protected note — no interestIf a principal-protected note ceases to be linked to an index or reference point that was to be used to determine the interest payable under the note and, as a result, no interest will be paid, the institution shall, without delay, disclose that fact to the person to whom the note was issued.2018, c. 27, s. 329
Current valueAn institution shall disclose the following information without delay to a person who makes a request concerning the value of a product referred to in section 627.78 that was issued to the person:in the case of a principal-protected note,the net asset value of the note on the day specified by the person and how that value is related to the interest payable under the note, orthe last available measure, before the day specified by the person, of the index or reference point on which the interest is determined and how that measure is related to the interest payable under the note;in the case of a deposit-type instrument, the amount of the principal and accrued interest on the day on which the request was made; andin the case of any prescribed product, prescribed information.2018, c. 27, s. 329
Amendments — deposit-type instruments or prescribed productsAn institution shall, before any amendment that it makes to a term or condition with respect to a deposit-type instrument or a prescribed product takes effect, disclose the amendment and its potential impact on the interest payable to the person to whom the instrument or product was issued.2018, c. 27, s. 329
Amendments — principal-protected notesAn institution shall, before any amendment that it makes to a term or condition with respect to a principal-protected note that may have an impact on the interest payable under the note takes effect, disclose the amendment and its potential impact on the interest payable to the person to whom the note was issued. However, if it is not possible to make that disclosure before the time the amendment takes effect, the institution shall do so as soon as possible after that time.2018, c. 27, s. 329
Redemption or purchase before maturityAn institution shallbefore redeeming or purchasing a principal-protected note before its maturity on the request of the person to whom it was issued, disclose to that personthe value of the note on the last business day before the day on which the request is made, or the value of the note based on the last available measure of the index or reference point on which the interest is determined,the amount of any charge or penalty,the net amount that the person would have received for the redemption or purchase after deducting the amount referred to in subparagraph (ii) from the value of the note referred to in subparagraph (i), andthe time at which and the manner in which the value of the note will be calculated, and the fact that the value of the note may differ from the value referred to in subparagraph (i);before redeeming a deposit-type instrument before its maturity on the request of the person to whom it was issued, disclose to that person the amount of the principal and accrued interest, the amount of any charge or penalty and the net amount payable by the institution on redemption; andbefore redeeming any prescribed product before its maturity on the request of the person to whom it was issued, disclose to that person prescribed information.2018, c. 27, s. 329
MannerFor the purposes of sections 627.8 and 627.83, the institution shall disclose the information in the same manner in which the request is made unless otherwise directed by the person.2018, c. 27, s. 329
Advertisements
Rate of interestAn institution shall — in any advertisement in Canada in which it indicates the rate of interest that it offers on a deposit or debt obligation — disclose the manner in which the amount of interest is calculated and any circumstances that will affect the rate of interest, including the balance of a deposit account. The information shall be disclosed in the same manner in which the rate is indicated, whether visually or orally, or both.2018, c. 27, s. 329
Uninsured depositsAn authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2) and a bank referred to in paragraph 413(1)(b) or (c) shall — in any advertisement in Canada in respect of deposits — disclose, visually or orally, that deposits with it are not insured by the Canada Deposit Insurance Corporation.2018, c. 27, s. 329
Financial instruments and notesAn institution shall — in any advertisement in Canada for a product that is a deposit-type instrument, a principal-protected note or a prescribed product — disclose, visually or orally,how the public may obtain information about the product;if the advertisement refers to features of the product or the interest payable under it,the manner in which interest is to be accrued and any limitations in respect of the interest payable, andthe fact that the product relates to deposits that are not eligible to be insured by the Canada Deposit Insurance Corporation, if that is the case; andany prescribed information.Non-applicationSubparagraph (1)(b)(ii) does not apply to an authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2) or a bank referred to in paragraph 413(1)(b) or (c).Market performanceAn institution shall — in any advertisement in Canada for a principal-protected note in which it uses past market performance — disclose, visually or orally, the assumptions underlying any hypothetical examples used in the advertisement to represent that performance, and the fact that past market performance is not an indicator of future market performance.Fair representationThe institution shall, in the advertisements referred to in subsection (3), represent the past market performance fairly and only use realistic assumptions to underlie hypothetical examples.2018, c. 27, s. 329
Credit
Availability of informationAn institution shall disclose prescribed information with respect to a credit agreement bymaking the information availableat each of its branches in Canada and points of service, andon each of its websites through which it offers products or services in Canada; andproviding the information to any person who requests it.2018, c. 27, s. 329
Agreement — natural personsAn institution shall, before entering into a credit agreement with a natural person other than for business purposes, disclose to the personthe cost of borrowing, as calculated and expressed in accordance with section 627.9;particulars of the person’s rights and obligations;any charges or penalties that may be imposed on the person;in the case of a line of credit or credit card account, the circumstances in which the institution shall send the person an alert, in accordance with section 627.13; andany prescribed information.Agreement — other personsAn institution shall, before entering into a credit agreement with a person, other than a person referred to in subsection (1), disclose to the person prescribed information.Applications for credit, payment or charge cardAn institution shall disclose in any application forms or related documents that it prepares for the issuance of credit, payment or charge cardsin the case of a credit card,a list of all non-interest charges,the information referred to in paragraph (1)(a),the day on which interest begins to accrue and information concerning any grace period that applies, andany prescribed information; andin the case of a payment or charge card, any prescribed information.Subsequent disclosureAn institution shall, after entering into a credit agreement with a person, disclose prescribed information to the person.AmendmentsAn institution shall disclose to the person with whom it has entered into a credit agreementany prescribed amendment to the terms or conditions of the credit agreement; andany prescribed information resulting from the amendment.RenewalAn institution shall disclose to the person with whom it has entered into a credit agreement any prescribed information respecting the renewal of the credit agreement.2018, c. 27, s. 329
Calculating borrowing costsThe cost of borrowing shall be calculated, in the prescribed manner, on the basis that all obligations of the borrower are fulfilled and shall be expressed as a rate per annum and, in the prescribed circumstances, as an amount in dollars and cents.2018, c. 27, s. 329
AdvertisementsAn institution that makes a prescribed representation in an advertisement in Canada for a product that may be obtained by a natural person under a credit agreement shall disclose prescribed information in the advertisement.2018, c. 27, s. 329
Prepaid Payment Products
IssuanceAn institution shall, before entering into an agreement with a person for the issuance of a prepaid payment product, disclose to the personthe name of the issuing institution;the day on which the product expires, if any;if it is a promotional product, the day, if any, on which the person’s right to use the funds that are loaded on the product will expire;a toll-free telephone number that can be used to make inquiries about the prepaid payment product, including its balance and the terms or conditions with respect to the product, and to make complaints;the following restrictions on the use of the product, if imposed by the issuing institution:the fact that the product is not reloadable,the fact that the product cannot be used to make withdrawals, andany other restriction that could reasonably be expected to affect the person’s decision to enter into the agreement;all charges that may be imposed on the person by the issuing institution in respect of the product;if the funds that are loaded on the product are not insured by the Canada Deposit Insurance Corporation, a statement to that effect;a statement indicatingin the case of a promotional product, either that the person’s right to use the funds that are loaded on the product will not expire, or that that right will expire, along with the expiry date, as the case may be, andin the case of any other prepaid payment product, that the person’s right to use the funds that are loaded on the product will not expire;a website address where the information referred to in paragraphs (a) and (d) to (g) can be obtained; andany prescribed information.Means of disclosureThe institution shall disclose the information set out in paragraphs (1)(a) to (d) and (i) by setting it out directly on the prepaid payment product or, if the product is electronic, by disclosing it electronically on the person’s request.2018, c. 27, s. 329
Increase or new chargeAn institution shall not increase any charge or impose a new charge associated with a prepaid payment product that is issued to a natural person unlessthe person has provided the institution with their name and mailing or email address;the institution has given the person the opportunity to modify the information referred to in paragraph (a); andthe institution discloses the new or increased charge bysending a notice to the most recent address provided for the person at least 30 days before the effective date of the new or increased charge, anddisplaying a notice on the institution’s website for a period of at least 60 days ending on the effective date of the new or increased charge.2018, c. 27, s. 329
Optional Products or Services
Agreement — natural personsAn institution shall, before entering into an agreement with a natural person other than for business purposes for an optional product or service, disclose to the person the following information:a description of the optional product or service;the term of the agreement;a list of all charges that will be imposed for the use of the product or service, or the method used for determining the charges and an example to illustrate the method;the conditions under which the person may cancel the agreement;the date from which the product or service is available for use and, if different, from which charges apply; andthe steps required to use the product or service.Content — cancellationBefore entering into the agreement, the institution shall also disclosethe fact that the person may cancel the agreement by notifying the institution that the agreement is to be cancelled;the fact that the cancellation will take effect on the last day of the billing cycle, or 30 days after the institution receives the notification, whichever is earlier; andthe fact that it shall, without delay on receipt of the notification, refund or credit to the person any amount that it received for any part of the product or service that will be unused from the effective date of the cancellation, to be calculated in accordance with the prescribed formula.2018, c. 27, s. 329
Promotional and other offersThe institution shall, immediately before obtaining a person’s express consent under section 627.42, disclose to the person the information set out in paragraphs 627.94(1)(b) to (e) and subsection 627.94(2) and,if consent is to be obtained under subsection 627.42(1), the day on which the person will no longer benefit from the offer; andif consent is to be obtained under subsection 627.42(2), the fact that the person no longer benefits from the offer.2018, c. 27, s. 329
AmendmentsIf an institution makes an amendment to a term or condition of an agreement referred to in section 627.94 that results in a change to the information that was required to be disclosed under that section, the institution shall, at least 30 days before the day on which the amendment takes effect, disclose that change to the person.2018, c. 27, s. 329
CancellationIf an optional product or service, other than one provided in relation to a credit agreement, is provided on an ongoing basis by an institution, the institution shall, as part of any disclosure that it is required to make under section 627.95 or 627.96, disclose the information set out in paragraph 627.94(1)(d) and subsection 627.94(2).2018, c. 27, s. 329
Registered Products
Availability of list of chargesAn institution shall disclose a list of all charges applicable to registered products bymaking the list availableat each of its branches in Canada and points of service where it offers registered products, andon each of its websites through which it offers registered products in Canada; andproviding the list to any person who requests it.2018, c. 27, s. 329
Agreement — personsAn institution shall, before entering into an agreement with a person for a registered product in Canada, disclose to the personinformation about all charges applicable to the product;information about how the person will be notified of any increase in those charges and of any new charges applicable to the product; andany prescribed information.2018, c. 27, s. 329
AmendmentsAn institution shall, before any amendment that it makes to a term or condition with respect to a registered product takes effect, disclose the amendment to the person to whom the product was issued.2018, c. 27, s. 329
Mortgage Insurance
Availability of informationIf an institution or any of its affiliates imposes a charge for insurance or a guarantee that the institution obtains against default on a loan made in Canada on the security of residential property, the institution shall disclose prescribed information and any other information that could reasonably be expected to have an impact on a borrower bymaking the information availableat each of its branches in Canada and points of service where it offers residential mortgages, andon each of its websites through which it offers residential mortgages in Canada; andproviding the information to any person who requests it.Agreement — personsAn institution shall, before entering into an agreement under which such a charge is imposed on a person, disclose prescribed information to the person and any other information that could reasonably be expected to have an impact on the person.2018, c. 27, s. 329
Public NoticesNotice of Branch Closure
Written noticeA member bank that closes a retail deposit-taking branch — or that ceases to open retail deposit accounts or to disburse cash to customers through a natural person at a retail deposit-taking branch — shallgive a written notice to the Commissioner not later thanfour months before the date proposed for the closure of the branch or the cessation of the activity, if the branch is in an urban area or in a rural area where there is another retail deposit-taking branch within a travelling distance of 10 km from the branch, orsix months before the date proposed for the closure of the branch or the cessation of the activity, if the branch is in a rural area where there is no other retail deposit-taking branch within a travelling distance of 10 km from the branch;give a written notice to each customer of the branch and to the public not later than four months before the date proposed for the closure of the branch or the cessation of the activity, if the branch is in an urban area or in a rural area where there is another retail deposit-taking branch within a travelling distance of 10 km from the branch; andgive a written notice to each customer of the branch, to the public and to the chairperson, mayor, warden, reeve or other similar chief officer of the municipal or local government body or authority for the area in which the branch is located not later than six months before the date proposed for the closure of the branch or the cessation of the activity, if the branch is in a rural area where there is no other retail deposit-taking branch within a travelling distance of 10 km from the branch.Notice to publicThe member bank shall give the notice to the public bydisplaying it prominently at the branch; andif the notice is one that is required under paragraph (1)(c), publishing it in a newspaper in general circulation at or near the place where the branch is located.Content of noticeThe notice shall include prescribed information.2018, c. 27, s. 329
ExemptionsIn prescribed circumstances, the Commissioner may, on the request of a member bank, exempt it from the requirement to give a notice under section 627.993 or vary the time and manner in which such a notice is required to be given.2018, c. 27, s. 329
MeetingAfter a notice is given but before the branch is closed or ceases to carry on the activity, the Commissioner shall require the member bank to convene and hold a meeting between representatives of the bank, representatives of the Agency and interested persons in the area affected by the closure of the branch or the cessation of the activity in order to exchange views about the closure of the branch or the cessation of the activity, including alternate service delivery by the bank and measures to help the branch’s customers adjust to the closure or the cessation of the activity, ifthe member bank has not consulted in the area well enough to ascertain the views of interested persons in the area with regard to the closure of the branch, the cessation of the activity, alternate service delivery by the bank or measures to help the branch’s customers adjust to the closure or the cessation of the activity; andan area representative or a person from the area submits to the Commissioner a request for the meeting and the request is not frivolous or vexatious.RulesThe Commissioner may establish rules for the convening and conduct of a meeting.Non-application of Statutory Instruments ActThe Statutory Instruments Act does not apply to rules established under subsection (2).2018, c. 27, s. 329
Public Accountability Statements
ContentA bank with equity of $1,000,000,000 or more shall, within 135 days after the end of each financial year,file a written statement with the Commissioner that includes, for that financial year,prescribed information with respect to the contribution of the bank and its prescribed affiliates to the Canadian economy and society and with respect to any other matter,the names of the voluntary codes of conduct that it has adopted, that are designed to protect the interests of its customers and that are publicly available — and of any public commitments that it has made and that are designed to protect the interests of its customers — along with the means by which the codes and commitments are made available to its customers and the public,a description of the measures taken by the bank and its prescribed affiliates to provide products and services to low-income persons, senior persons, persons with disabilities and persons who face accessibility, linguistic or literacy challenges, anda description of the consultations undertaken by the bank and its prescribed affiliates with their customers and the public in relation toexisting products and services, including the means by which they are provided,the development of new products and services, including the means by which they would be provided,the identification of trends and emerging issues that may have an impact on their customers or the public, andmatters in respect of which the bank has received complaints; andinform its customers and the public, through advertising, making public announcements, posting notices, mailing information or otherwise, about the means by which the statement is made available to them.ExceptionA bank is not required to include in the statement the information required under subparagraphs (1)(a)(i), (iii) and (iv) with respect to a prescribed affiliate if a company referred to in subsection 489.1(1) of the Insurance Companies Act or subsection 444.2(1) of the Trust and Loan Companies Act has already published that information in its statement published under those subsections.Availability of statementThe bank shall make the statement available free of chargeon each of its websites through which it offers products or services in Canada; andby providing it to any person who requests it.2018, c. 27, s. 329
Redress
Credit or refund of charge or penaltyAn institution shall, if it has imposed a charge or penalty in relation to a product or service,credit the amount of the charge or penalty or, if it was collected, refund the amount if the charge or penalty was not provided for in an agreement; orcredit the excess amount of the charge or penalty or, if it was collected, refund the excess amount if the charge or penalty was greater than the amount of charge or penalty that was provided for in an agreement.Credit or refund of charge or penalty — no express consentAn institution shall, if it has provided a person with a product or service without first having obtained from the person the express consent referred to in paragraph 627.08(1)(a), and if it has imposed a charge or penalty on the person in relation to the product or service, credit the amount of the charge or penalty or, if it was collected, refund the amount.InterestThe amount referred to in subsections (1) and (2) bears interest from the day on which it was imposed, at a rate equal to the Bank of Canada’s overnight rate on that day, until the day on which the amount is refunded or credited.2018, c. 27, s. 329
Regulations
RegulationsThe Governor in Council may make regulations respecting any matters involving an institution’s dealings, or the dealings of its employees, representatives, agents or other intermediaries, with customers or the public, any matters involving products or services that are the subject of those dealings and any matters involving an institution that is acting in the capacity of a representative, agent or other intermediary for another entity, including regulationsrequiring the disclosure of information;respecting the training of an institution’s employees, representatives, agents or other intermediaries;respecting the content of advertisements and the manner in which it is displayed or communicated;respecting the rebate or refund of any amounts paid or to be paid in relation to the provision of a product or service;prescribing what an institution may, shall or shall not do — including in relation to the imposition of charges or penalties — in carrying out any of the activities that it is permitted to carry out, or in providing any of the services that it is permitted to provide, under section 409 or 538 and any ancillary, related or incidental activities or services;respecting the names of positions to be used by an institution’s employees, representatives, agents or other intermediaries in their dealings with customers or the public;prescribing the time at which and the manner in which any of the activities referred to in paragraph (e) are to be carried out or any of the services referred to in that paragraph are to be provided;prescribing when documents and information that are required to be disclosed, sent or otherwise provided under this Part are deemed to have been provided;prescribing the manner in which any information that is required to be filed, disclosed, made available or otherwise provided under this Part is to be organized or broken down;prescribing the time at which and the manner in which any information that is required to be filed, disclosed, made available or otherwise provided under this Part is to be filed, disclosed, made available or otherwise provided;prescribing the circumstances in which all or part of sections 627.08, 627.17, 627.28, 627.3, 627.31, 627.59, 627.72, 627.89, 627.99, 627.992 and 627.993 do not apply;specifying conduct that shall be considered or shall not be considered coercion for the purpose of paragraph 627.04(a);requiring a member bank, at any point of service or any branch in Canada at which it opens retail deposit accounts through natural persons, to open, at the request of a natural person who meets the prescribed conditions, a low-cost or no-cost retail deposit account for the person, and prescribing the characteristics of such an account, including the name of the account;respecting the collection, retention, use or disclosure of information about a customer and the manner in which complaints by the customer in relation to that collection, retention, use or disclosure are to be dealt with; andrespecting the requirements to be met by the external complaints body.[Repealed, 2023, c. 26, s. 133]2018, c. 27, s. 3292023, c. 26, s. 133
Regulation of Banks — SuperintendentSupervisionReturns
Required informationA bank shall provide the Superintendent with such information, at such times and in such form as the Superintendent may require.[Repealed, 1997, c. 15, s. 86]1999, c. 28, s. 36
[Repealed, 2007, c. 6, s. 102]
[Repealed, 2007, c. 6, s. 102]
[Repealed, 2007, c. 6, s. 102]
Names of directors and auditorsA bank shall, within thirty days after each annual meeting of the bank, provide the Superintendent with a return showingthe name, residence and citizenship of each director holding office immediately following the meeting;the mailing address of each director holding office immediately following the meeting;the bodies corporate of which each director referred to in paragraph (a) is an officer or director and the firms of which each director is a member;the affiliation, within the meaning of section 162, with the bank of each director referred to in paragraph (a);the names of the directors referred to in paragraph (a) who are officers or employees of the bank or any affiliate of the bank, and the positions they occupy;the name of each committee of the bank on which each director referred to in paragraph (a) serves;the date of expiration of the term of each director referred to in paragraph (a); andthe name, address and date of appointment of the auditor or auditors of the bank.ChangesWhereany information relating to a director or an auditor of a bank shown in the latest return made to the Superintendent under subsection (1), other than information referred to in paragraph (1)(c) or (d), becomes inaccurate or incomplete,a vacancy in the office of auditor of the bank occurs or is filled by another person, ora vacancy on the board of directors of the bank occurs or is filled,the bank shall forthwith provide the Superintendent with such information as is required to maintain the return in a complete and accurate form.1999, c. 28, s. 38
Copy of by-lawsA bank shall send to the Superintendent, within thirty days after the coming into effect of a by-law or an amendment to a by-law, a copy of the by-law or amendment.1999, c. 28, s. 38; 2001, c. 9, s. 173
Register of banksThe Superintendent shall, in respect of each bank for which an order approving the commencement and carrying on of business has been made, cause a register to be maintained containing a copy ofthe incorporating instrument of the bank; andthe information referred to in paragraphs 632(1)(a), (c) and (e) to (h) contained in the latest return sent to the Superintendent under section 632.FormThe register may be maintained ina bound or loose-leaf form or in a photographic film form; ora system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.AccessPersons are entitled to reasonable access to the register and may make copies of or take extracts from the information in it.EvidenceA statement containing information in the register and purporting to be certified by the Superintendent is admissible in evidence in all courts as proof, in the absence of evidence to the contrary, of the facts stated in the statement without proof of the appointment or signature of the Superintendent.1999, c. 28, s. 39; 2001, c. 9, s. 173
CertificateOn the application of a bank that has been incorporated by a special Act of Parliament, the Superintendent may issue a certificate stating that the bank was incorporated by a special Act of Parliament, and may include with the certificate any information in the Superintendent’s possession that relates to the bank’s incorporation.2012, c. 5, s. 75
Production of information and documentsThe Superintendent may, by order, direct a person who controls a bank or any entity that is affiliated with a bank to provide the Superintendent with any information or documents that may be specified in the order if the Superintendent believes that the production of the information or documents is necessary in order to be satisfied thatthe provisions of this Act are being duly observed and that the bank is in a sound financial condition; orthe bank has adequate policies and procedures to protect itself against threats to its integrity or security.TimeAny person to whom a direction has been issued under subsection (1) shall provide the information or documents specified in the order within the time specified in the order and, where the order does not specify a time, the person shall provide the information or documents within a reasonable time.ExemptionSubsection (1) does not apply in respect of an entity that controls a bank or is affiliated with a bank where that entity is a financial institution regulatedby or under an Act of Parliament; orby or under an Act of the legislature of a province where the Superintendent has entered into an agreement with the appropriate official or public body responsible for the supervision of financial institutions in that province concerning the sharing of information on such financial institutions.1999, c. 28, s. 402023, c. 26, s. 555
Confidential informationSubject to section 639, all information regarding the business or affairs of a bank or a foreign bank, or regarding a person dealing with a bank or a foreign bank, that is obtained by the Superintendent, or by any person acting under the direction of the Superintendent, as a result of the administration or enforcement of any Act of Parliament, and all information prepared from that information, is confidential and shall be treated accordingly.Disclosure permittedNothing in subsection (1) prevents the Superintendent from disclosing any informationto any government agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision,to any other agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision,to the Canada Deposit Insurance Corporation for purposes related to its operation, andto the Deputy Minister of Finance or any officer of the Department of Finance authorized in writing by the Deputy Minister of Finance or to the Governor of the Bank of Canada or any officer of the Bank of Canada authorized in writing by the Governor of the Bank of Canada, for the purposes of policy analysis related to the regulation of financial institutions,if the Superintendent is satisfied that the information will be treated as confidential by the agency, body or person to whom it is disclosed.1999, c. 28, s. 41; 2001, c. 9, s. 174; 2007, c. 6, s. 103
RegulationsThe Governor in Council may make regulations prohibiting, limiting or restricting the disclosure by banks of prescribed supervisory information.1999, c. 28, s. 42
Evidentiary privilegePrescribed supervisory information shall not be used as evidence in any civil proceedings and is privileged for that purpose.No testimony or productionNo person shall by an order of any court, tribunal or other body be required in any civil proceedings to give oral testimony or to produce any document relating to any prescribed supervisory information.Exceptions to subsection (1)Despite subsection (1),the Minister, the Superintendent or the Attorney General of Canada may, in accordance with the regulations, if any, use prescribed supervisory information as evidence in any proceedings; anda bank may, in accordance with the regulations, if any, use prescribed supervisory information as evidence in any proceedings in relation to the administration or enforcement of this Act or the Winding-up and Restructuring Act that are commenced by the bank, the Minister, the Superintendent or the Attorney General of Canada.Exceptions to subsections (1) and (2)Despite subsections (1) and (2) and section 39.1 of the Office of the Superintendent of Financial Institutions Act, a court, tribunal or other body may, by order, require the Minister, the Superintendent or a bank to give oral testimony or to produce any document relating to any prescribed supervisory information in any civil proceedings in relation to the administration or enforcement of this Act that are commenced by the Minister, the Superintendent, the Attorney General of Canada or the bank.No waiverThe disclosure of any prescribed supervisory information, other than under subsection (3) or (4), does not constitute a waiver of the privilege referred to in subsection (1).RegulationsThe Governor in Council may, for the purposes of subsection (3), make regulations respecting the circumstances in which prescribed supervisory information may be used as evidence.1999, c. 28, s. 43; 2007, c. 6, s. 104; 2015, c. 36, s. 234
No waiverFor greater certainty, the disclosure by a bank — or by a person who controls a bank or by an entity that is affiliated with a bank — to the Superintendent of any information that is subject to a privilege under the law of evidence, solicitor-client privilege or the professional secrecy of advocates and notaries or to litigation privilege does not constitute a waiver of any of those privileges or that secrecy.No disclosureThe Superintendent shall not disclose any information referred to in subsection (1) to any person whose powers, duties or functions includethe investigation or prosecution of an offence under any Act of Parliament or of the legislature of a province; orthe investigation of, or conduct of proceedings in respect of, a violation under an Act referred to in paragraph (a).2018, c. 27, s. 170
Disclosure by SuperintendentThe Superintendent shall disclose, at such times and in such manner as the Minister may determine, such information obtained by the Superintendent under this Act as the Minister considers ought to be disclosed for the purposes of the analysis of the financial condition of a bank and thatis contained in returns filed pursuant to the Superintendent’s financial regulatory reporting requirements in respect of banks; orhas been obtained as a result of an industry-wide or sectoral survey conducted by the Superintendent in relation to an issue or circumstances that could have an impact on the financial condition of banks.Prior consultation requiredThe Minister shall consult with the Superintendent before making any determination under subsection (1).1999, c. 28, s. 44
Disclosure by a bankA bank shall make available to the public such information concerningthe compensation of its executives, as that expression is defined by the regulations, andits business and affairs for the purposes of the analysis of its financial condition,in such form and manner and at such times as may be required by or pursuant to such regulations as the Governor in Council may make for the purpose.Exemption by regulationParagraph (1)(a) does not apply to a bank that is within such class or classes of banks as may be prescribed.1999, c. 28, s. 44
Exceptions to disclosureSubject to any regulations made under paragraph 627.998(n), no information obtained by a bank regarding any of its customers shall be disclosed or made available under subsection 639(1) or section 640.1999, c. 28, s. 452018, c. 27, s. 330
Report respecting disclosureThe Superintendent shall prepare a report, to be included in the report referred to in section 40 of the Office of the Superintendent of Financial Institutions Act, respecting the disclosure of information by banks and describing the state of progress made in enhancing the disclosure of information in the financial services industry.1999, c. 28, s. 46; 2001, c. 9, s. 175
Inspection of Banks
Examination of banksThe Superintendent, from time to time, but at least once in each calendar year, shall make or cause to be made any examination and inquiry into the business and affairs of each bank that the Superintendent considers to be necessary or expedient to determine whether the bank is complying with the provisions of this Act, whether the bank is in a sound financial condition and whether the bank has adequate policies and procedures to protect itself against threats to its integrity or security. After the conclusion of each examination and inquiry, the Superintendent shall report on it to the Minister.[Repealed, 2023, c. 26, s. 556]Access to records of bankThe Superintendent or a person acting under the Superintendent’s directionhas a right of access to any records, cash, assets and security held by or on behalf of a bank; andmay require the directors, officers and the auditor or auditors of a bank to provide information and explanations, to the extent that they are reasonably able to do so, in respect of the condition and affairs of the bank or any entity in which the bank has a substantial investment.1999, c. 28, s. 46; 2001, c. 9, s. 176; 2012, c. 5, s. 762023, c. 26, s. 556
Power of Superintendent on inquiryThe Superintendent has all the powers of a person appointed as a commissioner under Part II of the Inquiries Act for the purpose of obtaining evidence under oath, and may delegate those powers to any person acting under the Superintendent’s direction.1999, c. 28, s. 46
Remedial PowersPrudential Agreements
Prudential agreementThe Superintendent may enter into an agreement, called a “prudential agreement”, with a bank for the purposes of implementing any measure designed to maintain or improve its safety and soundness or establishing adequate policies and procedures to protect it against threats to its integrity or security.2001, c. 9, s. 1772023, c. 26, s. 557
Directions of Compliance
Superintendent’s directions to bankWhere, in the opinion of the Superintendent, a bank, or a person with respect to a bank, is committing, or is about to commit, an act that is an unsafe or unsound practice in conducting the business of the bank, or is pursuing or is about to pursue any course of conduct that is an unsafe or unsound practice in conducting the business of the bank, the Superintendent may direct the bank or person tocease or refrain from committing the act or pursuing the course of conduct; andperform such acts as in the opinion of the Superintendent are necessary to remedy the situation.Directions — policies and proceduresIf, in the opinion of the Superintendent, a bank does not have adequate policies and procedures to protect itself against threats to its integrity or security, the Superintendent may direct the bank to take any measures that in the opinion of the Superintendent are necessary to remedy the situation.Opportunity for representationsSubject to subsection (3), no direction shall be issued to a bank or person under subsection (1) or (1.1) unless the bank or person is provided with a reasonable opportunity to make representations in respect of the matter.Temporary directionIf, in the opinion of the Superintendent, the length of time required for representations to be made under subsection (2) might be prejudicial to the public interest, the Superintendent may make a temporary direction with respect to the matters referred to in paragraphs (1)(a) and (b) or subsection (1.1) having effect for a period of not more than 15 days.Continued effectA temporary direction under subsection (3) continues to have effect after the expiration of the fifteen day period referred to in that subsection if no representations are made to the Superintendent within that period or, if representations have been made, the Superintendent notifies the bank or person that the Superintendent is not satisfied that there are sufficient grounds for revoking the direction.1999, c. 28, s. 472023, c. 26, s. 558
Court enforcementWhere a bank or personis contravening or has failed to comply with a prudential agreement entered into under section 644.1 or a direction of the Superintendent made under subsection 645(1), (1.1) or (3),is contravening this Act, orhas omitted to do any thing under this Act that is required to be done by or on the part of the bank or person,the Superintendent may, in addition to any other action that may be taken under this Act, apply to a court for an order requiring the bank or person to comply with the prudential agreement or the direction, cease the contravention or do any thing that is required to be done, and on such application the court may so order and make any other order it thinks fit.AppealAn appeal from a decision of a court under subsection (1) lies in the same manner, and to the same court, as an appeal from any other order of the court.1999, c. 28, s. 48; 2001, c. 9, s. 1782023, c. 26, s. 559
Disqualification and Removal of Directors or Senior Officers
Meaning of senior officerIn sections 647 and 647.1, senior officer means the chief executive officer, secretary, treasurer or controller of a bank or any other officer reporting directly to the bank’s board of directors or chief executive officer.2001, c. 9, s. 179
ApplicationThis section applies only in respect of a bankthat has been notified by the Superintendent that this section applies to it where the bank is subject to measures designed to maintain or improve its safety and soundness, which measureshave been specified by the Superintendent by way of conditions or limitations in respect of the order approving the commencement and carrying on of the bank’s business, orare contained in a prudential agreement entered into under section 644.1 or an undertaking given by the bank to the Superintendent; orthat is the subject of a direction made under section 645 or an order made under subsection 485(3).Information to be providedA bank shall provide the Superintendent with the name ofeach person who has been nominated for election or appointment as a member of its board of directors,each person who has been selected by the bank for appointment as a senior officer, andeach person who is newly elected as a director of the bank and who was not proposed for election by anyone involved in the management of the bank,together with such other information about the background, business record and experience of the person as the Superintendent may require.When information to be providedThe information required by subsection (2) shall be provided to the Superintendentat least thirty days prior to the date or proposed date of the election or appointment or within such shorter period as the Superintendent may allow; orin the case of a person referred to in paragraph (2)(c), within fifteen days after the date of the election of the person.Disqualification or removalIf the Superintendent is of the opinion that, on the basis of the competence, business record, experience, conduct or character of a person, he or she is not suitable to hold that position, the Superintendent may, by order,in the case of a person referred to in paragraph (2)(a) or (b), disqualify the person from being elected or appointed as a director of a bank or from being appointed as a senior officer; orin the case of a person referred to in paragraph (2)(c), remove the person from office as a director of the bank.Risk of prejudiceIn forming an opinion under subsection (4), the Superintendent must consider whether the interests of the depositors and creditors of the bank would likely be prejudiced if the person were to take office or continue to hold office, as the case may be.Representations may be madeThe Superintendent must in writing notify the person concerned and the bank of any action that the Superintendent proposes to take under subsection (4) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.ProhibitionWhere an order has been made under subsection (4)disqualifying a person from being elected or appointed to a position, the person shall not be, and the bank shall not permit the person to be, elected or appointed to the position; orremoving a director from office, the person shall not continue to hold, and the bank shall not permit the person to continue to hold, office as a director.1999, c. 28, s. 49; 2001, c. 9, s. 180; 2010, c. 12, s. 2080
Removal of directors or senior officersThe Superintendent may, by order, remove a person from office as a director or senior officer of a bank if the Superintendent is of the opinion that the person is not suitable to hold that officeon the basis of the competence, business record, experience, conduct or character of the person; orbecause the person has contravened or, by action or negligence, has contributed to the contravention ofthis Act or the regulations made under it,a direction made under section 645,an order made under subsection 485(3),a condition or limitation in respect of the order approving the commencement and carrying on of the bank’s business, ora prudential agreement entered into under section 644.1 or an undertaking given by the bank to the Superintendent.Risk of prejudiceIn forming an opinion under subsection (1), the Superintendent must consider whether the interests of the depositors and creditors of the bank have been or are likely to be prejudiced by the person’s holding office as a director or senior officer.Representations may be madeThe Superintendent must in writing notify the person concerned and the bank of any removal order that the Superintendent proposes to make under subsection (1) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.SuspensionIf the Superintendent is of the opinion that the public interest may be prejudiced by the director or senior officer continuing to exercise the powers or carry out the duties and functions of that office during the period for making representations, the Superintendent may make an order suspending the director or senior officer. The suspension may not extend beyond 10 days after the expiration of that period.Notice of orderThe Superintendent shall, without delay, notify the director or senior officer, as the case may be, and the bank of a removal order or suspension order.Consequences of removal orderThe director or senior officer, as the case may be, ceases to hold that office as of the date the removal order is made or any later date specified in the order.AppealThe director or senior officer, as the case may be, or the bank may, within 30 days after the date of receipt of notice of the removal order under subsection (5), or within any longer period that the Court allows, appeal the matter to the Federal Court.Powers of Federal CourtThe Federal Court, in the case of an appeal, may dismiss the appeal or set aside the removal order.Order not stayed by appealA removal order is not stayed by an appeal.2001, c. 9, s. 181
Supervisory Intervention
Superintendent may take controlSubject to this Act, where any of the circumstances described in subsection (1.1) exist in respect of a bank, the Superintendent maytake control, for a period not exceeding sixteen days, of the assets of the bank and the assets under its administration; orunless the Minister advises the Superintendent that the Minister is of the opinion that it is not in the public interest to do so,take control, for a period exceeding sixteen days, of the assets of the bank and the assets under its administration,where control of assets has been taken under paragraph (a), continue the control beyond the sixteen days referred to in that paragraph, ortake control of the bank.Circumstances for taking controlControl by the Superintendent under subsection (1) may be taken in respect of a bank wherethe bank has failed to pay its liabilities or, in the opinion of the Superintendent, will not be able to pay its liabilities as they become due and payable;[Repealed, 2001, c. 9, s. 182]the assets of the bank are not, in the opinion of the Superintendent, sufficient to give adequate protection to the bank’s depositors and creditors;any asset appearing on the books or records of the bank or held under its administration is not, in the opinion of the Superintendent, satisfactorily accounted for;the regulatory capital of the bank has, in the opinion of the Superintendent, reached a level or is eroding in a manner that may detrimentally affect its depositors or creditors;the bank has failed to comply with an order of the Superintendent under paragraph 485(3)(a);the bank’s deposit insurance has been terminated by the Canada Deposit Insurance Corporation;in the opinion of the Superintendent, the bank’s depositors and creditors may be detrimentally affected because all of the common shares or membership shares of the bank must be disposed of under a direction made by the Minister or because there is a prohibition under this Act in respect of the exercise of the right to vote attached to all of the common shares or membership shares of the bank;in the opinion of the Superintendent, any other state of affairs exists in respect of the bank that may be materially prejudicial to the interests of the bank’s depositors or creditors or the owners of any assets under the bank’s administration, including where proceedings under a law relating to bankruptcy or insolvency have been commenced in Canada or elsewhere in respect of the holding body corporate of the bank;in the opinion of the Superintendent, the continued operation of the bank by the directors of the bank or by the officers of the bank responsible for its management would be materially prejudicial to its integrity or security; orin the opinion of the Superintendent, the continued operation of the bank by the directors of the bank or by the officers of the bank responsible for its management would pose a risk to national security.Minister’s powersSubject to this Act, the Minister may, for reasons related to national security, direct the Superintendent totake control, for a period not exceeding 16 days, of the assets of the bank and the assets under its administration;take control, for a period exceeding 16 days, of the assets of the bank and the assets under its administration;if control of assets has been taken under paragraph (a), continue the control beyond the 16 days referred to in that paragraph; ortake control of the bank.Notice of proposed actionThe Superintendent must notify a bank of any action proposed to be taken in respect of it under paragraph (1)(b) and of its right to make written representations to the Superintendent within the time specified in the notice, not exceeding ten days after it receives the notice.Notice — up to 16 daysIf the Superintendent takes control of the assets of the bank under paragraph (1.11)(a), the Superintendent shall notify the bank that control has been taken at the direction of the Minister.Notice — more than 16 daysIf the Minister is considering whether to exercise the powers under any of paragraphs (1.11)(b) to (d), the Superintendent shall notify the bank of the action that is being considered and of its right to make written representations to the Minister within the time specified in the notice, not exceeding 10 days after it receives the notice.Notice — Committee and Review AgencyWithin 30 days after exercising any of the powers under subsection (1.11), the Minister shall notifythe Committee, as defined in section 2 of the National Security and Intelligence Committee of Parliamentarians Act; andthe Review Agency, as defined in section 2 of the National Security and Intelligence Review Agency Act.Objectives of SuperintendentIf the Superintendent has control under subsection (1) or (1.11) of the assets of a bank referred to in that subsection, the Superintendent may do all things necessary or expedient to protect the rights and interests of the depositors and creditors of the bank.Powers of SuperintendentIf the Superintendent has control under subsection (1) or (1.11) of the assets of a bank referred to in that subsection,the bank shall not make, acquire or transfer any loan or make any purchase, sale or exchange of securities or any disbursement or transfer of cash of any kind without the prior approval of the Superintendent or a representative designated by the Superintendent; andno director, officer or employee of the bank shall have access to any cash or securities held by the bank unlessa representative of the Superintendent accompanies the director, officer or employee, orthe access is previously authorized by the Superintendent or the Superintendent’s representative.1999, c. 28, s. 50; 2001, c. 9, s. 1822023, c. 26, s. 560
Powers suspendedIf the Superintendent takes control of a bank under subparagraph 648(1)(b)(iii) or paragraph 648(1.11)(d), the powers, duties, functions, rights and privileges of the directors of the bank and of the officers of the bank responsible for its management are suspended. If the bank is a federal credit union, the powers of the members to make, amend or repeal by-laws are also suspended.Superintendent to manage bankIf the Superintendent takes control of a bank under subparagraph 648(1)(b)(iii) or paragraph 648(1.11)(d), the Superintendent shall manage the business and affairs of the bank and in doing so the Superintendentmay perform any of the duties and functions that the persons referred to in subsection (1) were performing prior to the taking of control; andhas and may exercise any power, right or privilege that any such person had or could have exercised prior to the taking of control.Persons to assistIf the Superintendent takes control of a bank under subparagraph 648(1)(b)(iii) or paragraph 648(1.11)(d), the Superintendent may appoint one or more persons to assist in the management of the bank.1999, c. 28, s. 51; 2010, c. 12, s. 20812023, c. 26, s. 561(E)
Expiration of controlControl by the Superintendent under subsection 648(1) of a bank or of the assets of a bank expires on the day on which a notice by the Superintendent is sent to the directors and officers who conducted the business and affairs of the bank stating that the Superintendent is of the opinion that the circumstances leading to the taking of control by the Superintendent have been substantially rectified and that the bank can resume control of its business and affairs.Expiration of control — Minister’s directionControl by the Superintendent under subsection 648(1.11) of a bank or of the assets of a bank expires on the day on which a notice by the Superintendent is sent to the directors and officers who conducted the business and affairs of the bank stating that the Minister is of the opinion, on the recommendation of the Superintendant, that corrective measures have been taken in response to the reasons related to national security and that the bank can resume control of its business and affairs.1999, c. 28, s. 522023, c. 26, s. 562
Superintendent may request winding-upThe Superintendent may, at any time before the receipt of a request under section 652 to relinquish control of a bank or of the assets of a bank, request the Attorney General of Canada to apply for a winding-up order under section 10.1 of the Winding-up and Restructuring Act in respect of the bank, wherethe assets of the bank are under the control of the Superintendent under subparagraph 648(1)(b)(i) or (ii) or paragraph 648(1.11)(b) or (c); orthe bank is under the control of the Superintendent under subparagraph 648(1)(b)(iii) or paragraph 648(1.11)(d).1999, c. 28, s. 522023, c. 26, s. 563
Requirement to relinquish controlIf no action has been taken by the Superintendent under section 651 and, after 30 days following the taking of control by the Superintendent under subsection 648(1) or (1.11) of a bank or of the assets of a bank, the Superintendent receives from its board of directors a notice in writing requesting the Superintendent to relinquish control, the Superintendent shall, not later than 12 days after receipt of the notice,comply with the request; orrequest the Attorney General of Canada to apply for a winding-up order under section 10.1 of the Winding-up and Restructuring Act in respect of the bank.1999, c. 28, s. 532023, c. 26, s. 564(E)
Advisory committeeThe Superintendent may, from among the banks and authorized foreign banks that are subject to an assessment under section 23 of the Office of the Superintendent of Financial Institutions Act and required to share in the expenses resulting from the taking of control of a bank under subsection 648(1) or (1.11), appoint a committee of not more than six members to advise the Superintendent in respect of assets, management and all other matters pertinent to the duties and responsibilities of the Superintendent in exercising control of the bank.1999, c. 28, s. 542023, c. 26, s. 565(E)
Expenses payable by bankIf the Superintendent has taken control of a bank under subparagraph 648(1)(b)(iii) or paragraph 648(1.11)(d) and the control expires or is relinquished under section 650 or paragraph 652(a), the Superintendent may direct that the bank be liable for repayment of all or part of the expenses resulting from the taking of control of the bank and assessed against and paid by other banks and by authorized foreign banks under section 23 of the Office of the Superintendent of Financial Institutions Act, together with any interest in respect of the expenses at any rate that is specified by the Superintendent.Debt due to Her MajestyWhere any direction is made under subsection (1), the amount for which the bank is liable is a debt due to Her Majesty in right of Canada payable on demand and is recoverable in the Federal Court or any other court of competent jurisdiction.1999, c. 28, s. 552023, c. 26, s. 566(E)
Priority of claim in liquidationIn the case of the winding-up of a bank, the expenses resulting from the taking of control of the bank under subsection 648(1) or (1.11) and assessed against and paid by other banks and by authorized foreign banks under section 23 of the Office of the Superintendent of Financial Institutions Act, and interest in respect of the expenses at any rate that is specified by the Superintendent, constitute a claim of His Majesty in right of Canada against the assets of the bank that ranks after all other claims but prior to any claim in respect of the shares or membership shares of the bank.1999, c. 28, s. 56; 2010, c. 12, s. 20822023, c. 26, s. 567(E)
Application of assessmentAny amount recovered pursuant to section 654 or 655 shall be applied to reduce the total amount of expenses incurred for or in connection with the administration of this Act.1999, c. 28, s. 57
Regulation of Banks and External Complaints Bodies — Commissioner
Required informationA bank, authorized foreign bank or external complaints body must provide the Commissioner with the information at the times and in the form that he or she may require for the purposes of the administration of the Financial Consumer Agency of Canada Act and the consumer provisions.1999, c. 28, s. 58; 2001, c. 9, s. 183; 2010, c. 25, s. 151
Confidential informationSubject to subsection (2), information regarding the business or affairs of a bank, authorized foreign bank or external complaints body or regarding persons dealing with any of them that is obtained by the Commissioner or by any person acting under the Commissioner’s direction, in the course of the exercise or performance of powers, duties and functions referred to in subsection 5(1) of the Financial Consumer Agency of Canada Act, and any information prepared from that information, is confidential and shall be treated accordingly.Disclosure permittedIf the Commissioner is satisfied that the information will be treated as confidential by the agency, body or person to whom it is disclosed, subsection (1) does not prevent the Commissioner from disclosing itto any government agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision;to any other agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision;to the Canada Deposit Insurance Corporation, for purposes related to its operation; andto the Deputy Minister of Finance or any officer of the Department of Finance authorized in writing by the Deputy Minister of Finance or to the Governor of the Bank of Canada or any officer of the Bank of Canada authorized in writing by the Governor of the Bank of Canada, for the purposes of policy analysis related to the regulation of financial institutions.1999, c. 28, s. 59; 2001, c. 9, s. 183; 2010, c. 25, s. 152
Examination of banksThe Commissioner, from time to time but at least once in each calendar year, shall make or cause to be made any examination and inquiry that the Commissioner considers necessary for the purposes of satisfying the Commissioner that the applicable consumer provisions are being complied with and, after the conclusion of each examination and inquiry, shall report on it to the Minister.Special auditThe Commissioner may direct that a special audit be made in accordance with any terms and conditions that he or she considers appropriate if, in the opinion of the Commissioner, it is required for the purposes of the administration of the Financial Consumer Agency of Canada Act and the consumer provisions, and may appoint for that purposewith respect to a bank or an authorized foreign bank, a firm of accountants qualified under subsection 315(1); andwith respect to the external complaints body, a firm of accountants, as defined in section 313.Report to CommissionerIf a bank, an authorized foreign bank or the external complaints body is the subject of a special audit, it shall provide the Commissioner with the results of the audit.Expenses payableThe expenses incurred in respect of any special audit are payable by the bank, the authorized foreign bank or the external complaints body that is the subject of the audit.Access to records of bankThe Commissioner, or a person acting under the Commissioner’s direction, in carrying out his or her duties under this sectionhas a right of access to any records, including electronic records, of a bank, authorized foreign bank or external complaints body; andmay require the directors or officers of a bank, authorized foreign bank or external complaints body to provide information and explanations, to the extent that they are reasonably able to do so, in respect of any matter subject to examination, inquiry or audit under this section.1999, c. 28, s. 59; 2001, c. 9, s. 183; 2010, c. 25, s. 1532018, c. 27, s. 3312023, c. 26, s. 134
Power of Commissioner on inquiryThe Commissioner, in carrying out his or her duties in relation to consumer provisions, has all the powers of a person appointed as a commissioner under Part II of the Inquiries Act for the purpose of obtaining evidence under oath, and may delegate those powers to any person acting under the Commissioner’s direction.1999, c. 28, s. 60; 2001, c. 9, s. 183
Compliance agreementThe Commissioner may enter into an agreement, called a “compliance agreement”, with a bank, an authorized foreign bank or the external complaints body for the purposes of implementing any measure that is designed so as to further compliance by it with the consumer provisions.1999, c. 28, s. 61; 2001, c. 9, s. 183; 2010, c. 25, s. 1542023, c. 26, s. 135
Commissioner’s directionsIf, in the opinion of the Commissioner, a bank, authorized foreign bank or person, in conducting the business of the bank or authorized foreign bank, fails to comply, or there are reasonable grounds to believe that the bank, authorized foreign bank or person will fail to comply, with a compliance agreement, a consumer provision or this Part, the Commissioner may direct the bank, authorized foreign bank or person to comply with them and to perform any act that in the opinion of the Commissioner is necessary to do so.Directions — external complaints bodyIf, in the opinion of the Commissioner, the external complaints body fails, or there are reasonable grounds to believe that it will fail, to comply with a compliance agreement or any of paragraphs 627.49(b) to (m) or to discharge its functions and perform its activities in a manner that is consistent with the purpose set out in section 627.471, the Commissioner may direct the external complaints body to comply with them or to so discharge its functions and perform its activities and to perform any act that in the opinion of the Commissioner is necessary to do so.Opportunity for representationsSubject to subsection (3), no direction shall be issued under subsection (1) or (1.1) unless the bank, authorized foreign bank or person or the external complaints body is provided with a reasonable opportunity to make representations in respect of the matter.Temporary directionIf, in the opinion of the Commissioner, the length of time required for representations to be made under subsection (2) might be prejudicial to the public interest, the Commissioner may make a temporary direction with respect to the matters referred to in subsection (1) or (1.1) that has effect for a period of not more than 15 days.Continued effectA temporary direction under subsection (3) continues to have effect after the end of the 15-day period referred to in that subsection if no representations are made to the Commissioner within that period or, if representations have been made, the Commissioner notifies the bank, authorized foreign bank, person or external complaints body that the Commissioner is not satisfied that there are sufficient grounds for revoking the direction.2018, c. 27, s. 3322023, c. 26, s. 136
Court enforcementIf a bank, authorized foreign bank or person, in conducting the business of the bank or authorized foreign bank, contravenes or fails to comply with a compliance agreement or a direction made under subsection 661.1(1) or (3), contravenes this Act or omits to do any thing that is required to be done under this Act by or on the part of the bank, authorized foreign bank or person, the Commissioner may, in addition to any other action that may be taken under this Act, apply to a court for an order requiring the bank, authorized foreign bank or person to comply with the compliance agreement or the direction, cease the contravention or do any thing that is required to be done, and on the application the court may so order and make any other order it thinks fit.Court enforcement — external complaints bodyIf the external complaints body contravenes or fails to comply with a compliance agreement, any of paragraphs 627.49(b) to (m) or a direction made under subsection 661.1(1.1) or (3), the Commissioner may, in addition to any other action that may be taken under this Act, apply to a court for an order requiring the external complaints body to comply with the compliance agreement or the direction, cease the contravention or do any thing that is required to be done, and on the application the court may so order and make any other order it thinks fit.AppealAn appeal from a decision of a court under subsection (1) or (1.1) lies in the same manner, and to the same court, as an appeal from any other order of the court.2018, c. 27, s. 3322023, c. 26, s. 137
Bank Holding CompaniesPurpose
PurposeThe purpose of this Part is to provide for the incorporation, formation and regulation of bank holding companies.1999, c. 28, s. 61; 2001, c. 9, s. 183
Interpretation
DefinitionsThe following definitions apply in this Part.complainant, in relation to a bank holding company or any matter concerning a bank holding company, meansa registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a bank holding company or any of its affiliates;a director or an officer, or a former director or officer, of a bank holding company or any of its affiliates; orany other person who, in the discretion of a court, is a proper person to make an application under section 334, 338 or 989. (plaignant)subordinated indebtedness means an instrument evidencing an indebtedness of a bank holding company that by its terms provides that the indebtedness will, in the event of the insolvency or winding-up of the bank holding company, be subordinate in right of payment to all liabilities of the bank holding company except those that, by their terms, rank equally with or are subordinate to such indebtedness. (titre secondaire)Provisions in other PartsA reference in a provision of this Part to a provision in any other Part is deemed to be a reference to that provision as it has been made applicable by this Part in respect of bank holding companies.References in other PartsA reference in a provision of another Part to a provision that has been made applicable in respect of bank holding companies by this Part is to be read as including a reference to that provision as it has been made applicable in respect of bank holding companies.1999, c. 28, s. 61; 2001, c. 9, s. 183
Status and Powers
Corporate powersA bank holding company has the capacity of a natural person and, subject to this Act, the rights, powers and privileges of a natural person.Powers restrictedA bank holding company shall not carry on any business or exercise any power that it is restricted by this Act from carrying on or exercising, or exercise any of its powers in a manner contrary to this Act.Business in CanadaA bank holding company may carry on business throughout Canada.Powers outside CanadaSubject to this Act, a bank holding company has the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Canada to the extent and in the manner that the laws of that jurisdiction permit.1999, c. 28, s. 61; 2001, c. 9, s. 183
Policies and procedures — integrity or securityA bank holding company shall establish and adhere to policies and procedures to protect itself against threats to its integrity or security, including foreign interference.2023, c. 26, s. 568
No invalidityNo act of a bank holding company, including any transfer of property to or by a bank holding company, is invalid by reason only that the act or transfer is contrary to the bank holding company’s incorporating instrument or this Act.1999, c. 28, s. 62; 2001, c. 9, s. 183
By-law not necessaryIt is not necessary for a bank holding company to pass a by-law in order to confer any particular power on the bank holding company or its directors.1999, c. 28, s. 63; 2001, c. 9, s. 183
No personal liabilityThe shareholders of a bank holding company are not, as shareholders, liable for any liability, act or default of the bank holding company except as otherwise provided by this Act.1999, c. 28, s. 63; 2001, c. 9, s. 183
No constructive noticeNo person is affected by or is deemed to have notice or knowledge of the contents of a document concerning a bank holding company by reason only that the document has been filed with the Superintendent or the Minister or is available for inspection at an office of the bank holding company.1999, c. 28, s. 64, c. 31, ss. 16(F), 250; 2001, c. 9, s. 183
Authority of directors, officers and representativesNo bank holding company and no guarantor of an obligation of a bank holding company may assert against a person dealing with the bank holding company or against a person who has acquired rights from the bank holding company thatthe bank holding company’s incorporating instrument or any by-laws of the bank holding company have not been complied with;the persons named as directors of the bank holding company in the most recent return sent to the Superintendent under section 951 are not the directors of the bank holding company;the place named in the incorporating instrument or by-laws of the bank holding company is not the place where the head office of the bank holding company is situated;a person held out by the bank holding company as a director, officer or representative of the bank holding company has not been duly appointed or has no authority to exercise the powers and perform the duties that are customary in the business of the bank holding company or usual for a director, officer or representative; ora document issued by any director, officer or representative of the bank holding company with actual or usual authority to issue the document is not valid or not genuine.Exception — knowledgeSubsection (1) does not apply in respect of a person who has or ought to have knowledge of a situation described in that subsection by virtue of their relationship to the bank holding company.1999, c. 28, s. 65; 2001, c. 9, s. 183; 2005, c. 54, s. 83
Sunset provisionSubject to subsections (2) and (4), bank holding companies shall not carry on business after June 30, 2026.ExtensionThe Governor in Council may, by order, extend by up to six months the time during which bank holding companies may continue to carry on business. No more than one order may be made under this subsection.Order not a regulationThe order is not a regulation for the purposes of the Statutory Instruments Act. However, it shall be published in Part II of the Canada Gazette.Exception — dissolutionIf Parliament dissolves on the day set out in subsection (1) or on any day within the six-month period before that day or on any day within an extension ordered under subsection (2), bank holding companies may continue to carry on business until the end of the 180th day after the first day of the first session of the next Parliament.1999, c. 28, s. 65; 2001, c. 9, s. 183; 2006, c. 4, s. 199.1; 2007, c. 6, s. 105; 2012, c. 5, s. 77; 2016, c. 7, s. 119; 2018, c. 12, s. 3562021, c. 23, s. 1552024, c. 17, s. 405
Incorporation and ContinuanceFormalities of Incorporation
Incorporation of bank holding companyOn the application of one or more persons made in accordance with this Part, the Minister may, subject to this Division, issue letters patent incorporating a bank holding company.1999, c. 28, s. 66; 2001, c. 9, s. 183
Restrictions on incorporationLetters patent incorporating a bank holding company may not be issued if the application therefor is made by or on behalf ofHer Majesty in right of Canada or in right of a province, an agency of Her Majesty in either of those rights, or an entity controlled by Her Majesty in either of those rights;the government of a foreign country or any political subdivision thereof;an agency of the government of a foreign country or any political subdivision thereof; oran entity, other than a foreign institution or any subsidiary of a foreign institution, that is controlled by the government of a foreign country or any political subdivision thereof.1999, c. 28, s. 66; 2001, c. 9, s. 183
National treatmentIf a proposed bank holding company would be a subsidiary of a foreign bank, within the meaning of any of paragraphs (a) to (f) of the definition foreign bank in section 2, letters patent to incorporate the bank holding company may not be issued unless the Minister is satisfied that, if the application is made by a non-WTO Member foreign bank, treatment as favourable for bank holding companies to which this Act applies exists or will be provided in the jurisdiction in which the foreign bank principally carries on business, either directly or through a subsidiary.1999, c. 28, s. 67; 2001, c. 9, s. 183
Application for incorporationAn application for letters patent to incorporate a bank holding company setting out the names of the first directors of the bank holding company shall be filed with the Superintendent, together with such other information, material and evidence as the Superintendent may require.1999, c. 28, s. 68; 2001, c. 9, s. 183
Matters for considerationBefore issuing letters patent to incorporate a bank holding company, the Minister shall take into account all matters that the Minister considers relevant to the application, includingthe nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the bank that is proposed to be its subsidiary;the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the bank that is proposed to be its subsidiary;the business record and experience of the applicant or applicants;the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;whether the bank holding company will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;the impact of any integration of the businesses and operations of the applicant or applicants with those of the bank holding company and its affiliates on the conduct of those businesses and operations; andthe best interests of the financial system in Canada.1999, c. 28, s. 69; 2000, c. 12, s. 6; 2001, c. 9, s. 183
Contents of letters patentThere shall be set out in the letters patent incorporating a bank holding companythe name of the bank holding company;the province in which the head office of the bank holding company is to be situated; andthe date that the bank holding company came, or is to come, into existence.Provisions in letters patentThe Minister may set out in the letters patent incorporating a bank holding company any provision not contrary to this Act that the Minister considers advisable in order to take into account the particular circumstances of the proposed bank holding company.Terms and conditionsThe Minister may impose such terms and conditions in respect of the issuance of letters patent incorporating a bank holding company as the Minister considers necessary or appropriate.1999, c. 28, s. 70; 2001, c. 9, s. 183; 2005, c. 54, s. 84
Letters patent of incorporation on application of banksIf, under section 671, the Minister issues letters patent incorporating a bank holding company on the application of a bank, there may, on the request of the bank, and with the approval of the Minister, be included in the letters patent of incorporation of the bank holding company a provision deeming shares of the bank holding company to be issued, on a share for share basis, to all shareholders of the bank in exchange for all the issued and outstanding shares of the bank.Effect of provisionShares of a bank holding company deemed to be issued under subsection (1) are subject to the same designation, rights, privileges and restrictions or conditions and, subject to any agreement to the contrary, to the same charges, encumbrances and other restrictions as the shares of the bank for which they are exchanged and the shares of the bank, on the issuance of the letters patent, become the property of the bank holding company free and clear of any charge, encumbrance or other restriction.Effect of provisionAn exchange of shares of a bank referred to in subsection (1) under a provision included in the letters patent incorporating a bank holding company does not deprive a person who was a holder of shares of the bank immediately before the exchange of any right or privilege with respect to the shares or relieve the person of any liability in respect of the shares, but that right or privilege must be exercised in accordance with this Act.Transfer and voting of sharesDespite subsection (3), no share of a bank holding company that is deemed to be issued under a provision included in the letters patent incorporating a bank holding company may subsequently be transferred or voted contrary to this Act.Shareholder approvalNo provision described in subsection (1) may be included in letters patent issued under section 671 unless the application for the letters patent is accompanied by evidence that the request for the provision was approved by a special resolution of the shareholders of the bank at a shareholders’ meeting called to consider the application.Exchange of share certificatesIf, under a provision included in the letters patent incorporating a bank holding company, a share exchange is deemed to have taken place, the bank holding company shall, within ninety days after the issuance of the letters patent, make provision for the issue of share certificates representing shares of the bank holding company and for the exchange of those certificates for share certificates representing the shares of the bank that were outstanding on the effective date of the letters patent.1999, c. 28, s. 71; 2001, c. 9, s. 183
Proposal involving fundamental changeOn application, made in accordance with the regulations, by a bank to give effect to a proposal to incorporate a bank holding company as the holding body corporate of the bank, to continue a body corporate as a bank holding company of the bank or to amalgamate two or more bodies corporate and continue those bodies corporate as a bank holding company of the bank — and to make any other fundamental change to or in respect of the bank, including an exchange of any or all of the shares of the bank for shares of the bank holding company — , the Minister may, to give effect to the proposal,include in the letters patent of the bank holding company issued under section 671, 684 or 809 any provision the Minister considers necessary; ordespite any provision of the Act specified in regulations made under paragraph 2(e), give any approval that the Minister considers necessary.RegulationsThe Governor in Council may make regulationsrespecting applications referred to in subsection (1), including their form and the information to be contained in them, and authorizing the requesting of additional information in respect of such applications;respecting proposals to which subsection (1) applies, including the information to be contained in the proposals and the times within which the transactions involved in them must occur;respecting the procedures to be followed by a bank that makes an application under subsection (1);respecting the approval, confirmation or authorization, if any, of all or any portion of proposals to which subsection (1) applies, including the approval of shareholders and including the terms and conditions of those approvals, confirmations or authorizations and their effect; andspecifying provisions of the Act for the purpose of paragraph (1)(b).1999, c. 28, s. 72; 2001, c. 9, s. 183; 2007, c. 6, s. 106
Notice of issue of letters patentThe Superintendent shall cause to be published in the Canada Gazette a notice of the issuance of letters patent incorporating a bank holding company.1999, c. 28, s. 73; 2001, c. 9, s. 183
First directorsThe first directors of a bank holding company are the directors named in the application for letters patent to incorporate the bank holding company.1999, c. 28, s. 73; 2001, c. 9, s. 183
Effect of letters patentA bank holding company comes into existence on the date provided therefor in its letters patent.2001, c. 9, s. 183
Continuance
Federal corporationsA body corporate incorporated under the Canada Business Corporations Act or any other Act of Parliament, including a bank but not including a federal credit union, may apply to the Minister for letters patent continuing the body corporate as a bank holding company under this Part.Other corporationsA body corporate incorporated otherwise than by or under an Act of Parliament may, if so authorized by the laws of the jurisdiction where it is incorporated, apply to the Minister for letters patent continuing the body corporate as a bank holding company under this Part.2001, c. 9, s. 183; 2010, c. 12, s. 2083
Application for continuanceWhere a body corporate applies for letters patent under subsection 682(1) or (2), sections 672 to 675 apply in respect of the application, with such modifications as the circumstances require.Special resolution approvalWhere a body corporate applies for letters patent under subsection 682(1) or (2), the application must be duly authorized by a special resolution.Copy of special resolutionA copy of the special resolution referred to in subsection (2) shall be filed with the application.2001, c. 9, s. 183
Power to issue letters patentOn the application of a body corporate under subsection 682(1) or (2), the Minister may, subject to this Division, issue letters patent continuing the body corporate as a bank holding company under this Part.Issue of letters patentWhere letters patent are issued to a body corporate under subsection (1), section 676 applies in respect of the issue of letters patent, with such modifications as the circumstances require.2001, c. 9, s. 183
Effect of letters patentOn the day set out in the letters patent continuing a body corporate as a bank holding company under subsection 684(1),the body corporate becomes a bank holding company as if it had been incorporated under this Part; andthe letters patent are deemed to be the incorporating instrument of the continued bank holding company.2001, c. 9, s. 183
Copy of letters patentWhere a body corporate is continued as a bank holding company under this Part, the Superintendent shall without delay send a copy of the letters patent to the appropriate official or public body in the jurisdiction in which the body corporate was authorized to apply to be continued under this Part.Notice of issuance of letters patentThe Superintendent shall cause to be published in the Canada Gazette a notice of the issuance of letters patent continuing a body corporate as a bank holding company under this Part.2001, c. 9, s. 183
Effects of continuanceWhere a body corporate is continued as a bank holding company under this Part,the property of the body corporate continues to be the property of the bank holding company;the bank holding company continues to be liable for the obligations of the body corporate;an existing cause of action or claim by or against the body corporate or any liability of the body corporate to prosecution is unaffected;a civil, criminal or administrative action or proceeding pending by or against the body corporate may continue to be prosecuted by or against the bank holding company;a conviction against, or any ruling, order or judgment in favour of or against the body corporate may be enforced by or against the bank holding company;a person who, on the day the body corporate becomes a bank holding company, was the holder of a security issued by the body corporate is not deprived of any right or privilege available to the person at that time in respect of the security or relieved of any liability in respect thereof, but any such right or privilege may be exercised only in accordance with this Act; andthe by-laws of the body corporate, except those that are in conflict with this Act, continue as the by-laws of the bank holding company.2001, c. 9, s. 183
TransitionalNotwithstanding any other provision of this Act or the regulations, the Minister may, on the recommendation of the Superintendent, by order, grant to a bank holding company in respect of which letters patent were issued under subsection 684(1) permission toengage in a business activity specified in the order that a bank holding company is not otherwise permitted by this Act to engage in and that the body corporate continued as the bank holding company was engaging in at the time the application for the letters patent was made;continue to have issued and outstanding debt obligations the issue of which is not authorized by this Act if the debt obligations were outstanding at the time the application for the letters patent was made;hold assets that a bank holding company is not otherwise permitted by this Act to hold if the assets were held by the body corporate continued as the bank holding company at the time the application for the letters patent was made;acquire and hold assets that a bank holding company is not otherwise permitted by this Act to acquire or hold if the body corporate continued as the bank holding company was obliged, at the time the application for the letters patent was made, to acquire those assets; andmaintain outside Canada any records or registers required by this Act to be maintained in Canada.DurationThe permission granted under subsection (1) shall be expressed to be granted for a period specified in the order not exceedingwith respect to any activity described in paragraph (1)(a), thirty days after the effective date of the letters patent or, where the activity is conducted pursuant to an agreement existing on the effective date of the letters patent, the expiration of the agreement;with respect to any matter described in paragraph (1)(b), ten years; andwith respect to any matter described in any of paragraphs (1)(c) to (e), two years.RenewalSubject to subsection (4), the Minister may, on the recommendation of the Superintendent, by order, renew a permission granted by order under subsection (1) with respect to any matter described in paragraphs (1)(b) to (d) for such further period or periods as the Minister considers necessary.LimitationThe Minister shall not grant to a bank holding company any permissionwith respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the effective date of the letters patent, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the bank holding company that the bank holding company will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; andwith respect to matters described in paragraphs (1)(c) and (d), that purports to be effective more than ten years after the effective date of the letters patent.2001, c. 9, s. 183; 2007, c. 6, s. 107
Discontinuance
Transferring to other ActsA bank holding company may apply to be continued only as a body corporate under any other Act of Parliament or any Act of the legislature of a province, and it may do so only with the approval in writing of the Minister.Conditions for approvalNo approval referred to in subsection (1) may be given to a bank holding company unless the Minister is satisfied that the application of the bank holding company has been authorized by a special resolution.2001, c. 9, s. 183; 2007, c. 6, s. 108
Meaning of bank holding company without a bank subsidiaryFor the purpose of this section, bank holding company without a bank subsidiary means a bank holding company that does not, at any time within one year after it came into existence, have a subsidiary that is a bank or that does not, for a period of one year, have a subsidiary that is a bank.Obligation to applyA bank holding company without a bank subsidiary must, within 30 days after becoming a bank holding company without a bank subsidiary, apply to be continued under subsection 689(1).Cessation of existenceExcept for the sole purpose of winding up its affairs, a bank holding company without a bank subsidiary that has no other subsidiary that fails to make an application under subsection (2) within the time provided for in that subsection ceases to exist on the expiration of that period.2001, c. 9, s. 183
Act ceases to applyOn the day specified by the Minister, this Act ceases to apply to the body corporate continued under the other Act of Parliament or under the Act of the legislature of a province.2001, c. 9, s. 183
Withdrawing applicationWhere a special resolution authorizing the application under subsection 689(1) so states, the directors of a bank holding company may, without further approval of the shareholders, withdraw the application before it is acted on.2001, c. 9, s. 183
Corporate Name
Prohibited namesA bank holding company may not be incorporated under this Part with a namethat is prohibited by an Act of Parliament;that is, in the opinion of the Superintendent, deceptively misdescriptive;that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, any existingtrademark or trade name, orcorporate name of a body corporate,except where the trademark or trade name is being changed or the body corporate is being dissolved or is changing its corporate name and consent to the use of the trademark, trade name or corporate name is signified to the Superintendent in such manner as the Superintendent may require;that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, the known name under or by which any entity carries on business or is identified; orthat is reserved under section 43 for a bank or an authorized foreign bank or a proposed bank or proposed authorized foreign bank or under section 697 for another bank holding company or a proposed bank holding company.2001, c. 9, s. 1832014, c. 20, s. 366(E)
Affiliated bank holding companyDespite section 693 and subject to section 695, a bank holding company that is affiliated with another entity may, with the consent of that entity,be incorporated with, or change its name to, substantially the same name as that of the affiliated entity; orsubject to any terms and conditions that may be prescribed, carry on business under or identify itself by a name, other than its corporate name, that is substantially the same as the corporate name of the affiliated entity or that is another name under which or with which the affiliated entity carries on business or otherwise identifies itself.2001, c. 9, s. 183; 2007, c. 6, s. 109
RestrictionA bank holding company may not be incorporated or continued with, change its name to or carry on business or identify itself by, a name that is substantially similar to that of a bank unless the name contains words that, in the opinion of the Superintendent, indicate to the public that the bank holding company is distinct from any bank that is a subsidiary of the bank holding company.2001, c. 9, s. 183
French or English form of nameThe name of a bank holding company may be set out in its letters patent in an English form, a French form, an English form and a French form or in a combined English and French form, and the bank holding company may use and be legally designated by any such form.Mandatory abbreviationDespite any other provision of this Act and subject to the regulations, every bank holding company shall have as part of its name, the abbreviations “bhc” or “spb”.Alternate nameA bank holding company may identify itself outside Canada by its name in any language and the bank holding company may use and be legally designated by any such form of its name outside Canada.Other nameSubject to subsection (5) and section 832, a bank holding company may carry on business under or identify itself by a name other than its corporate name.DirectionsWhere a bank holding company is carrying on business under or identifying itself by a name other than its corporate name, the Superintendent may, by order, direct the bank holding company not to use that other name if the Superintendent is of the opinion that that other name is a name referred to in any of paragraphs 693(a) to (e).RegulationsThe Governor in Council may make regulations respecting the use of the abbreviations “bhc” or “spb” in the name of bank holding companies.2001, c. 9, s. 183
Reserved nameThe Superintendent may, on request, reserve for ninety days a name for a proposed bank holding company or for a bank holding company that intends to change its name.2001, c. 9, s. 183
Directing change of nameIf through inadvertence or otherwise a bank holding companycomes into existence or is continued with a name, oron an application to change its name, is granted a namethat is prohibited by section 693 or 695, the Superintendent may, by order, direct the bank holding company to change its name and the bank holding company shall comply with that direction.Revoking nameWhere a bank holding company has been directed under subsection (1) to change its name and has not, within sixty days after the service of the direction, changed its name to a name that is not prohibited by this Part, the Superintendent may revoke the name of the bank holding company and assign to it a name and, until changed in accordance with section 215 or 217, the name of the bank holding company is thereafter the name so assigned.2001, c. 9, s. 183
Publication of Information
Publication of informationThe Superintendent shall, within sixty days after the end of each year, cause a notice to be published in the Canada Gazette, showingthe name of every bank holding company; andthe province in which the head office of the bank holding company is situated.2001, c. 9, s. 183; 2005, c. 54, s. 85
Organization and Commencement
First directors’ meetingAfter letters patent incorporating a bank holding company are issued, a meeting of the directors of the bank holding company shall be held at which the directors may, subject to this Division,make by-laws;adopt forms of share certificates and corporate records;authorize the issue of shares of the bank holding company;appoint officers;appoint an auditor to hold office until the first meeting of shareholders;make banking arrangements; anddeal with any other matters necessary to organize the bank holding company.Calling directors’ meetingAn incorporator or a director named in the application for letters patent may call the meeting referred to in subsection (1) by giving, subject to subsection 770(2), no fewer than five days notice of the purpose, time and place of the meeting to each director of the bank holding company.2001, c. 9, s. 183
Calling shareholders’ meetingAfter the meeting referred to in subsection 700(1) is held, the directors of the bank holding company shall without delay call a meeting of the shareholders of the bank holding company.Meeting of shareholdersThe shareholders of a bank holding company shall, by resolution at the meeting of shareholders called pursuant to subsection (1),approve, amend or reject any by-law made by the directors of the bank holding company;subject to section 756, elect directors to hold office for a term expiring not later than the close of the third annual meeting of shareholders following the election; andappoint an auditor to hold office until the close of the first annual meeting of shareholders.2001, c. 9, s. 183
Term of first directorsA director named in the application for letters patent to incorporate a bank holding company holds office until the election of directors at the meeting of shareholders called pursuant to subsection 701(1).2001, c. 9, s. 183
Capital StructureShare Capital
Power to issue sharesSubject to this Part and the by-laws of the bank holding company, shares of a bank holding company may be issued at such times and to such persons and for such consideration as the directors of the bank holding company may determine.SharesShares of a bank holding company shall be in registered form and shall be without nominal or par value.Shares of continued bank holding companyWhere a body corporate is continued as a bank holding company under this Part, shares with nominal or par value issued by the body corporate before it was so continued are deemed to be shares without nominal or par value.Deemed share conditionsIf a right of a holder of a share with nominal or par value of a body corporate continued as a bank holding company under this Part, other than a voting right, was stated or expressed in terms of the nominal or par value of the share immediately before the body corporate was continued under this Part, that right is deemed, after the continuance, to be the same right stated or expressed without reference to the nominal or par value of the share.2001, c. 9, s. 183
Common sharesA bank holding company shall have one class of shares, to be designated as “common shares”, which are non-redeemable and in which the rights of the holders thereof are equal in all respects, and those rights includethe right to vote at all meetings of shareholders except where only holders of a specified class of shares are entitled to vote;the right to receive dividends declared on those shares; andthe right to receive the remaining property of the bank holding company on dissolution.Designations of sharesNo bank holding company shall designate more than one class of its shares as “common shares” or any variation of that term.Continued bank holding companyA body corporate continued as a bank holding company under this Part that is not in compliance with subsection (2) on the date letters patent continuing it as a bank holding company are issued shall, within twelve months after that date, redesignate its shares to comply with that subsection.2001, c. 9, s. 183
Classes of sharesThe by-laws of a bank holding company may provide for more than one class of shares and, if they so provide, shall set outthe rights, privileges, restrictions and conditions attaching to the shares of each class; andthe maximum number, if any, of shares of any class that the bank holding company is authorized to issue.Shareholder approvalWhere a by-law referred to in subsection (1) is made, the directors of the bank holding company shall submit the by-law to the shareholders at the next meeting of shareholders.Effective dateA by-law referred to in subsection (1) is not effective until it is confirmed or confirmed with amendments by special resolution of the shareholders at the meeting referred to in subsection (2).2001, c. 9, s. 183
Shares issued in seriesThe by-laws of a bank holding company may, subject to any limitations set out in them, authorize the issue of any class of shares in one or more series and mayfix the maximum number of shares in each series and determine the designation, rights, privileges, restrictions and conditions attaching to them; andauthorize the directors to do anything referred to in paragraph (a).Series participationIf any cumulative dividend or amounts payable on return of capital in respect of a series of shares are not paid in full, the shares of all series of the same class participate rateably in respect of accumulated dividends and return of capital.Voting rightsWhere voting rights are attached to any series of a class of shares, the shares of every other series of that class shall have the same voting rights.Restriction on seriesNo rights, privileges, restrictions or conditions attached to a series of shares authorized under this section confer on the series a priority in respect of dividends or return of capital over any other series of shares of the same class that are then outstanding.Material to SuperintendentIf the directors exercise their authority under paragraph (1)(b), the directors shall, before the issue of shares of the series, send to the Superintendent particulars of the series of shares and a copy of the by-law that granted the authority to the directors.2001, c. 9, s. 183; 2005, c. 54, s. 86; 2007, c. 6, s. 110(E)
One share, one voteWhere voting rights are attached to a share of a bank holding company, the voting rights may confer only one vote in respect of that share.2001, c. 9, s. 183
Shares non-assessableShares issued by a bank holding company are non-assessable and the shareholders are not liable to the bank holding company or to its creditors in respect thereof.2001, c. 9, s. 183
Consideration for shareNo share of any class of shares of a bank holding company shall be issued until it is fully paid for in money or, with the approval of the Superintendent, in property.Other currenciesWhen issuing shares, a bank holding company may provide that any aspect of the shares relating to money or involving the payment of or the liability to pay money be in a currency other than the currency of Canada.2001, c. 9, s. 183
Stated capital accountA bank holding company shall maintain a separate stated capital account for each class and series of shares it issues.Addition to stated capital accountA bank holding company shall record in the appropriate stated capital account the full amount of any consideration it receives for any shares it issues.ExceptionDespite subsection (2), a bank holding company may, subject to subsection (4), record in the stated capital account maintained for the shares of a class or series any part of the consideration it receives in an exchange if it issues sharesin exchange forproperty of a person who immediately before the exchange did not deal with the bank holding company at arm’s length within the meaning of that expression in the Income Tax Act,shares of or another interest in a body corporate that immediately before the exchange or because of it did not deal with the bank holding company at arm’s length within the meaning of that expression in the Income Tax Act, orproperty of a person who immediately before the exchange dealt with the bank holding company at arm’s length within the meaning of that expression in the Income Tax Act if the person, the bank holding company and all of the holders of shares in the class or series of shares so issued consent to the exchange;under an agreement referred to in subsection 804(1); orto shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated bank holding company.Limit on addition to a stated capital accountOn the issuance of a share, a bank holding company shall not add to the stated capital account in respect of the share an amount greater than the amount of the consideration it receives for the share.Constraint on addition to a stated capital accountWhere a bank holding company that has issued any outstanding shares of more than one class or series proposes to add to a stated capital account that it maintains in respect of a class or series of shares an amount that was not received by the bank holding company as consideration for the issue of shares, the addition must be approved by special resolution unless all the issued and outstanding shares are of not more than two classes of convertible shares referred to in subsection 720(4).2001, c. 9, s. 183; 2005, c. 54, s. 87
Stated capital of continued bank holding companyWhere a body corporate is continued as a bank holding company under this Part, the bank holding company shall record in the stated capital account maintained for each class and series of shares then outstanding an amount that is equal to the aggregate ofthe aggregate amount paid up on the shares of each class and series of shares immediately before the body corporate was so continued, andthe amount of the contributed surplus of the bank holding company that is attributable to those shares.Contributed surplus entryThe amount of any contributed surplus recorded in the stated capital account pursuant to paragraph (1)(b) shall be deducted from the contributed surplus account of the bank holding company.Shares issued before continuanceAny amount unpaid in respect of a share issued by a body corporate before it was continued as a bank holding company under this Part and paid after it was so continued shall be recorded in the stated capital account maintained by the bank holding company for the shares of that class or series.2001, c. 9, s. 183
Pre-emptive rightWhere the by-laws of a bank holding company so provide, no shares of any class shall be issued unless the shares have first been offered to the shareholders holding shares of that class, and those shareholders have a pre-emptive right to acquire the offered shares in proportion to their holdings of the shares of that class, at such price and on such terms as those shares are to be offered to others.ExceptionNotwithstanding the existence of a pre-emptive right, a shareholder of a bank holding company has no pre-emptive right in respect of shares of a class to be issuedfor a consideration other than money;as a share dividend; orpursuant to the exercise of conversion privileges, options or rights previously granted by the bank holding company.ExceptionNotwithstanding the existence of a pre-emptive right, a shareholder of a bank holding company has no pre-emptive right in respect of shares to be issuedwhere the issue of shares to the shareholder is prohibited by this Part; orwhere, to the knowledge of the directors of the bank holding company, the offer of shares to a shareholder whose recorded address is in a country other than Canada ought not to be made unless the appropriate authority in that country is provided with information in addition to that submitted to the shareholders at the last annual meeting.2001, c. 9, s. 183
Conversion privilegesA bank holding company may issue conversion privileges, options or rights to acquire securities of the bank holding company, and shall set out the conditions thereofin the documents that evidence the conversion privileges, options or rights; orin the securities to which the conversion privileges, options or rights are attached.Transferable rightsConversion privileges, options and rights to acquire securities of a bank holding company may be made transferable or non-transferable, and options and rights to acquire such securities may be made separable or inseparable from any securities to which they are attached.Reserved sharesWhere a bank holding company has granted privileges to convert any securities issued by the bank holding company into shares, or into shares of another class or series, or has issued or granted options or rights to acquire shares, if the by-laws limit the number of authorized shares, the bank holding company shall reserve and continue to reserve sufficient authorized shares to meet the exercise of such conversion privileges, options and rights.2001, c. 9, s. 183
Holding of own sharesExcept as provided in sections 715 to 717, or unless permitted by the regulations, a bank holding company shall nothold shares of the bank holding company or of any body corporate that controls the bank holding company;hold any ownership interests of any unincorporated entity that controls the bank holding company;permit any of its subsidiaries to hold any shares of the bank holding company or of any body corporate that controls the bank holding company; orpermit any of its subsidiaries to hold any ownership interests of any unincorporated entity that controls the bank holding company.2001, c. 9, s. 183
Purchase and redemption of sharesSubject to subsection (2) and to its by-laws, a bank holding company may, with the consent of the Superintendent, purchase, for the purpose of cancellation, any shares issued by it, or redeem any redeemable shares issued by it at prices not exceeding the redemption price thereof calculated according to a formula stated in its by-laws or the conditions attaching to the shares.Restrictions on purchase and redemptionA bank holding company shall not make any payment to purchase or redeem any shares issued by it if there are reasonable grounds for believing that the bank holding company is, or the payment would cause the bank holding company to be, in contravention of any regulation referred to in subsection 949(1) or (2) or any direction made pursuant to subsection 949(3).Donated sharesA bank holding company may accept from any shareholder a share of the bank holding company surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share except in accordance with section 718.2001, c. 9, s. 183
Holding as personal representativeA bank holding company may permit its subsidiaries to hold, in the capacity of a personal representative, shares of the bank holding company or of any body corporate that controls the bank holding company or ownership interests in any unincorporated entity that controls the bank holding company, but only if the subsidiary does not have a beneficial interest in the shares or ownership interests.Security interestA bank holding company may permit its subsidiaries to hold by way of a security interest shares of the bank holding company or of any body corporate that controls the bank holding company, or any ownership interests of any entity that controls the bank holding company, if the security interest is nominal or immaterial when measured by criteria established by the bank holding company that have been approved in writing by the Superintendent.2001, c. 9, s. 183; 2005, c. 54, s. 88(F)
Exception — conditions before acquisitionA bank holding company may permit any of its subsidiaries to acquire shares of the bank holding company through the issuance of those shares by the bank holding company to the subsidiary if the conditions prescribed for the purposes of this subsection are met before the subsidiary acquires the shares.Conditions after acquisitionAfter a subsidiary has acquired shares under the purported authority of subsection (1), the conditions prescribed for the purposes of this subsection must be met.Non-compliance with conditionsIf a bank holding company permits any of its subsidiaries to acquire shares of the bank holding company under the purported authority of subsection (1) and one or more of the conditions prescribed for the purposes of subsections (1) and (2) were not met, are not met or cease to be met, as the case may be, then, despite section 665 and subsection 710(2), the bank holding company must comply with the prescribed requirements.2007, c. 6, s. 111
Cancellation of sharesSubject to subsection (2), where a bank holding company purchases shares of the bank holding company or fractions thereof or redeems or otherwise acquires shares of the bank holding company, the bank holding company shall cancel those shares.Requirement to sellIf a subsidiary of a bank holding company, through the realization of security, acquires any shares of the bank holding company or of any body corporate that controls the bank holding company or any ownership interests in an unincorporated entity that controls the bank holding company, the bank holding company shall cause its subsidiary to, within six months after the day of the realization, sell or otherwise dispose of the shares or ownership interests.2001, c. 9, s. 183
Reduction of capitalThe stated capital of a bank holding company may be reduced by special resolution.LimitationA bank holding company shall not reduce its stated capital by special resolution if there are reasonable grounds for believing that the bank holding company is, or the reduction would cause the bank holding company to be, in contravention of any regulation referred to in subsection 949(1) or (2) or any direction made pursuant to subsection 949(3).Contents of special resolutionA special resolution to reduce the stated capital of a bank holding company shall specify the stated capital account or accounts from which the reduction of stated capital effected by the special resolution will be deducted.Approval by SuperintendentA special resolution to reduce the stated capital of a bank holding company has no effect until it is approved in writing by the Superintendent.ExceptionSubsection (4) does not apply ifthe reduction in the stated capital is made solely as a result of changes made to the accounting principles referred to in subsection 308(4); andthere is to be no return of capital to shareholders as a result of the reduction.Conditions for approvalNo approval to reduce the stated capital of a bank holding company may be given by the Superintendent unless application therefor is made within three months after the time of the passing of the special resolution and a copy of the special resolution, together with a notice of intention to apply for approval, has been published in the Canada Gazette.Statements to be submittedIn addition to evidence of the passing of a special resolution to reduce the stated capital of a bank holding company and of the publication thereof, statements showingthe number of the bank holding company’s shares issued and outstanding,the results of the voting by class of shares of the bank holding company,the bank holding company’s assets and liabilities, andthe reason why the bank holding company seeks the reduction of capitalshall be submitted to the Superintendent at the time of the application for approval of the special resolution.2001, c. 9, s. 183; 2007, c. 6, s. 112
Recovery by actionWhere any money or property was paid or distributed to a shareholder or other person as a consequence of a reduction of capital made contrary to section 718, a creditor of the bank holding company may apply to a court for an order compelling the shareholder or other person to pay the money or deliver the property to the bank holding company.Shares held by personal representativeNo person holding shares in the capacity of a personal representative and registered on the records of the bank holding company as a shareholder and therein described as the personal representative of a named person is personally liable under subsection (1), but the named person is subject to all the liabilities imposed by that subsection.LimitationAn action to enforce a liability imposed by subsection (1) may not be commenced more than two years after the date of the act complained of.Remedy preservedThis section does not affect any liability that arises under section 794.2001, c. 9, s. 183
Adjustment of stated capital accountOn a purchase, redemption or other acquisition by a bank holding company of shares or fractions thereof issued by it, the bank holding company shall deduct from the stated capital account maintained for the class or series of shares so purchased, redeemed or otherwise acquired an amount equal to the result obtained by multiplying the stated capital in respect of the shares of that class or series by the number of shares of that class or series so purchased, redeemed or otherwise acquired and dividing by the number of shares of that class or series outstanding immediately before the purchase, redemption or other acquisition.Adjustment of stated capital accountA bank holding company shall adjust its stated capital account or accounts in accordance with any special resolution referred to in section 718.Shares converted to another classOn a conversion of outstanding shares of a bank holding company into shares of another class or series, or on a change of outstanding shares of the bank holding company into shares of another class or series, the bank holding company shalldeduct from the stated capital account maintained for the class or series of shares converted or changed an amount equal to the result obtained by multiplying the stated capital of the shares of that class or series by the number of shares of that class or series converted or changed, and dividing by the number of outstanding shares of that class or series immediately before the conversion or change; andrecord the result obtained under paragraph (a) and any additional consideration received pursuant to the conversion or change in the stated capital account maintained or to be maintained for the class or series of shares into which the shares have been converted or changed.Stated capital of convertible sharesFor the purposes of subsection (3) and subject to the bank holding company’s by-laws, where a bank holding company issues two classes of shares and there is attached to each class a right to convert a share of one class into a share of the other class and a share is so converted, the amount of stated capital attributable to a share in either class is the aggregate of the stated capital of both classes divided by the number of outstanding shares of both classes immediately before the conversion.Conversion or change of sharesShares issued by a bank holding company and converted into shares of another class or series, or changed under subsection 217(1) into shares of another class or series, become issued shares of the class or series of shares into which the shares have been converted or changed.2001, c. 9, s. 183
Addition to stated capital accountOn a conversion of any debt obligation of a bank holding company into shares of a class or series of shares, the bank holding company shalldeduct from the liabilities of the bank holding company the nominal value of the debt obligation being converted; andrecord the result obtained under paragraph (a) and any additional consideration received for the conversion in the stated capital account maintained or to be maintained for the class or series of shares into which the debt obligation has been converted.2001, c. 9, s. 183
Declaration of dividendThe directors of a bank holding company may declare and a bank holding company may pay a dividend by issuing fully paid shares of the bank holding company or options or rights to acquire fully paid shares of the bank holding company and, subject to subsection (4), the directors of a bank holding company may declare and a bank holding company may pay a dividend in money or property, and where a dividend is to be paid in money, the dividend may be paid in a currency other than the currency of Canada.Notice to SuperintendentThe directors of a bank holding company shall notify the Superintendent of the declaration of a dividend at least 15 days before the day fixed for its payment.Share dividendIf shares of a bank holding company are issued in payment of a dividend, the bank holding company shall record in the stated capital account maintained or to be maintained for the shares of the class or series issued in payment of the dividend the declared amount of the dividend stated as an amount of money.When dividend not to be declaredThe directors of a bank holding company shall not declare and a bank holding company shall not pay a dividend if there are reasonable grounds for believing that the bank holding company is, or the payment would cause the bank holding company to be, in contravention of any regulation referred to in subsection 949(1) or (2) or any direction made pursuant to subsection 949(3).2001, c. 9, s. 183; 2007, c. 6, s. 113
Subordinated Indebtedness
Restriction on subordinated indebtednessA bank holding company shall not issue subordinated indebtedness unless the subordinated indebtedness is fully paid for in money or, with the approval of the Superintendent, in property.References to subordinated indebtednessA person shall not in any prospectus, advertisement, correspondence or literature relating to any subordinated indebtedness issued or to be issued by a bank holding company refer to the subordinated indebtedness otherwise than as subordinated indebtedness.Other currenciesWhen issuing subordinated indebtedness, a bank holding company may provide that any aspect of the subordinated indebtedness relating to money or involving the payment of or the liability to pay money in relation thereto be in a currency other than that of Canada including, without restricting the generality of the foregoing, the payment of any interest thereon.2001, c. 9, s. 183
Security Certificates and Transfers
Sections 81 to 135 applySections 81 to 135 apply in respect of bank holding companies, subject to the following:references to “bank” in those sections are to be read as references to “bank holding company”;references to “this Act” in those sections are to be read as references to “this Part”;references to “Part VII” in those sections are to be read as references to “Division 7 of Part XV”;references to “this Part” in those sections are to be read as references to “this Division”;the reference to “subsections 137(5) to (7) and sections 138 to 141 and 145” in subsection 93(1) is to be read as a reference to “subsections 726(5) to (7) and sections 727 to 730 and 734”; andthe reference to “section 71 or 77” in subsection 97(3) is to be read as a reference to “section 715 or 720”.2001, c. 9, s. 183; 2005, c. 54, s. 90
Corporate GovernanceShareholders
Place of meetingsMeetings of shareholders of a bank holding company shall be held at the place within Canada provided for in the by-laws of the bank holding company or, in the absence of any such provision, at the place within Canada that the directors determine.Participation by electronic meansUnless the by-laws provide otherwise, any person who is entitled to attend a meeting of shareholders may participate in the meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting if the bank holding company makes one available. A person who is participating in a meeting by one of those means is deemed for the purposes of this Part to be present at the meeting.RegulationsThe Governor in Council may make regulations respecting the manner of and conditions for participating in a meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting.2001, c. 9, s. 183; 2005, c. 54, s. 91
Calling meetingsThe directors of a bank holding companyshall, after the meeting called pursuant to subsection 701(1), call the first annual meeting of shareholders of the bank holding company, which meeting must be held not later than six months after the end of the first financial year of the bank holding company, and subsequently call an annual meeting of shareholders, which meeting must be held not later than six months after the end of each financial year; andmay at any time call a special meeting of shareholders.Order to delay calling annual meetingDespite subsection (1), the bank holding company may apply to the court for an order extending the time for calling an annual meeting.Obligation to notify SuperintendentThe bank holding company shall give notice of the application to the Superintendent before any hearing concerning the application and shall provide the Superintendent with a copy of any order that is issued.Superintendent’s right to appearThe Superintendent is entitled to appear and be heard in person or by counsel at any hearing concerning the application.Authority to fix record dateThe directors may in advance fix a record date, that is within the prescribed period, for the determination of shareholders for any purpose, including for a determination of which shareholders are entitled toreceive payment of a dividend;participate in a liquidation distribution;receive notice of a meeting of shareholders; orvote at a meeting of shareholders.Determination of record dateIf no record date is fixed,the record date for the determination of shareholders who are entitled to receive notice of a meeting of shareholders isat the close of business on the day immediately preceding the day on which the notice is given, orif no notice is given, the day on which the meeting is held; andthe record date for the determination of shareholders for any other purpose, other than to establish a shareholder’s right to vote, is at the close of business on the day on which the directors pass a resolution in respect of that purpose.Notice of record dateIf a record date is fixed and unless notice of the record date is waived in writing by every holder of a share of the class or series affected whose name is set out in the securities register at the close of business on the day on which the directors fix the record date, notice of the record date shall be given within the prescribed period byadvertisement in a newspaper in general circulation in the place where the bank holding company’s head office is situated and in each place in Canada where the bank holding company has a transfer agent or where a transfer of its shares may be recorded; andwritten notice to each stock exchange in Canada on which the bank holding company’s shares are listed for trading.2001, c. 9, s. 183; 2005, c. 54, s. 92
Notice of meetingNotice of the time and place of a meeting of shareholders of a bank holding company shall be sent within the prescribed period toeach shareholder entitled to vote at the meeting;each director;the auditor of the bank holding company; andthe Superintendent.ExceptionIn the case of a bank holding company that is not a distributing bank holding company, notice may be sent within any shorter period specified in its by-laws.Number of eligible votesA bank holding company with equity of twelve billion dollars or more shall set out in the notice of a meeting the number of eligible votes, as defined under subsection 156.09(1), that may be cast at the meeting as of the record date for determining those shareholders entitled to receive the notice of meeting, or if there are to be separate votes of shareholders at the meeting, the number of eligible votes, as defined in that subsection, in respect of each separate vote to be held at the meeting.Publication in newspaperIn addition to the notice required under subsection (1), where any class of shares of a bank holding company is publicly traded on a recognized stock exchange in Canada, notice of the time and place of a meeting of shareholders shall be published once a week for at least four consecutive weeks before the date of the meeting in a newspaper in general circulation in the place where the head office of the bank holding company is situated and in each place in Canada where the bank holding company has a transfer agent or where a transfer of the bank holding company’s shares may be recorded.2001, c. 9, s. 183; 2005, c. 54, s. 93; 2007, c. 6, s. 132; 2012, c. 5, s. 78
Notice not requiredA notice of a meeting is not required to be sent to shareholders who are not registered on the records of the bank holding company or the bank holding company’s transfer agent on the record date fixed under paragraph 726(5)(c) or determined under paragraph 726(6)(a).Effect of defaultFailure to receive a notice of a meeting of shareholders does not deprive a shareholder of the right to vote at the meeting.2001, c. 9, s. 183; 2005, c. 54, s. 94
Notice of adjourned meetingIf a meeting of shareholders is adjourned for less than thirty days, it is not necessary, unless the by-laws otherwise provide, to give notice of the adjourned meeting, other than by announcement at the earliest meeting that is adjourned.Notice where adjournment is longerIf a meeting of shareholders is adjourned by one or more adjournments for a total of thirty days or more, notice of the continuation of the meeting shall be given as for an original meeting but, unless the meeting is adjourned by one or more adjournments for a total of more than ninety days, subsection 156.04(1) does not apply.2001, c. 9, s. 183
Special businessAll matters dealt with at a special meeting of shareholders and all matters dealt with at an annual meeting of shareholders, except consideration of the financial statements, report of the auditor, election of directors, remuneration of directors and reappointment of the incumbent auditor, are deemed to be special business.Notice of special businessNotice of a meeting of shareholders at which special business is to be transacted muststate the nature of the special business in sufficient detail to permit a shareholder to form a reasoned judgment thereon; andcontain the text of any special resolution to be submitted to the meeting.2001, c. 9, s. 183
Waiver of noticeA shareholder and any other person entitled to attend a meeting of shareholders may in any manner waive notice of a meeting of shareholders.Attendance is waiverAttendance at a meeting of shareholders is a waiver of notice of the meeting, except when a person attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.2001, c. 9, s. 183
ProposalsSubject to subsections (1.1) and (1.2), a registered holder or beneficial owner of shares that may be voted at an annual meeting of shareholders maysubmit to the bank holding company notice of any matter that they propose to raise at the meeting (in this section and section 733 referred to as a “proposal”); anddiscuss at the meeting any matter in respect of which they would have been entitled to submit a proposal.Eligibility to submit proposalTo be eligible to submit a proposal a person shallfor at least the prescribed period be the registered holder or beneficial owner of at least the prescribed number of the bank holding company’s outstanding shares; orhave the support of persons who, in the aggregate and including or not including the person who submits the proposal, have for at least the prescribed period been the registered holders or beneficial owners of at least the prescribed number of the bank holding company’s outstanding shares.Information to be providedA proposal is to be accompanied by the following information:the name and address of the person submitting the proposal and the names and addresses of their supporters, if any; andthe number of shares held or owned by the person and their supporters, if any, and the date that the shares were acquired.Information not part of proposalThe information provided under subsection (1.2) does not form part of a proposal or of the supporting statement referred to in subsection (3) and is not to be included for the purpose of the prescribed maximum number of words referred to in subsection (3).Proof may be requiredIf the bank holding company requests within the prescribed period that a person provide proof that they are eligible to submit a proposal, the person shall within the prescribed period provide proof that they meet the requirements of subsection (1.1).Circulation of proposalA bank holding company that solicits proxies shall set out in the management proxy circular required by subsection 156.05(1) or attach to it any proposal submitted for consideration at a meeting of shareholders.Supporting statementAt the request of the person who submits a proposal, the bank holding company shall set out in the management proxy circular or attach to it the person’s statement in support of the proposal and their name and address. The statement and proposal together are not to exceed the prescribed maximum number of words.Nomination of directorsA proposal may include nominations for the election of directors if it is signed by one or more registered holders or beneficial owners of shares representing in the aggregate not less than 5% of the shares of the bank holding company or 5% of the shares of a class of its shares entitled to vote at the meeting at which the proposal is to be presented.ExemptionA bank holding company is not required to comply with subsections (2) and (3) ifthe proposal is not submitted to the bank holding company at least the prescribed number of days before the anniversary date of the notice of meeting that was sent to shareholders in respect of the previous annual meeting of shareholders;it clearly appears that the primary purpose of the proposal is to enforce a personal claim or redress a personal griev­ance against the bank holding company or its directors, officers or security holders;it clearly appears that the proposal does not relate in a significant way to the business or affairs of the bank holding company;the person submitting the proposal failed within the prescribed period before the bank holding company receives their proposal to present, in person or by proxy, at a meeting of shareholders a proposal that at their request had been set out in or attached to a management proxy circular;substantially the same proposal was set out in or attached to a management proxy circular or dissident’s proxy circular relating to, and presented to shareholders at, a meeting of shareholders held within the prescribed period before the receipt of the proposal and did not receive the prescribed minimum amount of support at the meeting; orthe rights conferred by subsections (1) to (4) are being abused to secure publicity.Bank holding company may refuse to include proposalIf a person who submits a proposal fails to continue to hold or own shares in accordance with paragraph (1.1)(a) or, as the case may be, does not continue to have the support of persons who are in the aggregate the registered holders or beneficial owners of the prescribed number of shares in accordance with paragraph (1.1)(b) until the end of the meeting, the bank holding company is not required to set out any proposal submitted by that person in or attach it to a management proxy circular for any meeting held within the prescribed period after the day of the meeting.Immunity for proposal and statementNo bank holding company or person acting on behalf of a bank holding company incurs any liability by reason only of circulating a proposal or statement in compliance with subsections (2) and (3).2001, c. 9, s. 183; 2005, c. 54, s. 95
Notice of refusalIf a bank holding company refuses to include a proposal in a management proxy circular, it shall in writing notify the person submitting the proposal of its intention to omit the proposal from the management proxy circular and of the reasons for the refusal. It shall notify the person within the prescribed period after either the day on which it receives the proposal or, if it has requested proof under subsection 732(1.4), the day on which it receives the proof.Application to courtOn the application of a person submitting a proposal who claims to be aggrieved by a bank holding company’s refusal under subsection (1), a court may restrain the holding of the meeting at which the proposal is sought to be presented and make any further order that it thinks fit.Appeal to courtA bank holding company or any person claiming to be aggrieved by a proposal may apply to a court for an order permitting the bank holding company to not attach the proposal to the notice of a meeting, and the court, if it is satisfied that subsection 732(5) applies, may make such order as it thinks fit.Notice to SuperintendentAn applicant under subsection (2) or (3) shall give the Superintendent written notice of the application and the Superintendent may appear and be heard at the hearing of the application in person or by counsel.2001, c. 9, s. 183; 2005, c. 54, s. 96
List of shareholders entitled to noticeA bank holding company shall prepare an alphabetical list of shareholders entitled to receive notice of a meeting showing the number of shares held by each shareholderif a record date is fixed under paragraph 726(5)(c), no later than 10 days after that date; andif no record date is fixed, on the record date determined under paragraph 726(6)(a).Voting listThe bank holding company shall prepare an alphabetical list of shareholders entitled to vote as of the record date showing the number of shares held by each shareholderif a record date is fixed under paragraph 726(5)(d), no later than 10 days after that date; andif no record date is fixed under paragraph 726(5)(d), no later than 10 days after a record date is fixed under paragraph 726(5)(c) or no later than the record date determined under paragraph 726(6)(a), as the case may be.Entitlement to voteSubject to section 156.09, a shareholder whose name appears on a list prepared under subsection (2) is entitled to vote the shares shown opposite their name.Examination of listA shareholder may examine the list of shareholdersduring usual business hours at the head office of the bank holding company or at the place where its central securities register is maintained; andat the meeting of shareholders for which the list was prepared.2001, c. 9, s. 183; 2005, c. 54, s. 97
QuorumUnless the by-laws otherwise provide, a quorum of shareholders is present at a meeting of shareholders if the holders of a majority of the shares who are entitled to vote at the meeting are present in person or represented by proxyholders.Quorum present at openingIf a quorum is present at the opening of a meeting of shareholders, the shareholders present may, unless the by-laws otherwise provide, proceed with the business of the meeting, notwithstanding that a quorum is not present throughout the meeting.Quorum not present at openingIf a quorum is not present at the opening of a meeting of shareholders, the shareholders present may adjourn the meeting to a fixed time and place but may not transact any other business.2001, c. 9, s. 183
One shareholder meetingIf a bank holding company has only one shareholder, or only one holder of any class or series of shares, the shareholder present in person or represented by a proxyholder constitutes a meeting of shareholders or a meeting of shareholders of that class or series.2001, c. 9, s. 183
One share — one voteSubject to subsection 156.09, if a share of a bank holding company entitles the holder of the share to vote at a meeting of shareholders, that share entitles the shareholder to one vote at the meeting.2001, c. 9, s. 183
Representative shareholderIf an entity is a shareholder of a bank holding company, the bank holding company shall recognize any natural person authorized by a resolution of the directors or governing body or similar authority of the entity to represent it at meetings of shareholders of the bank holding company.PowersA natural person authorized under subsection (1) to represent an entity may exercise on behalf of the entity all the powers the entity could exercise if it were a natural person as well as a shareholder.2001, c. 9, s. 183
Joint shareholdersUnless the by-laws otherwise provide, if two or more persons hold shares jointly, one of those holders present at a meeting of shareholders may in the absence of the others vote the shares, but if two or more of those persons who are present in person or represented by proxyholder vote, they shall vote as one on the shares jointly held by them.2001, c. 9, s. 183
Voting by hands or ballotUnless the by-laws otherwise provide, voting at a meeting of shareholders shall take place by show of hands except when a ballot is demanded by either a shareholder or proxyholder entitled to vote at the meeting.BallotA shareholder or proxyholder may demand a ballot either before or after any vote by show of hands.Electronic votingDespite subsection (1) and unless the by-laws provide otherwise, any vote referred to in that subsection may be held entirely by means of a telephonic, electronic or other communication facility if the bank holding company makes one available.Voting while participating electronicallyUnless the by-laws provide otherwise, any person who is participating in a meeting of shareholders under subsection 725(2) and entitled to vote at that meeting may vote by means of the telephonic, electronic or other communication facility that the bank holding company has made available for that purpose.RegulationsThe Governor in Council may make regulations respecting the manner of and conditions for voting at a meeting of shareholders by means of a telephonic, electronic or other communication facility.2001, c. 9, s. 183; 2005, c. 54, s. 98
Resolution in lieu of meetingExcept where a written statement is submitted by a director under section 762 or by an auditor under subsection 853(1),a resolution in writing signed by all the shareholders entitled to vote on that resolution at a meeting of shareholders is as valid as if it had been passed at a meeting of the shareholders; anda resolution in writing dealing with all matters required by this Part to be dealt with at a meeting of shareholders, and signed by all the shareholders entitled to vote at that meeting, satisfies all the requirements of this Part relating to meetings of shareholders.Filing resolutionA copy of every resolution referred to in subsection (1) shall be kept with the minutes of the meetings of shareholders.EvidenceUnless a ballot is demanded, an entry in the minutes of a meeting that the chairperson declared a resolution to be carried or defeated is in the absence of evidence to the contrary proof of that fact without proof of the number or proportion of votes recorded in favour of or against the resolution.2001, c. 9, s. 183; 2005, c. 54, s. 99
Requisitioned meetingShareholders who together hold not less than 5 per cent of the issued and outstanding shares of a bank holding company that carry the right to vote at a meeting sought to be held may requisition the directors to call a meeting of shareholders for the purposes stated in the requisition.FormA requisition referred to in subsection (1)must state the business to be transacted at the meeting and must be sent to each director and to the head office of the bank holding company; andmay consist of several documents of like form, each signed by one or more shareholders.Directors calling meetingOn receipt of a requisition referred to in subsection (1), the directors shall call a meeting of shareholders to transact the business stated in the requisition, unlessa record date has been fixed under paragraph 726(5)(c) and notice of it has been given under subsection 726(7);the directors have called a meeting of shareholders and have given notice thereof under section 727; orthe business of the meeting as stated in the requisition includes matters described in paragraphs 732(5)(b) to (e).Shareholders’ powerIf the directors do not call a meeting within twenty-one days after receiving the requisition referred to in subsection (1), any shareholder who signed the requisition may call the meeting.ProcedureA meeting called under this section shall be called as nearly as possible in the manner in which meetings are to be called pursuant to the by-laws and this Part.ReimbursementUnless the shareholders otherwise resolve at a meeting called under subsection (4), the bank holding company shall reimburse the shareholders for any expenses reasonably incurred by them in requisitioning, calling and holding the meeting.2001, c. 9, s. 183; 2005, c. 54, s. 100
Court may order meeting to be calledA court may, on the application of a director, a shareholder who is entitled to vote at a meeting of shareholders or the Superintendent, order a meeting to be called, held or conducted in the manner that the court directs ifit is impracticable to call the meeting within the time or in the manner in which it is to be called;it is impracticable to conduct the meeting in the manner required by this Part or the by-laws; orthe court thinks that the meeting ought to be called, held or conducted within the time or in the manner that it directs for any other reason.Varying quorumWithout restricting the generality of subsection (1), a court may order that the quorum required by the by-laws or this Part be varied or dispensed with at a meeting called, held and conducted pursuant to this section.Valid meetingA meeting called, held and conducted pursuant to this section is for all purposes a meeting of shareholders of the bank holding company duly called, held and conducted.2001, c. 9, s. 183; 2005, c. 54, s. 101
Court review of electionA bank holding company or a shareholder or director of a bank holding company may apply to a court to resolve any dispute in respect of the election or appointment of a director or an auditor of the bank holding company.Powers of courtOn an application under subsection (1), a court may make any order it thinks fit including, without limiting the generality of the foregoing,an order restraining a director or auditor whose election or appointment is challenged from acting pending determination of the dispute;an order declaring the result of the disputed election or appointment;an order requiring a new election or appointment, and including in the order directions for the management of the business and affairs of the bank holding company until a new election is held or the new appointment is made; andan order determining the voting rights of shareholders and of persons claiming to own shares.2001, c. 9, s. 183
Notice to SuperintendentA person who makes an application under subsection 743(1) or 744(1) shall give notice of the application to the Superintendent before the hearing and shall deliver a copy of the order of the court, if any, to the Superintendent.Superintendent representationThe Superintendent may appear and be heard in person or by counsel at the hearing of an application referred to in subsection (1).2001, c. 9, s. 183
Proxies and Voting Restrictions
Sections 156.01 to 156.09 applySections 156.01 to 156.09 apply in respect of bank holding companies, subject to the following:references to “bank” in those sections are to be read as references to “bank holding company”;references to “this Part” in those sections are to be read as references to “this Division”;the English version of subsection 156.05(1) is to be read without reference to “or auditors”;the reference to “section 375” in subsection 156.09(4) is to be read as a reference to “section 878”;the reference to “subsection 138(1.1)” in subsection 156.09(11) is to be read as a reference to “subsection 727(2)”; andthe reference to “paragraph 143(1.1)(b)” in subparagraph (b)(vi) of the definition solicitation in section 156.01 is to be read as a reference to “paragraph 732(1.1)(b)”.2001, c. 9, s. 1832005, c. 54, s. 102
Directors and OfficersDuties
Duty to manageSubject to this Act, the directors of a bank holding company shall manage or supervise the management of the business and affairs of the bank holding company.Specific dutiesWithout limiting the generality of subsection (1), the directors of a bank holding company shallestablish an audit committee to perform the duties referred to in subsections 782(3) and (4);establish procedures to resolve conflicts of interest, including techniques for the identification of potential conflict situations and for restricting the use of confidential information;designate a committee of the board of directors to monitor the procedures referred to in paragraph (b); andestablish investment and lending policies, standards and procedures in accordance with section 927.ExceptionParagraph (2)(a) does not apply to the directors of a bank holding company ifall the voting shares of the bank holding company are beneficially owned by a Canadian financial institution described in any of paragraphs (a) to (d) of the definition financial institution in section 2; andthe audit committee of the financial institution performs for and on behalf of the bank holding company all the functions that would otherwise be required to be performed by the audit committee of the bank holding company under this Part.2001, c. 9, s. 183
Duty of careEvery director and officer of a bank holding company in exercising any of the powers of a director or an officer and discharging any of the duties of a director or an officer shallact honestly and in good faith with a view to the best interests of the bank holding company; andexercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.Duty to complyEvery director, officer and employee of a bank holding company shall comply with this Act, the regulations, the bank holding company’s incorporating instrument and the by-laws of the bank holding company.No exculpationNo provision in any contract, in any resolution or in the by-laws of a bank holding company relieves any director, officer or employee of the bank holding company from the duty to act in accordance with this Act and the regulations or relieves a director, officer or employee from liability for a breach thereof.2001, c. 9, s. 183
Qualification and Number — Directors
Minimum number of directorsA bank holding company shall have at least seven directors.Residency requirementAt least one half of the directors of a bank holding company that is a subsidiary of a foreign bank and a majority of the directors of any other bank holding company must be, at the time of each director’s election or appointment, resident Canadians.2001, c. 9, s. 183; 2007, c. 6, s. 114
Disqualified personsThe following persons are disqualified from being directors of a bank holding company:a person who is less than eighteen years of age;a person who is of unsound mind and has been so found by a court in Canada or elsewhere;a person who has the status of a bankrupt;a person who is not a natural person;a person who is prohibited by subsection 156.09(9) or section 901 or 914 from exercising voting rights attached to shares of the bank holding company;a person who is an officer, director or full time employee of an entity that is prohibited by subsection 156.09(9) or section 901 or 914 from exercising voting rights attached to shares of the bank holding company;a person who is an officer, director, employee or agent of — or any other person acting on behalf of — an eligible agent within the meaning of subsection 370(1);[Repealed, 2013, c. 40, s. 163]a minister of Her Majesty in right of Canada or in right of a province; anda person who is an agent or employee of the government of a foreign country or any political subdivision thereof.2001, c. 9, s. 183; 2012, c. 19, s. 335, c. 31, s. 119; 2013, c. 40, s. 163
No shareholder requirementA director of a bank holding company is not required to hold shares of the bank holding company.2001, c. 9, s. 183
Limit on directorsNo more than 15 per cent of the directors of a bank holding company may, at each director’s election or appointment, be employees of the bank holding company or a subsidiary of the bank holding company, except that up to four persons who are employees of the bank holding company or a subsidiary of the bank holding company may be directors of the bank holding company if those directors constitute not more than one half of the directors of the bank holding company.2001, c. 9, s. 183
Election and Tenure — Directors
Number of directorsSubject to section 217, subsection 749(1) and section 756, the directors of a bank holding company shall, by by-law, determine the number of directors or the minimum and maximum number of directors, but no by-law that decreases the number of directors shortens the term of an incumbent director.Election at annual meetingA by-law made pursuant to subsection (1) that provides for a minimum and maximum number of directors may provide that the number of directors to be elected at any annual meeting of the shareholders be such number as is fixed by the directors prior to the annual meeting.2001, c. 9, s. 183
Election or appointment as directorThe election or appointment of a person as a director is subject to the following:the person was present at the meeting when the election or appointment took place and did not refuse to hold office as a director; orthe person was not present at the meeting when the election or appointment took place butconsented in writing to hold office as a director before the election or appointment or within 10 days after it, oracted as a director after the election or appointment.2005, c. 54, s. 103
Term of directorsExcept where this Part or the by-laws of a bank holding company provide for cumulative voting, a bank holding company may, by by-law, provide that the directors be elected for terms of one, two or three years.Term of one, two or three yearsA director elected for a term of one, two or three years holds office until the close of the first, second or third annual meeting of shareholders, as the case may be, following the election of the director.No stated termA director who is not elected for an expressly stated term of office ceases to hold office at the close of the next annual meeting of shareholders following the election of the director.Tenure of officeIt is not necessary that all directors elected at a meeting of shareholders hold office for the same term.Tenure of officeIf a by-law of a bank holding company provides that the directors be elected for a term of two or three years, it may also provide that the term of office of each director be for the whole of that term, or that, as nearly as may be, one half of the directors retire each year if the term is two years, and that one third of the directors retire each year if the term is three years.Composition requirementsIf a director of a bank holding company is elected or appointed for a term of more than one year, the bank holding company shall comply with subsection 749(2) and section 752 at each annual meeting of shareholders during the director’s term of office as if that director were elected or appointed on that date.2001, c. 9, s. 183
Determining election of directorsExcept where this Part or the by-laws of a bank holding company provide for cumulative voting, the persons, to the number authorized to be elected, who receive the greatest number of votes at an election of directors of a bank holding company shall be the directors thereof.Determining election of directorsIf, at any election of directors referred to in subsection (1), two or more persons receive an equal number of votes and there are not sufficient vacancies remaining to enable all the persons receiving an equal number of votes to be elected, the directors who receive a greater number of votes or the majority of them shall, in order to complete the full number of directors, determine which of the persons so receiving an equal number of votes are to be elected.2001, c. 9, s. 183
Cumulative votingWhere this Part or the by-laws provide for cumulative voting,there shall be a stated number of directors fixed by by-law and not a minimum and maximum number of directors;each shareholder entitled to vote at an election of directors has the right to cast a number of votes equal to the number of votes attached to the shares held by the shareholder multiplied by the number of directors to be elected, and the shareholder may cast all such votes in favour of one candidate or distribute them among the candidates in any manner;a separate vote of shareholders shall be taken with respect to each candidate nominated for director unless a resolution is passed unanimously permitting two or more persons to be elected by a single vote;if a shareholder has voted for more than one candidate without specifying the distribution of the votes among the candidates, the shareholder is deemed to have distributed the votes equally among the candidates for whom the shareholder voted;if the number of candidates nominated for director exceeds the number of positions to be filled, the candidates who receive the least number of votes shall be eliminated until the number of candidates remaining equals the number of positions to be filled;each director ceases to hold office at the close of the next annual meeting of shareholders following the director’s election;a director may be removed from office only if the number of votes cast in favour of a motion to remove the director is greater than the product of the number of directors required by the by-laws and the number of votes cast against the motion; andthe number of directors required by the by-laws may be decreased only if the number of votes cast in favour of a motion to decrease the number of directors is greater than the product of the number of directors required by the by-laws and the number of votes cast against the motion.Mandatory cumulative votingWhere the aggregate of the voting shares beneficially owned by a person and any entities controlled by the person carries more than 10 per cent of the voting rights attached to all the outstanding voting shares of a bank holding company, the directors shall be elected by cumulative voting.ExceptionSubsection (2) does not apply if all the voting shares of the bank holding company that are outstanding are beneficially owned byone person;one person and one or more entities controlled by that person; orone or more entities controlled by the same person.ExceptionSubsection (2) does not apply to a widely held bank holding company with equity of twelve billion dollars or more or to a widely held bank holding company that controls a bank to which subsection 378(1) applies.Transitional electionWhere this Part or the by-laws of a bank holding company provide for cumulative voting, the shareholders of the bank holding company shallat the first annual meeting of shareholders held not earlier than ninety days following the date that cumulative voting is required under subsection (2) or provided for in the by-laws, andat each succeeding annual meeting,elect the stated number of directors to hold office until the close of the next annual meeting of shareholders following their election.ExceptionNothing in this Part precludes the holders of any class or series of shares of a bank holding company from having an exclusive right to elect one or more directors.2001, c. 9, s. 183; 2005, c. 54, s. 104; 2007, c. 6, s. 132; 2012, c. 5, s. 79
Re-election of directorsA director who has completed a term of office is, if otherwise qualified, eligible for re-election.2001, c. 9, s. 183
Incomplete Elections and Director Vacancies
Void election or appointmentIf, immediately after the time of any purported election or appointment of directors, the board of directors would fail to comply with subsection 749(2) or section 752, the purported election or appointment of all persons purported to be elected or appointed at that time is void unless the directors, within forty-five days after the discovery of the non-compliance, develop a plan, approved by the Superintendent, to rectify the non-compliance.Failure to elect minimumWhere, at the close of a meeting of shareholders of a bank holding company, the shareholders have failed to elect the number or minimum number of directors required by this Part or the by-laws of a bank holding company, the purported election of directors at the meetingis valid if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together constitute a quorum; oris void if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together do not constitute a quorum.2001, c. 9, s. 183
Directors where elections incomplete or voidNotwithstanding subsections 754(2) and (3) and paragraphs 756(1)(f) and 760(1)(a), where subsection 758(1) or (2) applies at the close of any meeting of shareholders of a bank holding company, the board of directors shall, until their successors are elected or appointed, consist solely ofwhere paragraph 758(2)(a) applies, the directors referred to in that paragraph; orwhere subsection 758(1) or paragraph 758(2)(b) applies, the persons who were the incumbent directors immediately before the meeting.Where there is no approved rectification planNotwithstanding subsections 754(2) and (3) and paragraphs 756(1)(f) and 760(1)(a), where a plan to rectify the non-compliance referred to in subsection 758(1) has not been approved by the Superintendent by the end of the forty-five day period referred to in that subsection, the board of directors shall, until their successors are elected or appointed, consist solely of the persons who were the incumbent directors immediately before the meeting at which the purported election or appointment referred to in that subsection occurred.Directors to call meetingWhere subsection (1) or (2) applies, the board of directors referred to in that subsection shall without delay call a special meeting of shareholders to fill the vacancies, where paragraph 758(2)(a) applies, or elect a new board of directors, where subsection 758(1) or paragraph 758(2)(b) applies.Shareholder may call meetingWhere the directors fail to call a special meeting required by subsection (3), the meeting may be called by any shareholder.2001, c. 9, s. 183
Ceasing to hold officeA director ceases to hold officeat the close of the annual meeting at which the director’s term of office expires;when the director dies or resigns;when the director becomes disqualified under section 750 or ineligible to hold office pursuant to subsection 790(2);when the director is removed under section 761; orwhen the director is removed from office under section 963 or 964.Date of resignationThe resignation of a director of a bank holding company becomes effective at the time a written resignation is sent to the bank holding company by the director or at the time specified in the resignation, whichever is later.2001, c. 9, s. 183
Removal of directorSubject to paragraph 756(1)(g), the shareholders of a bank holding company may by resolution at a special meeting remove any director or all the directors from office.ExceptionWhere the holders of any class or series of shares of a bank holding company have the exclusive right to elect one or more directors, a director so elected may be removed only by a resolution at a meeting of the shareholders of that class or series.Vacancy by removalSubject to paragraphs 756(1)(b) to (e), a vacancy created by the removal of a director may be filled at the meeting of the shareholders at which the director is removed or, if not so filled, may be filled under section 765 or 766.2001, c. 9, s. 183
Statement of directorA director whoresigns,receives a notice or otherwise learns of a meeting of shareholders called for the purpose of removing the director from office, orreceives a notice or otherwise learns of a meeting of directors or shareholders at which another person is to be appointed or elected to fill the office of director, whether because of the director’s resignation or removal or because the director’s term of office has expired or is about to expire,is entitled to submit to the bank holding company a written statement giving the reasons for the resignation or the reasons why the director opposes any proposed action or resolution.Statement re disagreementWhere a director resigns as a result of a disagreement with the other directors or the officers of a bank holding company, the director shall submit to the bank holding company and the Superintendent a written statement setting out the nature of the disagreement.2001, c. 9, s. 183
Circulation of statementA bank holding company shall without delay on receipt of a director’s statement referred to in subsection 762(1) relating to a matter referred to in paragraph 762(1)(b) or (c), or a director’s statement referred to in subsection 762(2), send a copy of it to each shareholder entitled to receive a notice of meetings and to the Superintendent, unless the statement is attached to a notice of a meeting.Immunity for statementNo bank holding company or person acting on its behalf incurs any liability by reason only of circulating a director’s statement in compliance with subsection (1).2001, c. 9, s. 183
Shareholders filling vacancyThe by-laws of a bank holding company may provide that a vacancy among the directors is to be filled onlyby a vote of the shareholders; orby a vote of the holders of any class or series of shares having an exclusive right to elect one or more directors if the vacancy occurs among the directors elected by the holders of that class or series.2001, c. 9, s. 183
Directors filling vacancyDespite section 772 but subject to subsection (2) and sections 764 and 766, a quorum of directors may fill a vacancy among the directors except a vacancy resulting from a change in the by-laws by which the number or the minimum or maximum number of directors is increased or from a failure to elect the number or minimum number of directors provided for in the by-laws.Where composition failsNotwithstanding sections 764 and 772, where by reason of a vacancy the number of directors or the composition of the board of directors fails to meet any of the requirements of section 749 or section 752, the directors who, in the absence of any by-law, would be empowered to fill that vacancy shall do so forthwith.2001, c. 9, s. 183; 2005, c. 54, s. 105
Class vacancyNotwithstanding section 772, where the holders of any class or series of shares of a bank holding company have an exclusive right to elect one or more directors and a vacancy occurs among those directors, then, subject to section 764,the remaining directors elected by the holders of that class or series of shares may fill the vacancy except one resulting from an increase in the number or the minimum or maximum number of directors for that class or series or from a failure to elect the number or minimum number of directors provided for in the by-laws for that class or series;if there are no such remaining directors and, by reason of the vacancy, the number of directors or the composition of the board of directors fails to meet any of the requirements of section 749 or section 752, the other directors may fill that vacancy; andif there are no such remaining directors and paragraph (b) does not apply, any holder of shares of that class or series may call a meeting of the holders thereof for the purpose of filling the vacancy.2001, c. 9, s. 183; 2005, c. 54, s. 106
Unexpired termUnless the by-laws otherwise provide, a director elected or appointed to fill a vacancy holds office for the unexpired term of the director’s predecessor in office.2001, c. 9, s. 183
Additional directorsThe directors of a bank holding company may appoint one or more additional directors where the by-laws of the bank holding company allow them to do so and the by-laws determine the minimum and maximum numbers of directors.Term of officeA director appointed under subsection (1) holds office for a term expiring not later than the close of the next annual meeting of shareholders of the bank holding company.Limit on number appointedThe total number of directors appointed under subsection (1) may not exceed one third of the number of directors elected at the previous annual meeting of shareholders of the bank holding company.2001, c. 9, s. 183
Meetings of the Board
Meetings requiredThe directors shall meet at least four times during each financial year.Place for meetingsThe directors may meet at any place unless the by-laws provide otherwise.Notice for meetingsThe notice for the meetings must be given as required by the by-laws.2001, c. 9, s. 183
Notice of meetingA notice of a meeting of directors shall specify each matter referred to in section 785 that is to be dealt with at the meeting but, unless the by-laws otherwise provide, need not otherwise specify the purpose of or the business to be transacted at the meeting.Waiver of noticeA director may in any manner waive notice of a meeting of directors and the attendance of a director at a meeting of directors is a waiver of notice of that meeting except where the director attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.Adjourned meetingNotice of an adjourned meeting of directors is not required to be given if the time and place of the adjourned meeting were announced at the original meeting.2001, c. 9, s. 183
QuorumSubject to section 772, the number of directors referred to in subsection (2) constitutes a quorum at any meeting of directors or a committee of directors and, notwithstanding any vacancy among the directors, a quorum of directors may exercise all the powers of the directors.QuorumThe number of directors constituting a quorum at any meeting of directors or a committee of directors shall bea majority of the minimum number of directors required by this Part for the board of directors or a committee of directors; orsuch greater number of directors than the number calculated pursuant to paragraph (a) as may be established by the by-laws of the bank holding company.Director continues to be presentA director who is present at a meeting of directors or of a committee of directors but is not, in accordance with subsection 790(1), present at any particular time during the meeting is considered to be present for the purposes of this section.2001, c. 9, s. 183; 2005, c. 54, s. 107
Resident Canadian majorityThe directors of a bank holding company shall not transact business at a meeting of directors unlessin the case of a bank holding company that is a subsidiary of a foreign bank, at least one half of the directors present are resident Canadians; orin any other case, a majority of the directors present are resident Canadians.ExceptionDespite subsection (1), the directors of a bank holding company may transact business at a meeting of directors without the required proportion of directors who are resident Canadians ifa director who is a resident Canadian unable to be present approves, in writing or by telephonic, electronic or other communications facilities, the business transacted at the meeting; andthere would have been present the required proportion of directors who are resident Canadians had that director been present at the meeting.2001, c. 9, s. 183; 2013, c. 33, s. 106
Electronic meetingSubject to the by-laws of a bank holding company, a meeting of directors or of a committee of directors may be held by means of such telephonic, electronic or other communications facilities as permit all persons participating in the meeting to communicate adequately with each other during the meeting.Deemed presentA director participating in a meeting by any means referred to in subsection (1) is deemed for the purposes of this Part to be present at that meeting.2001, c. 9, s. 183
Resolution outside board meetingA resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of directors is as valid as if it had been passed at a meeting of directors.Filing directors’ resolutionA copy of the resolution referred to in subsection (1) shall be kept with the minutes of the proceedings of the directors.Resolution outside committee meetingA resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of a committee of directors, other than a resolution of the audit committee in carrying out its duties under subsection 782(3), is as valid as if it had been passed at a meeting of that committee.Filing committee resolutionA copy of the resolution referred to in subsection (3) shall be kept with the minutes of the proceedings of that committee.EvidenceUnless a ballot is demanded, an entry in the minutes of a meeting that the chairperson declared a resolution to be carried or defeated is in the absence of evidence to the contrary proof of that fact without proof of the number or proportion of votes recorded in favour of or against the resolution.2001, c. 9, s. 183; 2005, c. 54, s. 108
Dissent of directorA director of a bank holding company who is present at a meeting of directors or a committee of directors is deemed to have consented to any resolution passed or action taken at that meeting unlessthe director requests that the director’s dissent be entered or the director’s dissent is entered in the minutes of the meeting;the director sends a written dissent to the secretary of the meeting before the meeting is adjourned; orthe director sends the director’s dissent by registered mail or delivers it to the head office of the bank holding company immediately after the meeting is adjourned.Loss of right to dissentA director of a bank holding company who votes for or consents to a resolution is not entitled to dissent under subsection (1).Dissent of absent directorA director of a bank holding company who is not present at a meeting at which a resolution is passed or action taken is deemed to have consented thereto unless, within seven days after the director becomes aware of the resolution, the directorcauses the director’s dissent to be placed with the minutes of the meeting; orsends the director’s dissent by registered mail or delivers it to the head office of the bank holding company.2001, c. 9, s. 183
Record of attendanceA bank holding company shall keep a record of the attendance at each meeting of directors and each committee meeting of directors.Statement to shareholdersA bank holding company shall attach to the notice of each annual meeting it sends to its shareholders a statement showing, in respect of the financial year immediately preceding the meeting, the total number of directors’ meetings and directors’ committee meetings held during the financial year and the number of those meetings attended by each director.2001, c. 9, s. 183
Meeting required by SuperintendentWhere in the opinion of the Superintendent it is necessary, the Superintendent may, by notice in writing, require a bank holding company to hold a meeting of directors of the bank holding company to consider the matters set out in the notice.Attendance of SuperintendentThe Superintendent may attend and be heard at a meeting referred to in subsection (1).2001, c. 9, s. 183
By-laws
By-lawsUnless this Part otherwise provides, the directors of a bank holding company may by resolution make, amend or repeal any by-law that regulates the business or affairs of the bank holding company.Shareholder approvalThe directors shall submit a by-law, or an amendment to or a repeal of a by-law, that is made under subsection (1) to the shareholders at the next meeting of shareholders, and the shareholders may, by resolution, confirm or amend the by-law, amendment or repeal.Effective date of by-lawUnless this Part otherwise provides, a by-law, or an amendment to or a repeal of a by-law, is effective from the date of the resolution of the directors under subsection (1) until it is confirmed, confirmed as amended or rejected by the shareholders under subsection (2) or until it ceases to be effective under subsection (4) and, where the by-law is confirmed, or confirmed as amended, it continues in effect in the form in which it was so confirmed.Effect where no shareholder approvalIf a by-law, or an amendment to or a repeal of a by-law, is rejected by the shareholders, or is not submitted to the shareholders by the directors as required under subsection (2), the by-law, amendment or repeal ceases to be effective from the date of its rejection or the date of the next meeting of shareholders, as the case may be, and no subsequent resolution of the directors to make, amend or repeal a by-law having substantially the same purpose or effect is effective until it is confirmed, or confirmed as amended, by the shareholders.2001, c. 9, s. 183
Shareholder proposal of by-lawA shareholder entitled to vote at an annual meeting of shareholders may, in accordance with sections 732 and 733, make a proposal to make, amend or repeal a by-law.2001, c. 9, s. 183
Deemed by-lawsAny matter that, immediately prior to the day a body corporate is continued as a bank holding company, was provided for in the incorporating instrument of the body corporate, and that, under this Part, would be provided for in the by-laws of a bank holding company, is deemed to be provided for in the by-laws of the bank holding company.By-law prevailsWhere a by-law of the bank holding company made in accordance with sections 778 and 779 amends or repeals any matter referred to in subsection (1), the by-law prevails.2001, c. 9, s. 183
Committees of the Board
CommitteesThe directors of a bank holding company may appoint from their number, in addition to the committees referred to in subsection 747(2), such other committees as they deem necessary and, subject to section 785, delegate to those committees such powers of the directors, and assign to those committees such duties, as the directors consider appropriate.2001, c. 9, s. 183
Audit committeeThe audit committee of a bank holding company shall consist of at least three directors.MembershipNone of the members of the audit committee may be officers or employees of the bank holding company or any of its subsidiaries.Duties of audit committeeThe audit committee of a bank holding company shallreview the annual statement of the bank holding company before the annual statement is approved by the directors;review such returns of the bank holding company as the Superintendent may specify;require the management of the bank holding company to implement and maintain appropriate internal control procedures;review, evaluate and approve those procedures;review such investments and transactions that could adversely affect the well-being of the bank holding company as the auditor or any officer of the bank holding company may bring to the attention of the committee;meet with the auditor to discuss the annual statement and the returns and transactions referred to in this subsection; andmeet with the chief internal auditor of the bank holding company, or the officer or employee of the bank holding company acting in a similar capacity, and with management of the bank holding company, to discuss the effectiveness of the internal control procedures established for the bank holding company.ReportIn the case of the annual statement and returns of a bank holding company that under this Part must be approved by the directors of the bank holding company, the audit committee of the bank holding company shall report thereon to the directors before the approval is given.Required meeting of directorsThe audit committee of a bank holding company may call a meeting of the directors of the bank holding company to consider any matter of concern to the committee.2001, c. 9, s. 183
Directors and Officers — Authority
Chief executive officerThe directors of a bank holding company shall appoint from their number a chief executive officer who must be ordinarily resident in Canada and, subject to section 785, may delegate to that officer any of the powers of the directors.2001, c. 9, s. 183
Appointment of officersThe directors of a bank holding company may, subject to the by-laws, designate the offices of the bank holding company, appoint officers thereto, specify the duties of those officers and delegate to them powers, subject to section 785, to manage the business and affairs of the bank holding company.Directors as officersSubject to section 752, a director of a bank holding company may be appointed to any office of the bank holding company.Two or more officesTwo or more offices of a bank holding company may be held by the same person.2001, c. 9, s. 183
Limits on power to delegateThe directors of a bank holding company may not delegate any of the following powers, namely, the power tosubmit to the shareholders a question or matter requiring the approval of the shareholders;fill a vacancy among the directors, on a committee of directors or in the office of auditor or appoint additional directors;issue or cause to be issued securities, including an issue of shares of a series that is authorized in accordance with section 706, except in accordance with any authorization made by the directors;declare a dividend;authorize the redemption or other acquisition by the bank holding company pursuant to section 715 of shares issued by the bank holding company;authorize the payment of a commission on a share issue;approve a management proxy circular;except as provided in this Part, approve the annual statement of the bank holding company and any other financial statements issued by the bank holding company; oradopt, amend or repeal by-laws.2001, c. 9, s. 183; 2005, c. 54, s. 109
Remuneration of directors, officers and employeesSubject to this section and the by-laws, the directors of a bank holding company may fix the remuneration of the directors, officers and employees of the bank holding company.By-law requiredNo remuneration shall be paid to a director as director until a by-law fixing the aggregate of all amounts that may be paid to all directors in respect of directors’ remuneration during a fixed period of time has been confirmed by special resolution.2001, c. 9, s. 183
Validity of actsAn act of a director or an officer of a bank holding company is valid notwithstanding a defect in the director’s qualification or an irregularity in the director’s election or in the appointment of the director or officer.Validity of actsAn act of the board of directors of a bank holding company is valid notwithstanding a defect in the composition of the board or an irregularity in the election of the board or in the appointment of a member of the board.2001, c. 9, s. 183
Right to attend meetingsA director of a bank holding company is entitled to attend and to be heard at every meeting of shareholders.2001, c. 9, s. 183
Conflicts of Interest
Disclosure of interestA director or officer of a bank holding company shall disclose to the bank holding company, in writing or by requesting to have it entered in the minutes of a meeting of directors or a meeting of a committee of directors, the nature and extent of any interest they have in a material contract or material transaction with the bank holding company, whether entered into or proposed, if theyare a party to the contract or transaction;are a director or officer of a party to the contract or transaction or a person acting in a similar capacity; orhave a material interest in a party to the contract or transaction.Time of disclosure — directorThe disclosure shall be made in the case of a directorat the meeting of directors, or of a committee of directors, at which the proposed contract or transaction is first considered;if at the time of the meeting referred to in paragraph (a) the director was not interested in the proposed contract or transaction, at the first one after they become interested in it;if the director becomes interested after a contract or transaction is entered into, at the first one after they become interested; orif a person who is interested in a contract or transaction becomes a director, at the first one after they become a director.Time of disclosure — officerThe disclosure required by subsection (1) shall be made in the case of an officer who is not a directorimmediately after they become aware that the contract, transaction, proposed contract or proposed transaction is to be considered or has been considered at a meeting of directors or of a committee of directors;if they become interested after the contract or transaction is entered into, immediately after they become interested; orif a person who is interested in a contract or transaction becomes an officer, immediately after they become an officer.Time of disclosure — contract not requiring approvalIf the material contract or material transaction, whether entered into or proposed, is one that in the ordinary course of the bank holding company’s business would not require approval by the directors or shareholders, the director or officer shall disclose to the bank holding company, in writing or by requesting to have it entered in the minutes of a meeting of directors or of a committee of directors, the nature and extent of their interest immediately after they become aware of the contract or transaction.2001, c. 9, s. 183; 2005, c. 54, s. 110
Director to abstainA director who is required to make a disclosure under subsection 789(1) shall not be present at any meeting of directors, or of a committee of directors, while the contract or transaction is being considered or vote on any resolution to approve it unless the contract or transactionrelates primarily to their remuneration as a director, officer, employee or agent of the bank holding company, an entity controlled by the bank holding company or an entity in which the bank holding company has a substantial investment;is for indemnity under section 799 or insurance under section 800; oris with an affiliate of the bank holding company.IneligibilityAny director who knowingly contravenes subsection (1) ceases to hold office as director and is not eligible, for a period of five years after the date on which the contravention occurred, for election or appointment as a director of any bank holding company, any insurance holding company or any financial institution that is incorporated or formed by or under an Act of Parliament.Validity of actsAn act of the board of directors of a bank holding company, or of a committee of the board of directors, is not invalid because a person acting as a director had ceased under subsection (2) to hold office as a director.2001, c. 9, s. 183; 2005, c. 54, s. 111
General noticeFor the purposes of subsection 789(1), a general notice to the directors declaring that a director or officer is to be regarded as interested for any of the following reasons in a contract or transaction entered into with a party is a sufficient declaration of interest in relation to any contract or transaction with that party:the director or officer is a director or officer of a party referred to in paragraph 789(1)(b) or (c) or a person acting in a similar capacity;the director or officer has a material interest in the party; orthere has been a material change in the nature of the director’s or officer’s interest in the party.Access to disclosuresThe shareholders of the bank holding company may examine the portions of any minutes of meetings of directors or committees of directors that contain disclosures under subsection 789(1), or the portions of any other documents that contain those disclosures, during the usual business hours of the bank holding company.2001, c. 9, s. 183; 2005, c. 54, s. 112
Avoidance standardsA contract or transaction for which disclosure is required under subsection 789(1) is not invalid and a director or officer is not accountable to the bank holding company or its shareholders for any profit realized from it by reason only of the director’s or officer’s interest in the contract or transaction or the fact that the director was present or was counted to determine whether a quorum existed at the meeting of directors, or of a committee of directors, that considered it ifthe director or officer disclosed their interest in accordance with section 789 and subsection 791(1);the directors approved the contract or transaction; andthe contract or transaction was reasonable and fair to the bank holding company at the time that it was approved.Confirmation by shareholdersEven if the conditions set out in subsection (1) are not met, a director or officer acting honestly and in good faith is not accountable to the bank holding company or its shareholders for any profit realized from a contract or transaction for which disclosure was required and the contract or transaction is not invalid by reason only of the director’s or officer’s interest in it ifthe contract or transaction is approved or confirmed by special resolution at a meeting of shareholders;disclosure of the interest was made to the shareholders in a manner sufficient to indicate its nature before the contract or transaction was approved or confirmed; andthe contract or transaction was reasonable and fair to the bank holding company at the time that it was approved or confirmed.2001, c. 9, s. 183; 2005, c. 54, s. 112
Court may set aside or require accountingIf a director or officer of a bank holding company fails to comply with any of sections 789 to 792, a court, on application of the bank holding company or any of its shareholders, may set aside the contract or transaction on any terms that the court thinks fit and may require the director or officer to account to the bank holding company for any profit or gain realized on it.2001, c. 9, s. 183; 2005, c. 54, s. 112
Liability, Exculpation and Indemnification
Director liabilityDirectors of a bank holding company who vote for or consent to a resolution of the directors authorizing the issue of a share contrary to subsection 709(1) or the issue of subordinated indebtedness contrary to section 723 for a consideration other than money are jointly and severally, or solidarily, liable to the bank holding company to make good any amount by which the consideration received is less than the fair equivalent of the money that the bank holding company would have received if the share or subordinated indebtedness had been issued for money on the date of the resolution.Further liabilityDirectors of a bank holding company who vote for or consent to a resolution of the directors authorizing any of the following are jointly and severally, or solidarily, liable to restore to the bank holding company any amounts so distributed or paid and not otherwise recovered by the bank holding company and any amounts in relation to any loss suffered by the bank holding company:a redemption or purchase of shares contrary to section 715;a reduction of capital contrary to section 718;a payment of a dividend contrary to section 722; ora payment of an indemnity contrary to section 799.2001, c. 9, s. 183; 2005, c. 54, s. 113(E)
ContributionA director who has satisfied a judgment in relation to the director’s liability under section 794 is entitled to contribution from the other directors who voted for or consented to the unlawful act on which the judgment was founded.RecoveryA director who is liable under section 794 is entitled to apply to a court for an order compelling a shareholder or other person to pay or deliver to the director any money or property that was paid or distributed to the shareholder or other person contrary to section 715, 718, 722 or 799.Court orderWhere an application is made to a court under subsection (2), the court may, where it is satisfied that it is equitable to do so,order a shareholder or other person to pay or deliver to a director any money or property that was paid or distributed to the shareholder or other person contrary to section 715, 718, 722 or 799;order a bank holding company to return or issue shares to a person from whom the bank holding company has purchased, redeemed or otherwise acquired shares; ormake any further order it thinks fit.2001, c. 9, s. 183
LimitationAn action to enforce a liability imposed by section 794 may not be commenced after two years from the date of the resolution authorizing the action complained of.2001, c. 9, s. 183
Directors liable for wagesSubject to subsections (2) and (3), the directors of a bank holding company are jointly and severally, or solidarily, liable to each employee of the bank holding company for all debts not exceeding six months wages payable to the employee for services performed for the bank holding company while they are directors.Conditions precedentA director is not liable under subsection (1) unlessthe bank holding company has been sued for the debt within six months after it has become due and execution has been returned unsatisfied in whole or in part;the bank holding company has commenced liquidation and dissolution proceedings or has been dissolved and a claim for the debt has been proven within six months after the earlier of the date of commencement of the liquidation and dissolution proceedings and the date of dissolution; orthe bank holding company has made an assignment or a bankruptcy order has been made against it under the Bankruptcy and Insolvency Act and a claim for the debt has been proved within six months after the assignment or bankruptcy order.LimitationsA director is not liable under subsection (1) unless the director is sued for a debt referred to in that subsection while a director or within two years after the director has ceased to be a director.Amount due after executionWhere execution referred to in paragraph (2)(a) has issued, the amount recoverable from a director is the amount remaining unsatisfied after execution.Subrogation of directorWhere a director of a bank holding company pays a debt referred to in subsection (1) that is proven in liquidation and dissolution or bankruptcy proceedings, the director is entitled to any preference that the employee would have been entitled to and, where a judgment has been obtained, the director is entitled to an assignment of the judgment.Contribution entitlementA director of a bank holding company who has satisfied a claim under this section is entitled to a contribution from the other directors of the bank holding company who are liable for the claim.2001, c. 9, s. 183; 2004, c. 25, s. 186; 2005, c. 54, s. 114(E)
Defence — due diligenceA director, officer or employee of a bank holding company is not liable under section 794 or 797 and has fulfilled their duty under subsection 748(2) if they exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith onfinancial statements of the bank holding company that were represented to them by an officer of the bank holding company or in a written report of the auditor of the bank holding company fairly to reflect the financial condition of the bank holding company; ora report of a person whose profession lends credibility to a statement made by them.Defence — good faithA director or officer of a bank holding company has fulfilled their duty under subsection 748(1) if they relied in good faith onfinancial statements of the bank holding company that were represented to them by an officer of the bank holding company or in a written report of the auditor of the bank holding company fairly to reflect the financial condition of the bank holding company; ora report of a person whose profession lends credibility to a statement made by them.2001, c. 9, s. 183; 2005, c. 54, s. 115
IndemnificationA bank holding company may indemnify a director or officer of the bank holding company, a former director or officer of the bank holding company or another person who acts or acted, at the bank holding company’s request, as a director or officer of or in a similar capacity for another entity against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by them in respect of any civil, criminal, administrative, investigative or other proceeding in which they are involved because of that association with the bank holding company or other entity.AdvancesA bank holding company may advance amounts to the director, officer or other person for the costs, charges and expenses of a proceeding referred to in subsection (1). They shall repay the amounts if they do not fulfil the conditions set out in subsection (3).No indemnificationA bank holding company may not indemnify a person under subsection (1) unlessthe person acted honestly and in good faith with a view to the best interests of, as the case may be, the bank holding company or the other entity for which they acted at the bank holding company’s request as a director or officer or in a similar capacity; andin the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the person had reasonable grounds for believing that their conduct was lawful.Indemnification — derivative actionsA bank holding company may with the approval of a court indemnify a person referred to in subsection (1) or advance amounts to them under subsection (2) — in respect of an action by or on behalf of the bank holding company or other entity to procure a judgment in its favour to which the person is made a party because of the association referred to in subsection (1) with the bank holding company or other entity — against all costs, charges and expenses reasonably incurred by them in connection with that action if they fulfil the conditions set out in subsection (3).Right to indemnityDespite subsection (1), a person referred to in that subsection is entitled to be indemnified by the bank holding company in respect of all costs, charges and expenses reasonably incurred by them in connection with the defence of any civil, criminal, administrative, investigative or other proceeding to which the person is subject because of the association referred to in subsection (1) with the bank holding company or other entity described in that subsection if the personwas not judged by the court or other competent authority to have committed any fault or omitted to do anything that they ought to have done; andfulfils the conditions set out in subsection (3).Heirs and personal representativesA bank holding company may, to the extent referred to in subsections (1) to (5) in respect of the person, indemnify the heirs or personal representatives of any person whom the bank holding company may indemnify under those subsections.2001, c. 9, s. 183; 2005, c. 54, s. 115
Directors’ and officers’ insuranceA bank holding company may purchase and maintain insurance for the benefit of any person referred to in section 799 against any liability incurred by the personin the capacity of a director or an officer of the bank holding company, except where the liability relates to a failure to act honestly and in good faith with a view to the best interests of the bank holding company; orin the capacity of a director or officer of another entity or while acting in a similar capacity for another entity, if they act or acted in that capacity at the bank holding company’s request, except if the liability relates to a failure to act honestly and in good faith with a view to the best interests of the entity.2001, c. 9, s. 183; 2005, c. 54, s. 116
Application to court for indemnificationA bank holding company or a person referred to in section 799 may apply to a court for an order approving an indemnity under that section and the court may so order and make any further order it thinks fit.Notice to SuperintendentAn applicant under subsection (1) shall give the Superintendent written notice of the application and the Superintendent is entitled to appear and to be heard at the hearing of the application in person or by counsel.Other noticeOn an application under subsection (1), the court may order notice to be given to any interested person and that person is entitled to appear and to be heard in person or by counsel at the hearing of the application.2001, c. 9, s. 183
Fundamental ChangesAmendments
Sections 215 to 222 applySections 215 to 222 apply in respect of bank holding companies, subject to the following:references to “bank” in those sections are to be read as references to “bank holding company”;references to “this Act” in those sections are to be read as references to “this Part”;the reference to “subsection 159(1) and section 168” in paragraph 217(1)(i) is to be read as a reference to “subsection 749(1) and section 756”; andthe reference to “sections 143 and 144” in subsection 221(1) is to be read as a reference to “sections 732 and 733”.2001, c. 9, s. 183
Amalgamation
Application to amalgamateOn the joint application of two or more bodies corporate incorporated by or under an Act of Parliament, including banks and bank holding companies but not including federal credit unions, the Minister may issue letters patent amalgamating and continuing the applicants as one bank holding company.RestrictionDespite subsection (1), if one of the applicants is a bank holding company that controls a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, other than a bank in respect of which the Minister has specified that subsection 378(1) no longer applies, the Minister shall not issue letters patent referred to in subsection (1) unlessthe amalgamated bank holding company would be a widely held bank holding company; orthe amalgamated bank holding company would be controlled by a widely held bank holding company that, at the time the application was made, controlledthe applicant, orany other applicant that is a bank holding company that controls a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, other than a bank in respect of which the Minister has specified that subsection 378(1) no longer applies.RestrictionDespite subsection (1), if the amalgamated bank holding company would be a bank holding company with equity of twelve billion dollars or more, the Minister shall not issue letters patent referred to in that subsection unless the amalgamated bank holding company iswidely held;controlled, within the meaning of paragraphs 3(1)(a) and (d), by a widely held bank, or by a widely held bank holding company, that controlled one of the applicants at the time the application was made; orcontrolled, within the meaning of paragraph 3(1)(d), by a widely held insurance holding company, or by an eligible Canadian financial institution, within the meaning of subsection 370(1), other than a bank, or by an eligible foreign institution, within the meaning of subsection 370(1), that controlled one of the applicants at the time the application was made.2001, c. 9, s. 183; 2007, c. 6, s. 132; 2010, c. 12, s. 2084; 2012, c. 5, s. 80
Amalgamation agreementEach applicant proposing to amalgamate shall enter into an amalgamation agreement.Contents of agreementEvery amalgamation agreement shall set out the terms and means of effecting the amalgamation and, in particular,the name of the amalgamated bank holding company and the province in which its head office is to be situated;the name and place of ordinary residence of each proposed director of the amalgamated bank holding company;the manner in which the shares of each applicant are to be converted into shares or other securities of the amalgamated bank holding company;if any shares of an applicant are not to be converted into shares or other securities of the amalgamated bank holding company, the amount of money or securities that the holders of those shares are to receive in addition to or in lieu of shares or other securities of the amalgamated bank holding company;the manner of payment of money in lieu of the issue of fractional shares of the amalgamated bank holding company or of any other body corporate that are to be issued in the amalgamation;the proposed by-laws of the amalgamated bank holding company;details of any other matter necessary to perfect the amalgamation and to provide for the subsequent management and operation of the amalgamated bank holding company; andthe proposed effective date of the amalgamation.Cross ownership of sharesIf shares of one of the applicants are held by or on behalf of another of the applicants, other than shares held in the capacity of a personal representative or by way of security, the amalgamation agreement must provide for the cancellation of those shares when the amalgamation becomes effective without any repayment of capital in respect thereof, and no provision shall be made in the agreement for the conversion of those shares into shares of the amalgamated bank holding company.2001, c. 9, s. 183; 2005, c. 54, s. 117
Approval of agreement by SuperintendentAn amalgamation agreement must be submitted to the Superintendent for approval and any approval of the agreement under subsection 806(4) by the holders of any class or series of shares of an applicant is invalid unless, before the date of the approval, the Superintendent has approved the agreement in writing.2001, c. 9, s. 183; 2007, c. 6, s. 115
Shareholder approvalThe directors of each applicant shall submit an amalgamation agreement for approval to a meeting of the holders of shares of the applicant body corporate of which they are directors and, subject to subsection (3), to the holders of each class or series of such shares.Right to voteEach share of an applicant carries the right to vote in respect of an amalgamation agreement whether or not it otherwise carries the right to vote.Separate vote for class or seriesThe holders of shares of a class or series of shares of each applicant are entitled to vote separately as a class or series in respect of an amalgamation agreement if the agreement contains a provision that, if it were contained in a proposed amendment to the by-laws or incorporating instrument of the applicant, would entitle those holders to vote separately as a class or series.Special resolutionSubject to subsection (3), an amalgamation agreement is approved when the shareholders of each applicant that is a body corporate have approved the amalgamation by special resolution.TerminationAn amalgamation agreement may provide that, at any time before the issue of letters patent of amalgamation, the agreement may be terminated by the directors of an applicant notwithstanding that the agreement has been approved by the shareholders of all or any of the applicant bodies corporate.2001, c. 9, s. 183; 2005, c. 54, s. 118
Vertical short-form amalgamationA bank holding company may, without complying with sections 804 to 806, amalgamate with one or more bodies corporate that are incorporated by or under an Act of Parliament if the body or bodies corporate, as the case may be, are wholly-owned subsidiaries of the bank holding company andthe amalgamation is approved by a resolution of the directors of the bank holding company and of each amalgamating subsidiary; andthe resolutions provide thatthe shares of each amalgamating subsidiary will be cancelled without any repayment of capital in respect thereof,the letters patent of amalgamation and the by-laws of the amalgamated bank holding company will be the same as the incorporating instrument and the by-laws of the amalgamating bank holding company that is the holding body corporate, andno securities will be issued by the amalgamated bank holding company in connection with the amalgamation.Horizontal short-form amalgamationTwo or more bodies corporate incorporated by or under an Act of Parliament may amalgamate and continue as one bank holding company without complying with sections 804 to 806 ifat least one of the applicants is a bank holding company;the applicants are all wholly-owned subsidiaries of the same holding body corporate;the amalgamation is approved by a resolution of the directors of each of the applicants; andthe resolutions provide thatthe shares of all applicants, except those of one of the applicants that is a bank holding company, will be cancelled without any repayment of capital in respect thereof,the letters patent of amalgamation and the by-laws of the amalgamated bank holding company will be the same as the incorporating instrument and the by-laws of the amalgamating bank holding company whose shares are not cancelled, andthe stated capital of the amalgamating bank holding companies and bodies corporate whose shares are cancelled will be added to the stated capital of the amalgamating bank holding company whose shares are not cancelled.2001, c. 9, s. 183
Joint application to MinisterSubject to subsection (2), unless an amalgamation agreement is terminated in accordance with subsection 806(5), the applicants shall, within three months after the approval of the agreement in accordance with subsection 806(4) or the approval of the directors in accordance with subsection 807(1) or (2), jointly apply to the Minister for letters patent of amalgamation continuing the applicants as one bank holding company.Conditions precedent to applicationNo application for the issue of letters patent under subsection (1) may be made unlessnotice of intention to make such an application has been published at least once a week for a period of four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of each applicant is situated; andthe application is supported by satisfactory evidence that the applicants have complied with the requirements of this Part relating to amalgamations.Application of sections 672 to 674If two or more bodies corporate, none of which is a bank holding company, apply for letters patent under subsection (1), sections 672 to 674 apply in respect of the application with any modifications that the circumstances require.Matters for considerationBefore issuing letters patent of amalgamation continuing the applicants as one bank holding company, the Minister shall take into account all matters that the Minister considers relevant to the application, includingthe sources of continuing financial support for any bank that will be a subsidiary of the amalgamated bank holding company;the soundness and feasibility of the plans of the applicants for the future conduct and development of the business of any bank that will be a subsidiary of the amalgamated bank holding company;the business record and experience of the applicants;the reputation of the applicants for being operated in a manner that is consistent with the standards of good character and integrity;whether the amalgamated bank holding company will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;the impact of any integration of the operations and businesses of the applicants on the conduct of those operations and businesses;the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the amalgamated bank holding company and its affiliates may affect the supervision and regulation of any bank that will be its subsidiary, having regard tothe nature and extent of the proposed financial services activities to be carried out by the affiliates of the amalgamated bank holding company, andthe nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the amalgamated bank holding company; andthe best interests of the financial system in Canada.2001, c. 9, s. 183
Issue of letters patentWhere an application has been made to the Minister in accordance with section 808, the Minister may issue letters patent of amalgamation continuing the applicants as one bank holding company.Letters patentWhere letters patent are issued pursuant to this section, section 676 applies with such modifications as the circumstances require in respect of the issue of the letters patent.Publication of noticeThe Superintendent shall cause to be published in the Canada Gazette notice of the issuance of letters patent pursuant to subsection (1).2001, c. 9, s. 183
Court enforcementIf a bank holding company or any director, officer, employee or agent of a bank holding company is contravening or has failed to comply with any term or condition made in respect of the issuance of letters patent of amalgamation, the Minister may, in addition to any other action that may be taken under this Act, apply to a court for an order directing the bank holding company or the director, officer, employee or agent to comply with the term or condition, cease the contravention or do any thing that is required to be done, and on the application the court may so order and make any other order it thinks fit.AppealAn appeal from an order of a court under this section lies in the same manner as, and to the same court to which, an appeal may be taken from any other order of the court.2001, c. 9, s. 183
Effect of letters patentOn the day provided for in the letters patent issued under section 809,the amalgamation of the applicants and their continuance as one bank holding company becomes effective;the property of each applicant continues to be the property of the amalgamated bank holding company;the amalgamated bank holding company continues to be liable for the obligations of each applicant;any existing cause of action, claim or liability to prosecution is unaffected;any civil, criminal or administrative action or proceeding pending by or against an applicant may be continued to be prosecuted by or against the amalgamated bank holding company;any conviction against, or ruling, order or judgment in favour of or against, an applicant may be enforced by or against the amalgamated bank holding company;if any director or officer of an applicant continues as a director or officer of the amalgamated bank holding company, any disclosure by that director or officer of a material interest in any contract made to the applicant shall be deemed to be disclosure to the amalgamated bank holding company; andthe letters patent of amalgamation are the incorporating instrument of the amalgamated bank holding company.MinutesAny deemed disclosure under paragraph (1)(g) shall be recorded in the minutes of the first meeting of directors of the amalgamated bank holding company.2001, c. 9, s. 183
TransitionalDespite any other provision of this Act or the regulations, the Minister may, by order, on the recommendation of the Superintendent, grant to a bank holding company in respect of which letters patent were issued under subsection 809(1) permission toengage in a business activity specified in the order that a bank holding company is not otherwise permitted by this Act to engage in and that one or more of the amalgamating bodies corporate was engaging in at the time application for the letters patent was made;continue to have issued and outstanding debt obligations the issue of which is not authorized by this Act if the debt obligations were outstanding at the time the application for the letters patent was made;hold assets that a bank holding company is not otherwise permitted by this Act to hold if the assets were held by one or more of the amalgamating bodies corporate at the time the application for the letters patent was made;acquire and hold assets that a bank holding company is not otherwise permitted by this Act to acquire or hold if one or more of the amalgamating bodies corporate were obliged, at the time the application for the letters patent was made, to acquire those assets; andmaintain outside Canada any records or registers required by this Act to be maintained in Canada.Duration of exceptionsThe permission granted under subsection (1) shall be expressed to be granted for a period specified in the order not exceedingwith respect to any matter described in paragraph (1)(a), thirty days after the date of issue of the letters patent or, where the activity is conducted pursuant to an agreement existing on the date of issue of the letters patent, the expiration of the agreement;with respect to any matter described in paragraph (1)(b), ten years; andwith respect to any matter described in any of paragraphs (1)(c) to (e), two years.RenewalSubject to subsection (4), the Minister may, by order on the recommendation of the Superintendent, renew a permission granted by order under subsection (1) with respect to any matter described in any of paragraphs (1)(b) to (d) for any further period or periods that the Minister considers necessary.LimitationThe Minister shall not grant to a bank holding company any permissionwith respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the effective date of the letters patent of amalgamation, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the bank holding company that the bank holding company will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; andwith respect to matters described in paragraphs (1)(c) and (d), that purports to be effective more than ten years after the effective date of the letters patent.2001, c. 9, s. 183; 2007, c. 6, s. 116
Transfer of Business
Shareholder approvalA sale, lease or exchange of all or substantially all the property of a bank holding company requires the approval of the shareholders in accordance with subsections (2) to (7).Notice of meetingA notice of a meeting of shareholders complying with sections 727 and 730 shall be sent in accordance with those sections to each shareholder and shall include or be accompanied by a copy or summary of the agreement of sale, lease or exchange.Shareholder approvalAt the meeting referred to in the notice, the shareholders may authorize the sale, lease or exchange and may fix or authorize the directors to fix any of the sale’s, lease’s or exchange’s terms and conditions.Right to voteEach share of the bank holding company carries the right to vote in respect of the proposal whether or not the share otherwise carries the right to vote.Class voteThe holders of shares of a class or series of shares of the bank holding company are entitled to vote separately as a class or series in respect of the proposal if the shares of the class or series are affected by the proposed transaction in a manner different from the shares of another class or series.Special resolutionFor the purpose of subsection (1), the proposal is not approved unless the holders of the shares of each class or series of shares entitled to vote separately on the proposal have approved the proposal by special resolution.Abandoning transactionWhere a special resolution under subsection (6) approving a proposed transaction so states, the directors of a bank holding company may, subject to the rights of third parties, abandon the transaction without further approval of the shareholders.2001, c. 9, s. 183
Corporate RecordsHead Office and Corporate Records
Head officeA bank holding company shall at all times have a head office in the province specified in its incorporating instrument or by-laws.Change of head officeThe directors of a bank holding company may change the address of the head office within the province specified in the incorporating instrument or by-laws.Notice of change of addressA bank holding company shall send to the Superintendent, within fifteen days after any change of address of its head office, a notice of the change of address.2001, c. 9, s. 183; 2005, c. 54, s. 119
Bank holding company recordsA bank holding company shall prepare and maintain records containingits incorporating instrument and by-laws and all amendments to them;minutes of meetings and resolutions of shareholders;the information referred to in paragraphs 951(1)(a) and (c) to (g) contained in all returns provided to the Superintendent pursuant to section 951; andparticulars of exceptions granted under section 688 or 812 that are from time to time applicable to the bank holding company.Additional recordsIn addition to the records described in subsection (1), a bank holding company shall prepare and maintain adequatecorporate accounting records; andrecords containing minutes of meetings and resolutions of the board of directors and those of its committees.Continued bank holding companiesFor the purposes of paragraph (1)(b) and subsection (2),in the case of a body corporate continued as a bank holding company, records includes similar records required by law to be maintained by the body corporate before it was so continued; andin the case of a body corporate amalgamated and continued as a bank holding company, records includes similar records required by law to be maintained by the body corporate before it was so amalgamated.2001, c. 9, s. 183
Place of recordsThe records described in section 815 shall be kept at the head office of the bank holding company or at such other place in Canada as the directors think fit.ExceptionSubject to subsection 822(1.1), subsection (1) does not apply to a bank holding company that is a subsidiary of a foreign bank incorporated or formed otherwise in a country or territory other than Canada in which a trade agreement listed in Schedule IV is applicable or of a regulated foreign entity.Notice of place of recordsWhere any of the records described in section 815 are not kept at the head office of a bank holding company, the bank holding company shall notify the Superintendent of the place where the records are kept.InspectionThe records described in section 815 shall at all reasonable times be open to inspection by the directors.Access to bank holding company recordsShareholders and creditors of a bank holding company and their personal representatives may examine the records referred to in subsection 815(1) during the usual business hours of the bank holding company and may take extracts from them free of charge or have copies of them made on payment of a reasonable fee. If the bank holding company is a distributing bank holding company, any other person may on payment of a reasonable fee examine those records during the usual business hours of the bank holding company and take extracts from them or have copies of them made.Copies of by-lawsEvery shareholder of a bank holding company is entitled, on request made not more frequently than once in each calendar year, to receive, free of charge, one copy of the by-laws of the bank holding company.Electronic accessA bank holding company may make the information contained in records referred to in subsection 815(1) available to persons by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing the records in intelligible written form within a reasonable time.2001, c. 9, s. 183; 2005, c. 54, s. 1202020, c. 1, s. 166
Shareholder listsA person who is entitled to a basic list of shareholders of a bank holding company (in this section referred to as the “applicant”) may request the bank holding company to furnish the applicant with a basic list within ten days after receipt by the bank holding company of the affidavit referred to in subsection (2) and, on payment of a reasonable fee by the applicant, the bank holding company shall comply with the request.Affidavit and contentsA request under subsection (1) must be accompanied by an affidavit containingthe name and address of the applicant,the name and address for service of the entity, if the applicant is an entity, andan undertaking that the basic list and any supplemental lists obtained pursuant to subsections (5) and (6) will not be used except as permitted under section 819,and, if the applicant is an entity, the affidavit shall be made by a director or an officer of the entity, or any person acting in a similar capacity.Entitlement to listA shareholder or creditor of a bank holding company or their personal representative — or if the bank holding company is a distributing bank holding company, any person — is entitled to a basic list of shareholders of the bank holding company.Basic listA basic list of shareholders of a bank holding company consists of a list of shareholders that is made up to a date not more than ten days before the receipt of the affidavit referred to in subsection (2) and that sets outthe names of the shareholders of the bank holding company;the number of shares owned by each shareholder; andthe address of each shareholder as shown in the records of the bank holding company.Supplemental listsA person requiring a bank holding company to supply a basic list of shareholders may, if the person states in the accompanying affidavit that supplemental lists are required, request the bank holding company or its agent, on payment of a reasonable fee, to provide supplemental lists of shareholders setting out any changes from the basic list in the names and addresses of the shareholders and the number of shares owned by each shareholder for each business day following the date to which the basic list is made up.When supplemental lists to be furnishedA bank holding company or its agent shall provide a supplemental list of shareholders required under subsection (5)within ten days following the date the basic list is provided, where the information relates to changes that took place prior to that date; andwithin ten days following the day to which the supplemental list relates, where the information relates to changes that took place on or after the date the basic list was provided.2001, c. 9, s. 183; 2005, c. 54, s. 121
Option holdersA person requiring a bank holding company to supply a basic list or a supplemental list of shareholders may also require the bank holding company to include in that list the name and address of any known holder of an option or right to acquire shares of the bank holding company.2001, c. 9, s. 183
Use of shareholder listA list of shareholders obtained under section 817 shall not be used by any person except in connection withan effort to influence the voting of shareholders of the bank holding company;an offer to acquire shares of the bank holding company; orany other matter relating to the affairs of the bank holding company.2001, c. 9, s. 183
Form of recordsA register or other record required or authorized by this Part to be prepared and maintained by a bank holding companymay be in a bound or loose-leaf form or in a photographic film form; ormay be entered or recorded by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.Conversion of recordsRegisters and records maintained in one form may be converted to any other form.Destruction of converted recordsNotwithstanding section 823, a bank holding company may destroy any register or other record referred to in subsection (1) at any time after the register or other record has been converted to another form.2001, c. 9, s. 183
Protection of recordsA bank holding company and its agents shall take reasonable precautions toprevent loss or destruction of,prevent falsification of entries in,facilitate detection and correction of inaccuracies in, andensure that unauthorized persons do not have access to or use of information inthe registers and records required or authorized by this Part to be prepared and maintained.2001, c. 9, s. 183
Requirement to maintain copies and process information in CanadaIf the Superintendent is of the opinion that it is incompatible with the fulfilment of the Superintendent’s responsibilities under this Act for a bank holding company to maintain, in another country, copies of records referred to in section 815 or of its central securities register or for a bank holding company to process, in another country, information or data relating to the preparation and maintenance of those records or of its central securities register — or if the Superintendent is advised by the Minister that, in the opinion of the Minister, it is not in the national interest for a bank holding company to do any of those activities in another country — the Superintendent shall direct the bank holding company to not maintain those copies, or to not process the information or data, as the case may be, in that other country or to maintain those copies or to process the information or data only in Canada.Direction — immediate, direct, complete and ongoing accessWhere a bank holding company referred to in subsection 816(1.1) or 828(3) maintains records referred to in section 815 or the central securities register at a place outside Canada, the Superintendent may, in the case referred to in paragraph (a), and shall, in the case referred to in paragraph (b), by order, direct the bank holding company to maintain a copy of those records or register at any place in Canada as the directors think fitif the Superintendent is of the opinion that he or she does not have immediate, direct, complete and ongoing access to those records or register; orif the Superintendent is advised by the Minister that the Minister is of the opinion that it is not in the national interest for the bank holding company not to maintain a copy of those records or register at any place in Canada.Bank holding company to complyA bank holding company shall without delay comply with any order issued under subsection (1) or (1.1).2001, c. 9, s. 183; 2005, c. 54, s. 122; 2007, c. 6, s. 1172020, c. 1, s. 167
Retention of recordsA bank holding company shall retainthe records of the bank holding company referred to in subsection 815(1);any record of the bank holding company referred to in paragraph 815(2)(a) or (b); andthe central securities register referred to in subsection 825(1).2001, c. 9, s. 183
RegulationsThe Governor in Council may make regulations respecting the records, papers and documents to be retained by a bank holding company, including the length of time those records, papers and documents are to be retained, and what constitutes immediate, direct, complete and ongoing access, for the purpose of paragraph 822(1.1)(a).2001, c. 9, s. 1832020, c. 1, s. 168
Securities Registers
Central securities registerA bank holding company shall maintain a central securities register in which it shall record the securities, within the meaning of section 81, issued by it in registered form, showing in respect of each class or series of securitiesthe names, alphabetically arranged, and latest known addresses of the persons who are security holders, and the names and latest known addresses of the persons who have been security holders;the number of securities held by each security holder; andthe date and particulars of the issue and transfer of each security.Existing and continued bank holding companiesFor the purposes of subsection (1), “central securities register” includes similar registers required by law to be maintained by a body corporate continued, or amalgamated and continued, as a bank holding company under this Part before the continuance, or amalgamation, as the case may be.Access to central securities registerShareholders and creditors of a bank holding company and their personal representatives may examine the central securities register during the usual business hours of the bank holding company and may take extracts from it free of charge or have copies of it made on payment of a reasonable fee. If the bank holding company is a distributing bank holding company, any other person may on payment of a reasonable fee examine the central securities register during the usual business hours of the bank holding company and take extracts from it or have copies of it made.Electronic accessThe bank holding company may make the information contained in the central securities register available by any mechanical or electronic data processing system or other information storage device that is capable of reproducing it in intelligible written form within a reasonable time.Affidavit and undertakingA person who wishes to examine the central securities register, take extracts from it or have copies of it made shall provide the bank holding company with an affidavit containing their name and address — or if they are an entity, the name and address for service of the entity — and with an undertaking that the information contained in the register will not be used except in the same way as a list of shareholders may be used under section 819. In the case of an entity, the affidavit is to be sworn by a director or officer of the entity or a person acting in a similar capacity.Supplemental informationA person who wishes to examine a central securities register, take extracts from it or have copies of it made may on payment of a reasonable fee, if they state in the accompanying affidavit that supplementary information is required, request the bank holding company or its agent to provide supplementary information setting out any changes made to the register.When supplementary information to be providedA bank holding company or its agent shall provide the supplementary information within10 days after the day on which the central securities register is examined if the changes take place before that day; and10 days after the day to which the supplementary information relates if the changes take place on or after the day on which the central securities register is examined.2001, c. 9, s. 183; 2005, c. 54, s. 123
Branch registersA bank holding company may establish as many branch securities registers as it considers necessary.2001, c. 9, s. 183
AgentsA bank holding company may appoint an agent to maintain its central securities register and each of its branch securities registers.2001, c. 9, s. 183
Location of central securities registerThe central securities register of a bank holding company shall be maintained by the bank holding company at its head office or at any other place in Canada designated by the directors of the bank holding company.Location of branch securities registerA branch securities register of a bank holding company may be kept at any place in or outside Canada designated by the directors of the bank holding company.ExceptionSubject to subsection 822(1.1), subsection (1) does not apply to a bank holding company that is a subsidiary of a foreign bank incorporated or formed otherwise in a country or territory other than Canada in which a trade agreement listed in Schedule IV is applicable or of a regulated foreign entity.2001, c. 9, s. 1832020, c. 1, s. 169
Effect of registrationRegistration of the issue or transfer of a security in the central securities register or in a branch securities register is complete and valid registration for all purposes.2001, c. 9, s. 183
Particulars in branch registerA branch securities register shall only contain particulars of the securities issued or transferred at the branch for which that register is established.Particulars in central registerParticulars of each issue or transfer of a security registered in a branch securities register of a bank holding company shall also be kept in the central securities register of the bank holding company.2001, c. 9, s. 183
Destruction of certificatesA bank holding company, its agent or a trustee within the meaning of section 294 is not required to producea cancelled security certificate in registered form or an instrument referred to in subsection 713(1) that is cancelled or a like cancelled instrument in registered form after six years from the date of its cancellation;a cancelled security certificate in bearer form or an instrument referred to in subsection 713(1) that is cancelled or a like cancelled instrument in bearer form after the date of its cancellation; oran instrument referred to in subsection 713(1) or a like instrument, irrespective of its form, after the date of its expiration.2001, c. 9, s. 183
Corporate Name and Seal
Publication of nameA bank holding company shall set out its name in legible characters in all contracts, invoices, negotiable instruments and other documents evidencing rights or obligations with respect to other parties that are issued or made by or on behalf of the bank holding company.2001, c. 9, s. 183
Corporate sealA bank holding company may adopt a corporate seal and change one that it adopted.Validity of unsealed documentsA document executed on behalf of a bank holding company is not invalid merely because a corporate seal is not affixed to it.2001, c. 9, s. 183; 2005, c. 54, s. 124
Insiders
Ss. 265 to 272 applySections 265 to 272 apply in respect of bank holding companies except that references to “bank” are to be read as references to “bank holding company”.2001, c. 9, s. 183; 2005, c. 54, s. 124
Prospectus
Ss. 273 and 274 applySections 273 and 274 apply in respect of bank holding companies except that references to “bank” are to be read as references to “bank holding company”.2001, c. 9, s. 183; 2005, c. 54, s. 124
Going-private Transactions and Squeeze-out Transactions
Ss. 275 to 277 applySections 275 to 277 apply in respect of bank holding companies subject to the following:references to “bank” are to be read as references to “bank holding company”;the reference to “this Act” in section 276 is to be read as a reference to “this Part”; andthe reference to “a regulation referred to in subsection 485(1) or (2) or of an order made under subsection 485(3)” in subsection 277(25) is to be read as a reference to “a regulation referred to in subsection 949(1) or (2) or of an order made under subsection 949(3)”.2005, c. 54, s. 124
Compulsory Acquisitions
Ss. 283 to 292.1 applySections 283 to 292.1 apply in respect of bank holding companies, subject to the following:references to “bank” in those sections are to be read as references to “bank holding company”;references to “another deposit-taking financial institution” in subsection 287(3) are to be read as references to “a deposit-taking financial institution”; andthe reference to “the Minister” in subsection 291(4) is to be read as a reference to “the Receiver General”.2001, c. 9, s. 183; 2005, c. 54, s. 125
RecoveryIf at any time a person establishes an entitlement to any moneys paid to the Receiver General under subsection 291(4), the Receiver General shall pay an equivalent amount to that person out of the Consolidated Revenue Fund.2001, c. 9, s. 183
Trust Indentures
Sections 294 to 306 applySections 294 to 306 apply in respect to bank holding companies, subject to the following:references to “bank” in those sections are to be read as references to “bank holding company”;references to “this Act” in those sections are to be read as references to “this Part”; andreferences to “subordinated indebtedness” in those sections are to be read as references to “subordinated indebtedness” as defined in subsection 663(1).2001, c. 9, s. 183
Financial Statements and AuditorAnnual Financial Statement
Financial year of bank holding companyThe financial year of a bank holding company ends, at the election of the bank holding company in its by-laws, on the expiration of the thirty-first day of October of each year or the thirty-first day of December of each year.First financial yearIf, in any year, a bank holding company comes into existence after the first day of July, its first financial year ends, at its election in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in the next calendar year.2001, c. 9, s. 183
Annual financial statementThe directors of a bank holding company shall place before the shareholders at every annual meetinga comparative annual financial statement (in this Part referred to as an “annual statement”) relating separately tothe financial year immediately preceding the meeting, andthe financial year, if any, immediately preceding the financial year referred to in subparagraph (i);the report of the auditor of the bank holding company; andany further information respecting the financial position of the bank holding company and the results of its operations required by the by-laws of the bank holding company to be placed before the shareholders at the annual meeting.Annual statement — contentsWith respect to each of the financial years to which it relates, the annual statement of a bank holding company must contain the prescribed statements and any information that is in the opinion of the directors necessary to present fairly, in accordance with the accounting principles referred to in subsection (4), the financial position of the bank holding company as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the bank holding company for that financial year.Additional informationA bank holding company shall include with its annual statementa list of the subsidiaries of the bank holding company, other than subsidiaries that are not required to be listed by the regulations and subsidiaries acquired pursuant to section 934 or pursuant to a realization of security in accordance with section 935 and which the bank holding company would not otherwise be permitted to hold, showing, with respect to each subsidiary,its name and the address of its head or principal office,the book value of the aggregate of any shares of the subsidiary beneficially owned by the bank holding company and by other subsidiaries of the bank holding company, andthe percentage of the voting rights attached to all the outstanding voting shares of the subsidiary that is carried by the aggregate of any voting shares of the subsidiary beneficially owned by the bank holding company and by other subsidiaries of the bank holding company; andsuch other information as the Governor in Council may, by order, require in such form as may be prescribed.Accounting principlesThe financial statements referred to in subsection (1), paragraph (3)(b) and subsection 842(1) shall, except as otherwise specified by the Superintendent, be prepared in accordance with generally accepted accounting principles, the primary source of which is the Handbook of the Chartered Professional Accountants of Canada. A reference in any provision of this Act to the accounting principles referred to in this subsection shall be construed as a reference to those generally accepted accounting principles with any specifications so made.RegulationsThe Governor in Council may make regulations respecting subsidiaries that are not required to be listed for the purposes of paragraph (3)(a).2001, c. 9, s. 183; 2005, c. 54, s. 126; 2017, c. 26, s. 62
Annual statement — approvalThe directors of a bank holding company shall approve the annual statement and their approval shall be evidenced by the signature or a printed or otherwise mechanically reproduced facsimile of the signature ofthe chief executive officer or, in the event of that officer’s absence or inability to act, any other officer of the bank holding company authorized by the directors to sign in the stead of the chief executive officer; andone director, if the signature required by paragraph (a) is that of a director, or two directors if the signature required by that paragraph is that of an officer who is not a director.Condition precedent to publicationA bank holding company shall not publish copies of an annual statement unless it is approved and signed in accordance with subsection (1).2001, c. 9, s. 183; 2005, c. 54, s. 127
Statements — subsidiariesA bank holding company shall keep at its head office a copy of the current financial statements of each subsidiary of the bank holding company.ExaminationSubject to this section, the shareholders of a bank holding company and their personal representatives may, on request therefor, examine the statements referred to in subsection (1) during the usual business hours of the bank holding company and may take extracts therefrom free of charge.Barring examinationA bank holding company may refuse to permit an examination under subsection (2) by any person.Application for orderWithin fifteen days after a refusal under subsection (3), the bank holding company shall apply to a court for an order barring the right of the person concerned to make an examination under subsection (2) and the court shall either order the bank holding company to permit the examination or, if it is satisfied that the examination would be detrimental to the bank holding company or to any other body corporate the financial statements of which would be subject to examination, bar the right and make any further order it thinks fit.Notice to SuperintendentA bank holding company shall give the Superintendent and the person seeking to examine the statements referred to in subsection (1) notice of an application to a court under subsection (4), and the Superintendent and the person may appear and be heard in person or by counsel at the hearing of the application.2001, c. 9, s. 183
Annual statement — distributionA bank holding company shall, no later than 21 days before the date of each annual meeting or before the signing of a resolution under paragraph 741(1)(b) in lieu of the annual meeting, send to each shareholder a copy of the documents referred to in subsections 840(1) and (3) unless that time period is waived by the shareholder.ExceptionA bank holding company is not required to comply with subsection (1) with respect to a shareholder who has informed the bank holding company, in writing, that the shareholder does not wish to receive the annual statement.Effect of defaultWhere a bank holding company is required to comply with subsection (1) and the bank holding company does not comply with that subsection, the annual meeting at which the documents referred to in that subsection are to be considered shall be adjourned until that subsection has been complied with.2001, c. 9, s. 183; 2005, c. 54, s. 128
Copy to SuperintendentSubject to subsection (2), a bank holding company shall send to the Superintendent a copy of the documents referred to in subsections 840(1) and (3) not later than twenty-one days before the date of each annual meeting of shareholders of the bank holding company.Later filingIf a bank holding company’s shareholders sign a resolution under paragraph 741(1)(b) in lieu of an annual meeting, the bank holding company shall send a copy of the documents referred to in subsections 840(1) and (3) to the Superintendent not later than thirty days after the signing of the resolution.2001, c. 9, s. 183
Auditors
DefinitionsThe following definitions apply in this section and sections 846 to 864.firm of accountants means a partnership, the members of which are accountants engaged in the practice of accounting, or a body corporate that is incorporated by or under an Act of the legislature of a province and engaged in the practice of accounting. (cabinet de comptables)member, in relation to a firm of accountants, meansan accountant who is a partner in a partnership, the members of which are accountants engaged in the practice of accounting; oran accountant who is an employee of a firm of accountants. (membre)2001, c. 9, s. 183
Appointment of auditorThe shareholders of a bank holding company shall, by ordinary resolution at the first meeting of shareholders and at each succeeding annual meeting, appoint a firm of accountants to be the auditor of the bank holding company until the close of the next annual meeting.Remuneration of auditorThe remuneration of the auditor may be fixed by ordinary resolution of the shareholders but, if not so fixed, shall be fixed by the directors.2001, c. 9, s. 183
Qualification of auditorA firm of accountants is qualified to be an auditor of a bank holding company iftwo or more members thereof are accountants whoare members in good standing of an institute or association of accountants incorporated by or under an Act of the legislature of a province,each have at least five years experience at a senior level in performing audits of a financial institution,are ordinarily resident in Canada, andare independent of the bank holding company; andthe member of the firm jointly designated by the firm and the bank holding company to conduct the audit of the bank holding company on behalf of the firm is qualified in accordance with paragraph (a).IndependenceFor the purposes of subsection (1),independence is a question of fact; anda member of a firm of accountants is deemed not to be independent of a bank holding company if that member, a business partner of that member or the firm of accountantsis a business partner, director, officer or employee of the bank holding company or of any affiliate of the bank holding company or is a business partner of any director, officer or employee of the bank holding company or of any affiliate of the bank holding company,beneficially owns or controls, directly or indirectly, a material interest in the shares of the bank holding company or of any affiliate of the bank holding company, orhas been a liquidator, trustee in bankruptcy, receiver or receiver and manager of any affiliate of the bank holding company within the two years immediately preceding the firm’s proposed appointment as auditor of the bank holding company, other than an affiliate that is a subsidiary of the bank holding company acquired pursuant to section 934 or through a realization of security pursuant to section 935.Business partnersFor the purposes of subsection (2), a business partner of a member of a firm of accountants includesanother member of the firm; anda shareholder of the firm or of a business partner of the member.Notice of designationWithin fifteen days after appointing a firm of accountants as auditor of a bank holding company, the bank holding company and the firm of accountants shall jointly designate a member of the firm who has the qualifications described in subsection (1) to conduct the audit of the bank holding company on behalf of the firm and the bank holding company shall forthwith notify the Superintendent in writing of the designation.New designationWhere for any reason a member of a firm of accountants designated pursuant to subsection (3) ceases to conduct the audit of the bank holding company, the bank holding company and the firm of accountants may jointly designate another member of the same firm of accountants who has the qualifications described in subsection (1) to conduct the audit of the bank holding company and the bank holding company shall forthwith notify the Superintendent in writing of the designation.Deemed vacancyIn any case where subsection (4) applies and a designation is not made pursuant to that subsection within thirty days after the designated member ceases to conduct the audit of the bank holding company, there shall be deemed to be a vacancy in the office of auditor of the bank holding company.2001, c. 9, s. 183; 2005, c. 54, s. 129
Duty to resignAn auditor that ceases to be qualified under section 847 shall resign forthwith after any member of the firm becomes aware that the firm has ceased to be so qualified.Disqualification orderAny interested person may apply to a court for an order declaring that an auditor of a bank holding company has ceased to be qualified under section 847 and declaring the office of auditor to be vacant.2001, c. 9, s. 183
Revocation of appointmentThe shareholders of a bank holding company may, by ordinary resolution at a special meeting, revoke the appointment of an auditor.Revocation of appointmentThe Superintendent may at any time revoke the appointment of an auditor made under subsection (3) or 846(1) or section 851 by notice in writing signed by the Superintendent and sent by registered mail to the auditor and to the bank holding company addressed to the usual place of business of the auditor and the bank holding company.Filling vacancyA vacancy created by the revocation of the appointment of an auditor under subsection (1) may be filled at the meeting at which the appointment was revoked and, if not so filled, shall be filled by the directors under section 851.2001, c. 9, s. 183
Ceasing to hold officeAn auditor of a bank holding company ceases to hold office whenthe auditor resigns; orthe appointment of the auditor is revoked by the shareholders or the Superintendent.Effective date of resignationThe resignation of an auditor becomes effective at the time a written resignation is sent to the bank holding company or at the time specified in the resignation, whichever is later.2001, c. 9, s. 183
Filling vacancySubject to subsection 849(3), where a vacancy occurs in the office of auditor of a bank holding company, the directors shall forthwith fill the vacancy, and the auditor so appointed holds office for the unexpired term of office of the predecessor of that auditor.Where Superintendent may fill vacancyWhere the directors fail to fill a vacancy in accordance with subsection (1), the Superintendent may fill the vacancy and the auditor so appointed holds office for the unexpired term of office of the predecessor of that auditor.Designation of member of firmWhere the Superintendent has, pursuant to subsection (2), appointed a firm of accountants to fill a vacancy, the Superintendent shall designate the member of the firm who is to conduct the audit of the bank holding company on behalf of the firm.2001, c. 9, s. 183
Right to attend meetingsThe auditor of a bank holding company is entitled to receive notice of every meeting of shareholders and, at the expense of the bank holding company, to attend and be heard thereat on matters relating to the duties of the auditor.Duty to attend meetingIf a director or shareholder of a bank holding company, whether or not the shareholder is entitled to vote at the meeting, gives written notice, not less than ten days before a meeting of shareholders, to an auditor or former auditor of the bank holding company that the director or shareholder wishes the auditor’s attendance at the meeting, the auditor or former auditor shall attend the meeting at the expense of the bank holding company and answer questions relating to the auditor’s or former auditor’s duties as auditor.Notice to bank holding companyA director or shareholder who gives notice under subsection (2) shall send concurrently a copy of the notice to the bank holding company and the bank holding company shall forthwith send a copy thereof to the Superintendent.Superintendent may attendThe Superintendent may attend and be heard at any meeting referred to in subsection (2).2001, c. 9, s. 183
Statement of auditorAn auditor of a bank holding company thatresigns,receives a notice or otherwise learns of a meeting of shareholders called for the purpose of revoking the appointment of the auditor, orreceives a notice or otherwise learns of a meeting of directors or shareholders at which another firm of accountants is to be appointed in its stead, whether because of the auditor’s resignation or revocation of appointment or because the auditor’s term of office has expired or is about to expire,shall submit to the bank holding company and the Superintendent a written statement giving the reasons for the resignation or the reasons why the auditor opposes any proposed action.Other statementsIn the case of a proposed replacement of an auditor whether because of removal or the expiry of their term, the bank holding company shall make a statement of the reasons for the proposed replacement and the proposed replacement auditor may make a statement in which they comment on those reasons.Statements to be sentThe bank holding company shall send a copy of the statements referred to in subsections (1) and (1.1) without delay to every shareholder entitled to vote at the annual meeting of shareholders and to the Superintendent.2001, c. 9, s. 183; 2005, c. 54, s. 130
Duty of replacement auditorWhere an auditor of a bank holding company has resigned or the appointment of an auditor has been revoked, no firm of accountants shall accept an appointment as auditor of the bank holding company or consent to be an auditor of the bank holding company until the firm of accountants has requested and received from the other auditor a written statement of the circumstances and reasons why the other auditor resigned or why, in the other auditor’s opinion, the other auditor’s appointment was revoked.ExceptionNotwithstanding subsection (1), a firm of accountants may accept an appointment or consent to be appointed as auditor of a bank holding company if, within fifteen days after a request under that subsection is made, no reply from the other auditor is received.Effect of non-complianceUnless subsection (2) applies, an appointment as auditor of a bank holding company is void if subsection (1) has not been complied with.2001, c. 9, s. 183
Auditors’ examinationThe auditor of a bank holding company shall make such examination as the auditor considers necessary to enable the auditor to report on the annual statement and on other financial statements required by this Part to be placed before the shareholders, except such annual statements or parts thereof as relate to the period referred to in subparagraph 840(1)(a)(ii).Auditing standardsThe examination of the auditor referred to in subsection (1) shall, except as otherwise specified by the Superintendent, be conducted in accordance with generally accepted auditing standards, the primary source of which is the Handbook of the Chartered Professional Accountants of Canada.2001, c. 9, s. 183; 2017, c. 26, s. 62
Right to informationOn the request of the auditor of a bank holding company, the present or former directors, officers, employees or agents of the bank holding company shall, to the extent that such persons are reasonably able to do so,permit access to such records, assets and security held by the bank holding company or any entity in which the bank holding company has a substantial investment, andprovide such information and explanationsas are, in the opinion of the auditor, necessary to enable the auditor to perform the duties of the auditor of the bank holding company.Directors to provide informationOn the request of the auditor of a bank holding company, the directors of the bank holding company shall, to the extent that they are reasonably able to do so,obtain from the present or former directors, officers, employees and agents of any entity in which the bank holding company has a substantial investment the information and explanations that such persons are reasonably able to provide and that are, in the opinion of the auditor, necessary to enable them to perform the duties of the auditor of the bank holding company; andprovide the auditor with the information and explanations so obtained.No civil liabilityA person who in good faith makes an oral or written communication under subsection (1) or (2) shall not be liable in any civil action arising from having made the communication.2001, c. 9, s. 183
Auditor’s report and extended examinationThe Superintendent may, in writing, require that the auditor of a bank holding company report to the Superintendent on the extent of the procedures of the auditor in the examination of the annual statement and may, in writing, require that the auditor enlarge or extend the scope of that examination or direct that any other particular procedure be performed in any particular case, and the auditor shall comply with any such requirement of the Superintendent and report to the Superintendent thereon.Special examinationThe Superintendent may, in writing, require that the auditor of a bank holding company make a particular examination to determine whether any procedures adopted by the bank holding company may be prejudicial to the interests of depositors, policyholders or creditors of any federal financial institution that is affiliated with the bank holding company, or any other examination as, in the Superintendent’s opinion, the public interest may require, and report to the Superintendent thereon.Special examinationThe Superintendent may direct that a special audit of a bank holding company be made if, in the opinion of the Superintendent, it is so required and may appoint for that purpose a firm of accountants qualified pursuant to subsection 847(1) to be an auditor of the bank holding company.Expenses payable by bank holding companyThe expenses entailed by any examination or audit referred to in any of subsections (1) to (3) are payable by the bank holding company on being approved in writing by the Superintendent.2001, c. 9, s. 183
Auditor’s reportThe auditor shall, not less than twenty-one days before the date of the annual meeting of the shareholders of the bank holding company, make a report in writing to the shareholders on the annual statement referred to in subsection 840(1).Audit for shareholdersIn each report required under subsection (1), the auditor shall state whether, in the opinion of the auditor, the annual statement presents fairly, in accordance with the accounting principles referred to in subsection 840(4), the financial position of the bank holding company as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the bank holding company for that financial year.Auditor’s remarksIn each report referred to in subsection (2), the auditor shall include such remarks as the auditor considers necessary whenthe examination has not been made in accordance with the auditing standards referred to in subsection 855(2);the annual statement has not been prepared on a basis consistent with that of the preceding financial year; orthe annual statement does not present fairly, in accordance with the accounting principles referred to in subsection 840(4), the financial position of the bank holding company as at the end of the financial year to which it relates or the results of the operations or changes in the financial position of the bank holding company for that financial year.2001, c. 9, s. 183
Report on directors’ statementThe auditor of a bank holding company shall, if required by the shareholders, audit and report to the shareholders on any financial statement submitted by the directors to the shareholders, and the report shall state whether, in the opinion of the auditor, the financial statement presents fairly the information required by the shareholders.Making of reportA report of the auditor made under subsection (1) shall be attached to the financial statement to which it relates and a copy of the statement and report shall be sent by the directors to every shareholder and to the Superintendent.2001, c. 9, s. 183
Auditor of subsidiariesA bank holding company shall take all necessary steps to ensure thatits auditor is the auditor of each of its subsidiaries; andin the case of a subsidiary with more than one auditor, the auditor of the bank holding company is one of the subsidiary’s auditors.Subsidiary outside CanadaSubsection (1) applies in the case of a subsidiary that carries on its operations in a country other than Canada unless the laws of that country do not permit the appointment of an auditor of the bank holding company as the auditor of that subsidiary.ExceptionSubsection (1) does not apply in respect of any particular subsidiary where the bank holding company, after having consulted its auditor, is of the opinion that the total assets of the subsidiary are not a material part of the total assets of the bank holding company.2001, c. 9, s. 183; 2005, c. 54, s. 131
Auditor’s attendanceThe auditor of a bank holding company is entitled to receive notice of every meeting of the audit committee of the bank holding company and, at the expense of the bank holding company, to attend and be heard at that meeting.AttendanceIf so requested by a member of the audit committee, the auditor shall attend every meeting of the audit committee held during the member’s term of office.2001, c. 9, s. 183
Calling meetingThe auditor of a bank holding company or a member of the audit committee may call a meeting of the audit committee.Right to interviewThe chief internal auditor of a bank holding company or any officer or employee of the bank holding company acting in a similar capacity shall, at the request of the auditor of the bank holding company and on receipt of reasonable notice, meet with the auditor.2001, c. 9, s. 183
Notice of errorsA director or an officer of a bank holding company shall forthwith notify the audit committee and the auditor of the bank holding company of any error or misstatement of which the director or officer becomes aware in an annual statement or other financial statement on which the auditor or any former auditor has reported.Error noted by auditorIf the auditor or former auditor of a bank holding company is notified or becomes aware of an error or misstatement in an annual statement or other financial statement on which the auditor reported and in the opinion of the auditor the error or misstatement is material, the auditor or former auditor shall inform each director of the bank holding company accordingly.Duty of directorsWhen under subsection (2) the auditor or former auditor of a bank holding company informs the directors of an error or misstatement in an annual statement or other financial statement, the directors shallprepare and issue a revised annual statement or financial statement; orotherwise inform the shareholders and the Superintendent of the error or misstatement.2001, c. 9, s. 183
Qualified privilege for statementsAny oral or written statement or report made under this Part by the auditor or former auditor of a bank holding company has qualified privilege.2001, c. 9, s. 183
Remedial Actions
Sections 334 to 338 applySections 334 to 338 apply in respect of bank holding companies, subject to the following:references to “bank” in those sections are to be read as references to “bank holding company”; andreferences to “this Act” in those sections are to be read as references to “this Part”.2001, c. 9, s. 183
Liquidation and Dissolution
Definition of court”For the purposes of subsections 346(1) and 347(1) and (2), sections 348 to 352, subsection 353(1), sections 355 and 357 to 359, subsections 363(3) and (4) and section 368, court means a court having jurisdiction in the place where the bank holding company has its head office.2001, c. 9, s. 183
Non-application of certain provisionsSubsection (2) and sections 342 to 365, 368 and 868 do not apply to a bank holding company that is an insolvent person or a bankrupt as those terms are defined in subsection 2(1) of the Bankruptcy and Insolvency Act.Staying proceedings on insolvencyAny proceedings taken under this Division to dissolve or to liquidate and dissolve a bank holding company shall be stayed if the bank holding company is at any time found, in a proceeding under the Bankruptcy and Insolvency Act, to be an insolvent person as defined in subsection 2(1) of that Act.Winding-up and Restructuring Act does not applyThe Winding-up and Restructuring Act does not apply to a bank holding company.2001, c. 9, s. 183
Returns to SuperintendentA liquidator appointed under this Division to wind up the business of a bank holding company shall provide the Superintendent with such information relating to the business and affairs of the bank holding company in such form as the Superintendent requires.2001, c. 9, s. 183
Simple Liquidation
Sections 342 to 346 applySections 342 to 346 apply in respect of bank holding companies, subject to the following:references to “bank” in those sections are to be read as references to “bank holding company”; andthe reference to “sections 143 and 144” in subsection 343(1) is to be read as a reference to “sections 732 and 733”.2001, c. 9, s. 183
Court-supervised Liquidation
Sections 347 to 360 applySections 347 to 360 apply in respect of bank holding companies, subject to the following:references to “bank” in those sections are to be read as references to “bank holding company”;the reference to “subsection 308(1)” in subsection 353(1) is to be read as a reference to “subsection 840(1)”; andparagraph 354(a) is to be read without reference to “or auditors”.2001, c. 9, s. 183
General
Sections 361 to 365 and 368 applySections 361 to 365 and 368 apply in respect of bank holding companies, subject to the following:references to “bank” in those sections are to be read as references to “bank holding company”;references to “this Part” in those sections are to be read as references to “this Division”;the reference to “section 632” in subsection 362(2) is to be read as a reference to “section 951”;the reference to “section 366” in section 364 is to be read as a reference to “section 872”; andthe reference to “sections 366 and 367” in section 365 is to be read as a reference to “section 872”.2001, c. 9, s. 183
Unknown claimantsOn the dissolution of a bank holding company under this Act, the portion of the property distributable to a creditor or shareholder who cannot be found shall be converted into money and paid to the Receiver General.Constructive satisfactionA payment under subsection (1) is deemed to be in satisfaction of a debt or claim of such creditor or shareholder.RecoveryIf at any time a person establishes that he or she is entitled to any moneys paid to the Receiver General under this Act, the Receiver General shall pay an equivalent amount to him or her out of the Consolidated Revenue Fund.2001, c. 9, s. 183
OwnershipConstraints on Ownership
Sections 370 to 371.1 applySections 370 to 371.1 apply in respect of bank holding companies, except that references to “bank” in sections 371 and 371.1 are to be read as references to “bank holding company”.2001, c. 9, s. 183; 2012, c. 19, s. 336
Significant interestExcept as permitted by this Division, no person shall have a significant interest in any class of shares of a bank holding company.2001, c. 9, s. 183
Acquisition of significant interestSubject to section 876, no person, or entity controlled by a person, shall, without the approval of the Minister, purchase or otherwise acquire any share of a bank holding company or purchase or otherwise acquire control of any entity that holds any share of a bank holding company ifthe acquisition would cause the person to have a significant interest in any class of shares of the bank holding company; orif the person has a significant interest in a class of shares of the bank holding company, the acquisition would increase the significant interest of the person in that class of shares.Amalgamation, etc., constitutes acquisitionIf the entity that would result from an amalgamation, a merger or a reorganization would have a significant interest in a class of shares of a bank holding company, the entity is deemed to be acquiring a significant interest in that class of shares of the bank holding company through an acquisition for which the approval of the Minister is required under subsection (1).2001, c. 9, s. 183; 2007, c. 6, s. 118
Limitations on share holdingsNo person may be a major shareholder of a bank holding company with equity of twelve billion dollars or more.Exception — widely held bankSubsection (1) does not apply to a widely held bank that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank holding company with equity of twelve billion dollars or more if it controlled, within the meaning of those paragraphs, the bank holding company on the day the bank holding company’s equity reached twelve billion dollars and it has controlled, within the meaning of those paragraphs, the bank holding company since that day.Exception — widely held bank holding companySubsection (1) does not apply to a widely held bank holding company that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank holding company with equity of twelve billion dollars or more if the widely held bank holding company controlled, within the meaning of those paragraphs, the bank holding company on the day the bank holding company’s equity reached twelve billion dollars and the widely held bank holding company has controlled, within the meaning of those paragraphs, the bank holding company since that day.Exception — insurance holding companies and certain institutionsSubsection (1) does not apply to any of the following that controls, within the meaning of paragraph 3(1)(d), the bank holding company with equity of twelve billion dollars or more if it controlled, within the meaning of that paragraph, the bank holding company on the day the bank holding company’s equity reached twelve billion dollars and it has controlled, within the meaning of that paragraph, the bank holding company since that day:a widely held insurance holding company;an eligible Canadian financial institution, other than a bank; oran eligible foreign institution.Exception — other entitiesSubsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank holding company with equity of twelve billion dollars or more if the entity is controlled, within the meaning of those paragraphs, by a widely held bank to which subsection (2) applies, or a widely held bank holding company to which subsection (3) applies, that controls the bank holding company.Exception — other entitiesSubsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the bank holding company with equity of twelve billion dollars or more if the entity is controlled, within the meaning of that paragraph, bya widely held insurance holding company to which subsection (4) applies that controls the bank holding company;an eligible Canadian financial institution, other than a bank, to which subsection (4) applies that controls the bank holding company; oran eligible foreign institution to which subsection (4) applies that controls the bank holding company.2001, c. 9, s. 183; 2007, c. 6, s. 132; 2012, c. 5, s. 81
ExceptionDespite section 876, if a bank holding company with equity of twelve billion dollars or more was formed as the result of an amalgamation, a person who is a major shareholder of the bank holding company on the effective date of the letters patent of amalgamation shall do all things necessary to ensure that the person is no longer a major shareholder of the bank holding company on the day that is one year after that day or on the day that is after any shorter period specified by the Minister.Exception — widely held banks and bank holding companiesSubsection (1) does not apply to a widely held bank or a widely held bank holding company that controlled, within the meaning of paragraphs 3(1)(a) and (d), one of the applicants for the letters patent of amalgamation and that has controlled, within the meaning of those paragraphs, the amalgamated bank holding company since the effective date of those letters patent.Exception — insurance holding companies and certain institutionsSubsection (1) does not apply to any of the following that controlled, within the meaning of paragraph 3(1)(d), one of the applicants for the letters patent of amalgamation if it has controlled, within the meaning of that paragraph, the amalgamated bank holding company since the effective date of those letters patent:a widely held insurance holding company;an eligible Canadian financial institution, other than a bank; oran eligible foreign institution.Exception — other entitiesSubsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(a) and (d), the amalgamated bank holding company if the entity is controlled, within the meaning of those paragraphs, by a widely held bank or widely held bank holding company to which subsection (2) applies that controls the amalgamated bank holding company.Exception — other entitiesSubsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the amalgamated bank holding company if the entity is controlled, within the meaning of that paragraph, by any of the following:a widely held insurance holding company to which subsection (3) applies that controls the amalgamated bank holding company;an eligible Canadian financial institution to which subsection (3) applies, other than a bank, that controls the amalgamated bank holding company; oran eligible foreign institution to which subsection (3) applies that controls the amalgamated bank holding company.ExtensionIf general market conditions so warrant and the Minister is satisfied that the person has used the person’s best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which the person must comply with that subsection.2001, c. 9, s. 183; 2007, c. 6, s. 132; 2012, c. 5, s. 82
Limitation on share holdingsIf a person is a major shareholder of a bank holding company with equity of less than twelve billion dollars and the bank holding company’s equity reaches twelve billion dollars or more, the person shall do all things necessary to ensure that the person is not a major shareholder of the bank holding company on the day that is three years after the day the bank holding company’s equity reached twelve billion dollars.ExceptionSubsection (1) does not apply if any of subsections 876(2) to (6) applies to the person in respect of the bank holding company.ExtensionIf general market conditions so warrant and the Minister is satisfied that the person has used the person’s best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which the person must comply with that subsection.2001, c. 9, s. 183; 2007, c. 6, s. 132; 2012, c. 5, s. 83
Obligation of widely held bank holding companyIf a widely held bank holding company with equity of twelve billion dollars or more controls a bank and a person becomes a major shareholder of the bank or of any entity that also controls the bank, the widely held bank holding company must do all things necessary to ensure that, on the day that is one year after the person became a major shareholder of the bank or entity that controls it,the widely held bank holding company no longer controls the bank; orthe bank or the entity that controls the bank does not have any major shareholder other than the widely held bank holding company or any entity that it controls.ExceptionSubsection (1) does not apply in respect of a bank with equity of less than two hundred and fifty million dollars, or any other prescribed amount.ExtensionIf general market conditions so warrant and the Minister is satisfied that the widely held bank holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.2001, c. 9, s. 183; 2007, c. 6, s. 132; 2012, c. 5, s. 84
Obligation of widely held bank holding companyDespite subsection 879(1), if a widely held bank holding company with equity of twelve billion dollars or more controls a bank in respect of which that subsection does not apply by reason of subsection 879(2) and the equity of the bank reaches two hundred and fifty million dollars or more or any other amount that is prescribed and on the day the equity of the bank reaches two hundred and fifty million dollars or more or the prescribed amount, as the case may be, a person is a major shareholder of the bank or of any entity that also controls the bank, the widely held bank holding company must do all things necessary to ensure that, on the day that is three years after that day,the widely held bank holding company no longer controls the bank; orthe bank or the entity that controls the bank does not have any major shareholder other than the widely held bank holding company or any entity that the widely held bank holding company controls.ExtensionIf general market conditions so warrant and the Minister is satisfied that the widely held bank holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.2001, c. 9, s. 183; 2007, c. 6, s. 132; 2012, c. 5, s. 85
Prohibition against significant interestNo person who has a significant interest in any class of shares of a widely held bank holding company with equity of twelve billion dollars or more may have a significant interest in any class of shares of a subsidiary of the widely held bank holding company that is a bank or a bank holding company.2001, c. 9, s. 183; 2007, c. 6, s. 132; 2012, c. 5, s. 86
Prohibition against significant interestNo person who has a significant interest in any class of shares of a bank holding company may have a significant interest in any class of shares of any widely held bank with equity of twelve billion dollars or more, or of any widely held bank holding company with equity of twelve billion dollars or more, that controls the bank holding company.2001, c. 9, s. 183; 2007, c. 6, s. 132; 2012, c. 5, s. 86
Prohibition against controlNo person shall control, within the meaning of paragraph 3(1)(d), a bank holding company with equity of twelve billion dollars or more.Exception — widely held bankSubsection (1) does not apply if any of subsections 876(2) to (6) applies in respect of the person in respect of the bank holding company.2001, c. 9, s. 183; 2007, c. 6, s. 132; 2012, c. 5, s. 87
Restriction on controlNo person shall, without the approval of the Minister, acquire control, within the meaning of paragraph 3(1)(d), of a bank holding company with equity of less than twelve billion dollars.Amalgamation, etc., constitutes acquisitionIf the entity that would result from an amalgamation, a merger or a reorganization would control, within the meaning of paragraph 3(1)(d), a bank holding company with equity of less than twelve billion dollars, the entity is deemed to be acquiring control, within the meaning of that paragraph, of the bank holding company through an acquisition for which the approval of the Minister is required under subsection (1).2001, c. 9, s. 183; 2007, c. 6, s. 119; 2012, c. 5, s. 88
DeemingA bank holding company with equity of less than twelve billion dollars that controls a bank to which subsection 378(1) applies is deemed, for the purposes of sections 156.09, 727, 876, 879, 879.1, 880, 881, 882, 888 and 890, subsection 891(2), section 893 and subsection 906(2), to be a bank holding company with equity of twelve billion dollars or more.2001, c. 9, s. 183; 2007, c. 6, s. 132; 2012, c. 5, s. 88
ProhibitionNo person may control or be a major shareholder of a bank holding company if the person or an entity affiliated with the personhas control of or has a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity within the meaning of subsection 464(1) is prohibited from engaging in; orengages in Canada in any personal property leasing activity that a financial leasing entity within the meaning of subsection 464(1) is prohibited from engaging in.2001, c. 9, s. 183
ProhibitionNo person who controls a bank holding company or who is a major shareholder of a bank holding company, and no entity affiliated with that person, maycontrol or have a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity within the meaning of subsection 464(1) is prohibited from engaging in; orengage in Canada in any personal property leasing activity that a financial leasing entity within the meaning of subsection 464(1) is prohibited from engaging in.2001, c. 9, s. 183
Constraint on registrationNo bank holding company shall, unless the acquisition of the share has been approved by the Minister, record in its securities register a transfer or issue of any share of the bank holding company to any person or to any entity controlled by a person ifthe transfer or issue of the share would cause the person to have a significant interest in any class of shares of the bank holding company; orwhere the person has a significant interest in a class of shares of the bank holding company, the transfer or issue of the share would increase the significant interest of the person in that class of shares.2001, c. 9, s. 183
ExemptionOn application by a bank holding company, other than a bank holding company with equity of twelve billion dollars or more, the Superintendent may exempt any class of non-voting shares of the bank holding company the aggregate book value of which is not more than 30 per cent of the aggregate book value of all the outstanding shares of the bank holding company from the application of sections 875 and 887.2001, c. 9, s. 183; 2007, c. 6, s. 132; 2012, c. 5, s. 89
Exception — small holdingsDespite section 887, if, as a result of a transfer or issue of shares of a class of shares of a bank holding company to a person, other than an eligible agent, the total number of shares of that class registered in the securities register of the bank holding company in the name of that person would not exceed 5,000 and would not exceed 0.1% of the outstanding shares of that class, the bank holding company is entitled to assume that no person is acquiring or increasing a significant interest in that class of shares of the bank holding company as a result of that issue or transfer of shares.2001, c. 9, s. 183; 2012, c. 31, s. 120
When approval not requiredDespite sections 875 and 887, the approval of the Minister is not required in respect of a bank holding company with equity of less than twelve billion dollars if a person with a significant interest in a class of shares of the bank holding company, or an entity controlled by a person with a significant interest in a class of shares of the bank holding company, purchases or otherwise acquires shares of that class, or acquires control of any entity that holds any share of that class, and the number of shares of that class purchased or otherwise acquired, or the acquisition of control of the entity, as the case may be, would not increase the significant interest of the person in that class of shares of the bank holding company to a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever is applicable.PercentageSubject to subsection (3) and for the purpose of subsection (1), the percentage is 5 percentage points in excess of the significant interest of the person in that class of shares of the bank holding company on the day of the most recent purchase or acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank holding company, or of control of an entity that held shares of that class of shares of the bank holding company, for which approval was given by the Minister.When approval not requiredIf a person has a significant interest in a class of shares of a bank holding company and the person’s percentage of that class has decreased after the date of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank holding company, or of control of an entity that held shares of that class of shares of the bank holding company, for which approval was given by the Minister, the percentage for the purposes of subsection (1) is the percentage that is the lesser of5 percentage points in excess of the significant interest of the person in that class of shares of the bank holding company on the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank holding company, or of control of an entity that held shares of that class of shares of the bank holding company, for which approval was given by the Minister, and10 percentage points in excess of the lowest significant interest of the person in that class of shares of the bank holding company at any time after the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank holding company, or of control of an entity that held shares of that class of shares of the bank holding company, for which approval was given by the Minister.Exception — eligible agentIf the person referred to in subsection (1) is an eligible agent or an entity controlled by an eligible agent, then the Minister may reduce the percentage referred to in subsection (2) or (3).ExceptionSubsection (1) does not apply if the purchase or other acquisition of shares or the acquisition of control referred to in that subsection wouldresult in the acquisition of control of the bank holding company by the person referred to in that subsection;if the person controls the bank holding company but the voting rights attached to the aggregate of any voting shares of the bank holding company beneficially owned by the person and by entities controlled by the person do not exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the bank holding company, cause the voting rights attached to that aggregate to exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the bank holding company;result in the acquisition of a significant interest in a class of shares of the bank holding company by an entity controlled by the person and the acquisition of that investment is not exempted by the regulations; orresult in an increase in a significant interest in a class of shares of the bank holding company by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies, and the increase is not exempted by the regulations.RegulationsThe Governor in Council may make regulationsexempting from the application of paragraph (4)(c) the acquisition of a significant interest in a class of shares of the bank holding company by an entity controlled by the person; andexempting from the application of paragraph (4)(d) an increase in a significant interest in a class of shares of the bank holding company by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies.2001, c. 9, s. 183; 2007, c. 6, s. 132; 2012, c. 5, s. 90, c. 31, s. 121
When approval not requiredDespite sections 875 and 887, the approval of the Minister is not required ifthe Superintendent has, by order, directed the bank holding company to increase its capital and shares of the bank holding company are issued and acquired in accordance with the terms and conditions, if any, that may be specified in the order; ora person, other than an eligible agent, who controls, within the meaning of paragraph 3(1)(a), the bank holding company acquires additional shares of the bank holding company.ExceptionParagraph (1)(a) does not apply in respect of a bank holding company with equity of twelve billion dollars or more.2001, c. 9, s. 183; 2007, c. 6, s. 132; 2012, c. 5, s. 91, c. 31, s. 122
Pre-approvalFor the purposes of sections 875 and 887, the Minister may approvethe purchase or other acquisition of any number or percentage of shares of a bank holding company that may be required in a particular transaction or series of transactions; orthe purchase or other acquisition of up to a specified number or percentage of shares of a bank holding company within a specified period.2001, c. 9, s. 183
Public holding requirementEvery bank holding company with equity of two billion dollars or more but less than twelve billion dollars shall, from and after the day determined under this section in respect of that bank holding company, have, and continue to have, voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the bank holding company and that areshares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; andshares none of which is beneficially owned by a person who is a major shareholder of the bank holding company in respect of the voting shares of the bank holding company or by any entity that is controlled by a person who is a major shareholder of the bank holding company in respect of such shares.Determination of dayThe day referred to in subsection (1) isif the bank holding company had equity of two billion dollars or more but less than twelve billion dollars on the day the bank holding company was formed or came into existence, the day that is three years after that day; andin any other case, the day that is three years after the day of the first annual meeting of the shareholders of the bank holding company held after the equity of the bank holding company first reaches two billion dollars.ExtensionIf general market conditions so warrant and the Minister is satisfied that a bank holding company has used its best efforts to be in compliance with this section on the day determined under subsection (2), the Minister may specify a later day as the day from and after which the bank holding company must comply with subsection (1).2001, c. 9, s. 183; 2007, c. 6, ss. 132, 133; 2012, c. 5, s. 92
Public holding requirementIf a bank holding company to which section 893 applies becomes a bank holding company with equity of twelve billion dollars or more, that section continues to apply to the bank holding company until no person is a major shareholder of the bank holding company, other than a person in respect of whom subsections 876(2) to (6) applies.2001, c. 9, s. 183; 2007, c. 6, s. 132; 2012, c. 5, s. 93
Limit on assetsUnless an exemption order with respect to the bank holding company is granted under section 897, if a bank holding company fails to comply with section 893 in any month, the Minister may, by order, require the bank holding company not to have, until it complies with that section, average total assets in any three month period ending on the last day of a subsequent month exceeding the bank holding company’s average total assets in the three month period ending on the last day of the month immediately before the month specified in the order.Average total assetsFor the purposes of subsection (1), the average total assets of a bank holding company in a three month period is to be computed by adding the total assets of the bank holding company as calculated for the month end of each of the three months in the period and by dividing the sum by three.Definition of total assetsFor the purposes of subsections (1) and (2), total assets, in respect of a bank holding company, has the meaning given that expression by the regulations.2001, c. 9, s. 183
Increase of capitalIf the Superintendent has, by order, directed a bank holding company with equity of two billion dollars or more but less than twelve billion dollars to increase its capital and shares of the bank holding company are issued and acquired in accordance with any terms and conditions that may be specified in the order, section 893 does not apply in respect of the bank holding company until the time that the Superintendent may, by order, specify.2001, c. 9, s. 183; 2007, c. 6, ss. 132, 133; 2012, c. 5, s. 94
Exemption by order of the MinisterOn application by a bank holding company, the Minister may, if the Minister considers it appropriate to do so, by order exempt the bank holding company from the requirements of section 893, subject to any terms and conditions that the Minister considers appropriate.Compliance with section 893If an exemption order granted under this section in respect of a bank holding company expires, the bank holding company shall comply with section 893 as of the day the exemption order expires.Limit on assetsIf a bank holding company fails to comply with section 893 on the day referred to in subsection (2), the bank holding company shall not, until it complies with that section, have average total assets in any three month period ending on the last day of a subsequent month exceeding the bank holding company’s average total assets in the three month period ending on the last day of the month immediately before the day referred to in subsection (2) or any later day that the Minister may, by order, specify.Application of ss. 895(2) and (3)Subsections 895(2) and (3) apply for the purposes of subsection (3).2001, c. 9, s. 183
ExceptionIf a bank holding company fails to comply with section 893 as the result of any of the following, section 895 does not apply in respect of the bank holding company until the expiration of six months after the day it failed to comply with section 893:a distribution to the public of voting shares of the bank holding company;a redemption or purchase of voting shares of the bank holding company;the exercise of any option to acquire voting shares of the bank holding company; orthe conversion of any convertible securities into voting shares of the bank holding company.Shares acquiring voting rightsIf, as the result of an event that has occurred and is continuing, shares of a bank holding company acquire voting rights in such number as to cause the bank holding company to no longer be in compliance with section 893, section 895 does not apply in respect of that bank holding company until the expiration of six months after the day the bank holding company ceased to be in compliance with section 893 or any later day that the Minister may, by order, specify.2001, c. 9, s. 183
Acquisition of control permittedSubject to subsection (2) and sections 887 and 900, section 893 does not apply in respect of a bank holding company if a person acquires control of the bank holding company through the purchase or other acquisition of all or any number of the shares of the bank holding company by the person or by any entity controlled by the person.Undertaking requiredSubsection (1) applies only if the person referred to in that subsection provides the Minister with an undertaking satisfactory to the Minister to do all things necessary so that, within three years after the acquisition, or any other period that the Minister may specify, the bank holding company has voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the bank holding company and that areshares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; andshares none of which is beneficially owned by a person who is a major shareholder of the bank holding company in respect of the voting shares of the bank holding company or by any entity that is controlled by a person who is a major shareholder of the bank holding company in respect such shares.2001, c. 9, s. 183
Application of section 893At the expiration of the period for compliance with an undertaking referred to in subsection 899(2), section 893 shall apply in respect of the bank holding company to which the undertaking relates.2001, c. 9, s. 183
Restriction on voting rightsIf, with respect to any bank holding company, a particular person contravenes section 874, subsection 875(1), 876(1) or 878(1), section 880 or 881 or subsection 882(1) or section 883 or fails to comply with an undertaking referred to in subsection 899(2) or with any term or condition imposed under section 907, no person, and no entity controlled by the particular person, shall, in person or by proxy, exercise any voting rightsthat are attached to shares of the bank holding company beneficially owned by the particular person or any entity controlled by the particular person; orthat are subject to an agreement entered into by the particular person, or any entity controlled by the particular person, pertaining to the exercise of the voting rights.Subsection (1) ceases to applySubsection (1) shall cease to apply in respect of a person when, as the case may be,the shares to which the contravention relates have been disposed of;the person ceases to control the bank holding company within the meaning of paragraph 3(1)(d);if the person failed to comply with an undertaking referred to in subsection 899(2), the bank holding company complies with section 893; orif the person failed to comply with a term or condition imposed under section 907, the person complies with the term or condition.SavingDespite subsection (1), if a person contravenes subsection 876(1) by reason only that, as a result of an event that has occurred and is continuing and is not within the control of the person, shares of the bank holding company beneficially owned by the person or by any entity controlled by the person acquire voting rights in such number so as to cause the person to be a major shareholder of the bank holding company, the Minister may, after consideration of the circumstances, permit the person and any entity controlled by the person to exercise voting rights, in person or by proxy, in respect of any class of voting shares of the bank holding company beneficially owned by them that do not in aggregate exceed 20 per cent of the voting rights attached to that class of voting shares.2001, c. 9, s. 183
Loss of control — bank and bank holding companyDespite sections 876 and 882, a widely held bank or a widely held bank holding company may be a major shareholder of a bank holding company with equity of twelve billion dollars or more and cease to control, within the meaning of paragraphs 3(1)(a) and (d), the bank holding company if it has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the bank holding company on the expiration of the day specified in the agreement.ExtensionIf general market conditions so warrant and the Minister is satisfied that the bank or the bank holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.2001, c. 9, s. 183; 2007, c. 6, s. 132; 2012, c. 5, s. 95
Loss of control — other entitiesDespite sections 876 and 882, an eligible foreign institution, an eligible Canadian financial institution, other than a bank, or a widely held insurance holding company may be a major shareholder of a bank holding company with equity of twelve billion dollars or more and cease to control, within the meaning of paragraph 3(1)(d), the bank holding company if it has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the bank holding company on the expiration of the day specified in the agreement.ExtensionIf general market conditions so warrant and the Minister is satisfied that the institution or insurance holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.2001, c. 9, s. 183; 2007, c. 6, s. 132; 2012, c. 5, s. 96
Change in statusIf a body corporate that is an eligible financial institution other than a bank controls, within the meaning of paragraph 3(1)(d), a bank holding company with equity of twelve billion dollars or more and the body corporate subsequently ceases to be an eligible financial institution, the body corporate must do all things necessary to ensure that, on the day that is one year after the day it ceased to be an eligible financial institution,it does not control, within the meaning of paragraph 3(1)(d), the bank holding company; andit is not a major shareholder of the bank holding company.ExtensionIf general market conditions so warrant and the Minister is satisfied that the body corporate has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.2001, c. 9, s. 183; 2007, c. 6, s. 132; 2012, c. 5, s. 97
Approval Process
Application for approvalAn application for an approval of the Minister required under this Division must be filed with the Superintendent and contain the information, material and evidence that the Superintendent may require.ApplicantIf, with respect to any particular transaction, this Division applies to more than one person, any one of those persons may make the application to the Minister for approval on behalf of all of those persons.2001, c. 9, s. 183
Matters for considerationSubject to subsection (2), if an application for an approval under section 875 is made, the Minister, in determining whether or not to approve the transaction, shall take into account all matters that the Minister considers relevant to the application, includingthe nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support of any bank that is a subsidiary of the bank holding company;the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of any bank that is a subsidiary of the bank holding company;the business record and experience of the applicant or applicants;the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;whether the bank holding company will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;the impact of any integration of the businesses and operations of the applicant or applicants with those of the bank holding company and its affiliates on the conduct of those businesses and operations; andthe best interests of the financial system in Canada.ExceptionExcept for an application by an eligible agent for an approval under section 875, and subject to subsection 882(1), the Minister shall take into account only paragraph (1)(d) if the application is in respect of a transaction that would result in the applicant or applicants holdingmore than 10 per cent but no more than 20 per cent of any class of the outstanding voting shares of a widely held bank holding company with equity of twelve billion dollars or more; ormore than 10 per cent but no more than 30 per cent of any class of the outstanding non-voting shares of such a bank holding company.Favourable treatmentThe Minister shall not approve a transaction that would cause a bank holding company to become a subsidiary of a foreign bank within the meaning of any of paragraphs (a) to (f) of the definition foreign bank in section 2 that is a non-WTO Member foreign bank, unless the Minister is satisfied that treatment as favourable for bank holding companies to which this Act applies exists or will be provided in the jurisdiction in which the foreign bank principally carries on business, either directly or through a subsidiary.2001, c. 9, s. 183; 2007, c. 6, s. 132; 2012, c. 5, s. 98, c. 31, s. 123
Terms and conditionsThe Minister may impose any terms and conditions in respect of an approval given under this Division that the Minister considers necessary to ensure compliance with any provision of this Act.2001, c. 9, s. 183
Certifying receipt of applicationIf, in the opinion of the Superintendent, an application filed under this Division contains all the required information, the Superintendent shall without delay refer the application to the Minister and send a receipt to the applicant certifying the date on which the completed application was received by the Superintendent.Incomplete applicationIf, in the opinion of the Superintendent, an application filed under this Division is incomplete, the Superintendent shall send a notice to the applicant specifying the information required by the Superintendent to complete the application.2001, c. 9, s. 183; 2007, c. 6, s. 120(F)
Notice of decisionSubject to subsections (2) and (3) and 910(1), the Minister shall, within a period of thirty days after the certified date referred to in subsection 908(1), send to the applicanta notice approving the transaction to which the application relates; orif the Minister is not satisfied that the transaction to which the application relates should be approved, a notice to that effect, advising the applicant of the right to make representations to the Minister in respect of the matter.Notice of decisionSubject to subsections (4) and 910(2), the notice referred to in paragraph (1)(a) or (b) shall be sent by the Minister within a period of 45 days after the certified date referred to in subsection 908(1) in the following cases:the application involves the acquisition of control of a bank holding company;the application is made by an eligible agent or an entity controlled by an eligible agent; oran application is made for the approval referred to in subsection 913(3).Extension of period for noticeIf the Minister is unable to complete the consideration of an application within the period referred to in subsection (1), the Minister shall,within that period, send a notice to that effect to the applicant; andwithin a further period of thirty days after the date of the sending of the notice referred to in paragraph (a) or within any other further period that may be agreed on by the applicant and the Minister, send a notice referred to in paragraph (1)(a) or (b) to the applicant.Further extensionsIf the Minister considers it appropriate to do so, the Minister may extend the period referred to in subsection (2) for one or more periods of forty-five days.2001, c. 9, s. 183; 2012, c. 31, s. 124
Reasonable opportunity to make representationsIf, after receipt of the notice referred to in paragraph 909(1)(b), the applicant advises the Minister that the applicant wishes to make representations, the Minister must provide the applicant with a reasonable opportunity within a period of thirty days after the date of the notice, or within any further period that may be agreed on by the applicant and the Minister, to make representations in respect of the matter.Reasonable opportunity to make representationsIf, after receipt of the notice sent in accordance with subsection 909(2) that the Minister is not satisfied that the transaction to which the application relates should be approved, the applicant advises the Minister that the applicant wishes to make representations, the Minister must provide the applicant with a reasonable opportunity within a period of 45 days after the date of the notice, or within any further period that may be agreed on by the applicant and the Minister, to make representations in respect of the matter.2001, c. 9, s. 183; 2012, c. 31, s. 125(E)
Notice of decisionWithin a period of thirty days after the expiration of the period for making representations referred to in subsection 910(1), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.Notice of decisionWithin a period of forty-five days after the expiration of the period for making representations referred to in subsection 910(2), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.2001, c. 9, s. 183
Deemed approvalIf the Minister does not send a notice under subsection 909(1) or (3) or 911(1) within the period provided for in those subsections, the Minister is deemed to have approved the transaction to which the application relates.2001, c. 9, s. 183
Constraining registration: Crown and foreign governmentsNo bank holding company shall record in its securities register a transfer or issue of any share of the bank holding company toHer Majesty in right of Canada or of a province or any agent or agency of Her Majesty in either of those rights; orthe government of a foreign country or any political subdivision of a foreign country, or any agent or agency of a foreign government.ExceptionDespite subsection (1), a bank holding company may record in its securities register a transfer or issue of any share of the bank holding company to a foreign bank, or to a foreign institution, that is controlled by the government of a foreign country or any political subdivision of a foreign country, or by any agent or agency of a foreign government, if the share that is transferred or issued is beneficially owned by the foreign bank or foreign institution or by an entity controlled by the foreign bank or foreign institution.Certain foreign banks excludedSubsection (2) does not permit a bank holding company to record in its securities register a transfer or issue of any share of the bank holding company to a foreign bank that is a foreign bank by reason only of paragraph (f) of the definition foreign bank in section 2.ExceptionDespite subsection (1), a bank holding company may, with the Minister’s approval, record in its securities register the issue of any share of the bank holding company to an eligible agent.Application made jointlyThe application for the approval referred to in subsection (3) must be made jointly by the bank holding company and the eligible agent.Matters for considerationThe Minister, in determining whether to grant the approval referred to in subsection (3), shall take into account all matters that he or she considers relevant, including those set out in paragraphs 906(1)(a) to (g).Consequence of revocation of approvalIf an approval referred to in subsection (3) is revoked, the bank holding company shall delete any entry in its securities register in respect of the recording of the issuance of shares to the eligible agent.Disposition of shareholdingsIf a bank holding company or an eligible agent fails to comply with any undertaking or term or condition in relation to an approval referred to in subsection (3), or if an eligible agent ceases to be an eligible agent, the Minister may, if the Minister considers it to be in the public interest to do so, by order, direct the eligible agent or former eligible agent and any person controlled by the eligible agent or former eligible agent to dispose of any number of shares of the bank holding company beneficially owned by the eligible agent or former eligible agent or the persons controlled by the eligible agent or former eligible agent that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the eligible agent or former eligible agent and the persons controlled by the eligible agent or former eligible agent that is specified in the order.RepresentationsNo direction shall be made under subsection (7) unless the Minister has provided each person to whom the direction relates and the bank holding company concerned with a reasonable opportunity to make representations in respect of the subject-matter of the direction.AppealAny person with respect to whom a direction has been made under subsection (7) may, within 30 days after the date of the direction, appeal the matter in accordance with section 977.2001, c. 9, s. 183; 2012, c. 5, s. 99, c. 19, s. 337, c. 31, s. 126
Suspension of voting rights held by governmentsDespite section 737, no person shall, in person or by proxy, exercise any voting rights attached to any share of a bank holding company that is beneficially owned byHer Majesty in right of Canada or of a province or any agency of Her Majesty in either of those rights; orthe government of a foreign country or any political subdivision thereof, or any agency thereof.ExceptionSubsection (1) does not apply to a foreign bank, or to a foreign institution, that is controlled by the government of a foreign country or any political subdivision of a foreign country, or by any agent or agency of a foreign government, if the share referred to in subsection (1) is beneficially owned by the foreign bank or foreign institution or by an entity controlled by the foreign bank or foreign institution.Exception — eligible agentSubsection (1) does not apply in respect of the exercise of voting rights attached to any share referred to in subsection 913(3).Consequence of suspension of approvalIf an approval referred to in subsection 913(3) is suspended, the eligible agent shall not exercise, in person or by proxy, any voting rights attached to any share of the bank holding company that is beneficially owned by the eligible agent.2001, c. 9, s. 183; 2012, c. 5, s. 100, c. 19, s. 338, c. 31, s. 127
Disposition of shareholdingsIf, with respect to any bank holding company, a person contravenes section 874 or subsection 875(1), 876(1) or 878(1) or section 880 or 881 or subsection 882(1) or section 883 or fails to comply with an undertaking referred to in subsection 899(2) or with any terms and conditions imposed under section 907, the Minister may, if the Minister deems it in the public interest to do so, by order, direct that person and any person controlled by that person to dispose of any number of shares of the bank holding company beneficially owned by any of those persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the person and the persons controlled by that person that is specified in the order.RepresentationsNo direction shall be made under subsection (1) unless the Minister has provided each person to whom the direction relates and the bank holding company concerned with a reasonable opportunity to make representations in respect of the subject-matter of the direction.2001, c. 9, s. 183
AppealAny person with respect to whom a direction has been made under subsection 915(1) may, within thirty days after the date of the direction, appeal the matter in accordance with section 977.2001, c. 9, s. 183; 2012, c. 31, s. 128(F)
Application to courtIf a person fails to comply with a direction made under subsection 913(7) or 915(1), an application on behalf of the Minister may be made to a court for an order to enforce the direction.Court orderA court may, on an application under subsection (1), make such order as the circumstances require to give effect to the terms of the direction and may, without limiting the generality of the foregoing, require the bank holding company concerned to sell the shares that are the subject-matter of the direction.AppealAn appeal from an order of a court under this section lies in the same manner as, and to the same court to which, an appeal may be taken from any other order of the court.2001, c. 9, s. 183; 2012, c. 31, s. 129
Interest of securities underwriterThis Division does not apply to a securities underwriter in respect of shares of a body corporate or ownership interests in an unincorporated entity that are acquired by the underwriter in the course of a distribution to the public of those shares or ownership interests and that are held by the underwriter for a period of not more than six months.2001, c. 9, s. 183
Arrangements to effect complianceThe directors of a bank holding company may make such arrangements as they deem necessary to carry out the intent of this Division and, in particular, but without limiting the generality of the foregoing, mayrequire any person in whose name a share of the bank holding company is held to submit a declaration setting outthe beneficial ownership of the share, andsuch other information as the directors deem relevant for the purposes of this Division;require any person who wishes to have a transfer of a share registered in the name of, or to have a share issued to, that person to submit a declaration referred to in paragraph (a) as though the person were the holder of that share; anddetermine the circumstances in which a declaration referred to in paragraph (a) is to be required, the form of the declaration and the times at which it is to be submitted.Order of SuperintendentThe Superintendent may, by order, direct a bank holding company to obtain from any person in whose name a share of the bank holding company is held a declaration setting out the name of every entity controlled by that person and containing information concerningthe ownership or beneficial ownership of the share; andsuch other related matters as are specified by the Superintendent.Compliance requiredAs soon as possible after receipt by a bank holding company of a direction under subsection (2),the bank holding company shall comply with the direction; andevery person who is requested by the bank holding company to provide a declaration containing information referred to in subsection (1) or (2) shall comply with the request.Outstanding declaration: effectWhere, pursuant to this section, a declaration is required to be submitted by a shareholder or other person in respect of the issue or transfer of any share, a bank holding company may refuse to issue the share or register the transfer unless the required declaration is submitted.2001, c. 9, s. 183
Reliance on informationA bank holding company and any person who is a director or an officer, employee or agent of the bank holding company may rely on any information contained in a declaration required by the directors pursuant to section 919 or on any information otherwise acquired in respect of any matter that might be the subject of such a declaration, and no action lies against the bank holding company or any such person for anything done or omitted to be done in good faith in reliance on any such information.2001, c. 9, s. 183
Competition ActNothing in, or done under the authority of, this Act affects the operation of the Competition Act.2001, c. 9, s. 183
Business and Powers
Main businessSubject to this Part, a bank holding company shall not engage in or carry on any business other thanacquiring, holding and administering investments that are permitted by this Part;providing management, advisory, financing, accounting, information processing and other prescribed services to entities in which it has a substantial investment; andany other prescribed business.RegulationsThe Governor in Council may make regulations prescribing businesses or services for the purposes of subsection (1).2001, c. 9, s. 183
Restriction on guaranteesA bank holding company shall not guarantee on behalf of any person the payment or repayment of any sum of money.ExceptionSubsection (1) does not apply ifthe person on whose behalf the bank holding company has undertaken to guarantee the payment or repayment is a subsidiary of the bank holding company; andthe subsidiary has an unqualified obligation to reimburse the bank holding company for the full amount of the payment or repayment to be guaranteed.RegulationsThe Governor in Council may make regulations imposing terms and conditions in respect of guarantees permitted by this section.2001, c. 9, s. 183
Restriction on partnershipsExcept with the approval of the Superintendent, a bank holding company shall not be a general partner in a limited partnership or a partner in a general partnership.Meaning of general partnershipFor the purposes of subsection (1), general partnership means any partnership other than a limited partnership.2001, c. 9, s. 183
InvestmentsInterpretation
DefinitionsThe definitions in subsection 464(1) apply in respect of bank holding companies, except that the reference to “section 468” in the definition permitted entity is to be read as a reference to “section 930” and the reference to “bank” in that definition is to be read as a reference to “bank holding company”.Members of a bank holding company’s groupFor the purpose of this Division, a member of a bank holding company’s group is any of the following:an entity referred to in any of paragraphs 930(1)(a) to (f) that controls the bank holding company;a subsidiary of the bank holding company or of an entity referred to in any of paragraphs 930(1)(a) to (f) that controls the bank holding company;an entity in which the bank holding company, or an entity referred to in any of paragraphs 930(1)(a) to (f) that controls the bank holding company, has a substantial investment; ora prescribed entity in relation to the bank holding company.Non-application of DivisionThis Division does not apply in respect ofthe holding of a security interest in real property, unless the security interest is prescribed under paragraph 941(a) to be an interest in real property; orthe holding of a security interest in securities of an entity.2001, c. 9, s. 183
Investments
InvestmentsSubject to this Division, a bank holding company may invest its funds in the shares of or ownership interests in any entity or make any other investment that its directors consider necessary or advisable to manage the bank holding company’s liquidity.2001, c. 9, s. 183
General Constraints on Investments
Investment standardsThe directors of a bank holding company shall establish and the bank holding company shall adhere to investment and lending policies, standards and procedures that a reasonable and prudent person would apply to avoid undue risk of loss and obtain a reasonable return.2001, c. 9, s. 183
Limit — business growth fundThe aggregate value of all ownership interests in the business growth fund and the entities that the business growth fund controls that a bank holding company and its subsidiaries hold must not exceed $200,000,000.ApplicationFor the purposes of subsection (1), the value of an ownership interest is determined by the amount paid for it at the time of its issuance.2018, c. 27, s. 143
Restriction on control and substantial investmentsSubject to subsections (2) to (3.4), no bank holding company shall acquire control of, or hold, acquire or increase a substantial investment in, any entity other than a permitted entity.Exception: indirect investmentsA bank holding company may acquire control of, or acquire or increase a substantial investment in, an entity other than a permitted entity by way ofan acquisition of control of an entity referred to in any of paragraphs 930(1)(a) to (j), a specialized financing entity or a prescribed entity that controls or has a substantial investment in the entity; oran acquisition of shares or ownership interests in the entity byan entity referred to in any of paragraphs 930(1)(a) to (j), a specialized financing entity or a prescribed entity that is controlled by the bank holding company, oran entity controlled by an entity referred to in any of paragraphs 930(1)(a) to (j), a specialized financing entity or a prescribed entity that is controlled by the bank holding company.Exception: temporary investments, realizations and loan workoutsA bank holding company may acquire control of, or acquire or increase a substantial investment in, an entity by way ofa temporary investment permitted by section 933;an acquisition of shares of a body corporate or of ownership interests in an unincorporated entity permitted by section 934; ora realization of security permitted by section 935.Business growth fundSubject to section 927.1 and subsections (3.2) to (3.4), a bank holding company may hold, acquire or increase a substantial investment in the business growth fund or any entity that the business growth fund controls.For greater certaintyFor greater certainty, a bank holding company is prohibited from acquiring control of the business growth fund or any entity that the business growth fund controls.Prohibition — entityA bank holding company is prohibited from holding or acquiring a substantial investment in the business growth fund or any entity that the business growth fund controls if the business growth fund or any entity that the business growth fund controls hold or acquires shares of, or other ownership interests in, any of the following entities, or in any entity that controls any of the following entities:an entity referred to in any of paragraphs 930(1)(a) to (j);an entity that is primarily engaged in the leasing of motor vehicles in Canada for the purpose of extending credit to a customer or financing a customer’s acquisition of a motor vehicle;an entity that is primarily engaged in providing temporary possession of personal property, including motor vehicles, to customers in Canada for a purpose other than to finance the customer’s acquisition of the property;an entity that acts as an insurance broker or agent in Canada; oran entity that is engaged in any prescribed activity.Prohibition — capital and loansA bank holding company is prohibited from holding or acquiring a substantial investment in the business growth fund or any entity that the business growth fund controls if the business growth fund or any entity that the business growth fund controls holds shares of, or other ownership interests in, an entity or holds a loan made to an entity and, in respect of that entity and its affiliates, the aggregate value of the following exceeds $100,000,000:all ownership interests that are held by the bank holding company, the bank holding company’s subsidiaries, the business growth fund or the entities that the business growth fund controls, the value of those ownership interests as determined by the amount paid for them at the time each was first acquired by any of those entities; andthe outstanding principal of all loans held by the business growth fund or the entities that the business growth fund controls.Exception: uncontrolled eventA bank holding company is deemed not to contravene subsection (1) if the bank holding company acquires control of, or acquires or increases a substantial investment in, an entity solely as the result of an event not within the control of the bank holding company.Non-application of subsection (2)No bank holding company shall, under subsection (2), acquire control of, or acquire or increase a substantial investment in, an entity referred to in paragraph 930(1)(j).HoldingIf a bank holding company holds a substantial investment in an entity referred to in paragraph 930(1)(j) that it acquired or increased under subsection (2) before the coming into force of subsection (4.1), the bank holding company may continue to hold that substantial investment.Application of other provisionDespite having acquired control of, or a substantial investment in, an entity under a particular provision of this Part, a bank holding company may continue to control the entity or hold the substantial investment in the entity as though it had made the acquisition under another provision of this Part so long as the conditions of that other provision are met.Timing of deemed acquisitionIf a bank holding company decides to exercise its right under subsection (5), the bank holding company is deemed to be acquiring the control or the substantial investment under the other provision.2001, c. 9, s. 183; 2007, c. 6, s. 121; 2013, c. 40, s. 169; 2018, c. 27, s. 144
Regulations re limitsThe Governor in Council may make regulationsrespecting the determination of the amount or value of loans, investments and interests for the purposes of this Division;respecting the loans and investments, and the maximum aggregate amount of all loans and investments, that may be made or acquired by a bank holding company and its prescribed subsidiaries to or in a person and any persons connected with that person;specifying the classes of persons who are connected with any person for the purposes of paragraph (b); andprescribing terms and conditions under which a bank holding company may acquire control of, or acquire or increase a substantial investment in, a specialized financing entity.2001, c. 9, s. 183
Subsidiaries and Equity Investments
Permitted investmentsSubject to subsections (4) to (6), a bank holding company may acquire control of, or acquire or increase a substantial investment ina bank;a bank holding company;a body corporate to which the Trust and Loan Companies Act applies;an association to which the Cooperative Credit Associations Act applies;an insurance company or a fraternal benefit society incorporated or formed by or under the Insurance Companies Act;an insurance holding company;a trust, loan or insurance corporation incorporated or formed by or under an Act of the legislature of a province;a cooperative credit society incorporated or formed, and regulated, by or under an Act of the legislature of a province;an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province and that is primarily engaged in dealing in securities; oran entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province and that is primarily engaged outside Canada in a business that, if carried on in Canada, would be the business of banking, the business of a cooperative credit society, the business of insurance, the business of providing fiduciary services or the business of dealing in securities.Permitted investmentsSubject to subsections (3) to (6), a bank holding company may acquire control of, or acquire or increase a substantial investment in, an entity, other than an entity referred to in any of paragraphs (1)(a) to (j), whose business is limited to one or more of the following:engaging in any financial service activity that a bank is permitted to engage in under any of paragraphs 409(2)(a) to (d) or any other activity that a bank is permitted to engage in under section 410 or 411;acquiring or holding shares of, or ownership interests in, entities in which a bank holding company is permitted under this Division to hold or acquire;engaging in the provision of any services exclusively to any or all of the following, so long as the entity is providing those services to the bank holding company or any member of the bank holding company’s group:the bank holding company,any member of the bank holding company’s group,any entity that is primarily engaged in the business of providing financial services,any permitted entity in which an entity referred to in subparagraph (iii) has a substantial investment, orany prescribed person, if it is doing so under prescribed terms and conditions, if any are prescribed;engaging in any activity that a bank is permitted to engage in, other than an activity referred to in paragraph (a) or (e), that relates tothe promotion, sale, delivery or distribution of a financial product or financial service that is provided by any member of the bank holding company’s group, orif a significant portion of the business of the entity involves an activity referred to in subparagraph (i), the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any other entity that is primarily engaged in the business of providing financial services;engaging in the activities referred to in the definition closed-end fund, mutual fund distribution entity, mutual fund entity or real property brokerage entity in subsection 464(1); andengaging in prescribed activities, under prescribed terms and conditions, if any are prescribed.RestrictionA bank holding company may not acquire control of, or acquire or increase a substantial investment in, an entity whose business includes any activity referred to in any of paragraphs (2)(a) to (e) if the entity engages in the business of accepting deposit liabilities or if the activities of the entity includeactivities that a bank is not permitted to engage in under any of sections 412, 417 and 418;dealing in securities, except as may be permitted under paragraph (2)(e) or as may be permitted to a bank under paragraph 409(2)(c);activities that a bank is not permitted to engage in under section 416 if the entity engages in the activities of a finance entity or of any other entity as may be prescribed;acquiring control of or acquiring or holding a substantial investment in another entity unlessin the case of an entity that is controlled by the bank holding company, a bank would be permitted under Part IX to acquire a substantial investment in the other entity, orin the case of an entity that is not controlled by the bank holding company, a bank would be permitted to acquire a substantial investment in the other entity under subsection 466(2), paragraph 466(3)(b) or (c) or subsection 466(4) or 468(1) or (2); orany prescribed activity.ExceptionDespite paragraph (3)(a), a bank holding company may acquire control of, or acquire or increase a substantial investment in, any entity that acts as a trustee for a trust if the entity has been permitted under the laws of a province to act as a trustee for a trust and the following conditions are satisfied:the entity acts as a trustee only with respect to a closed-end fund or mutual fund entity; andif the entity engages in other business, that business is limited to engaging in one or more of the following:the activities of a mutual fund distribution entity,any activity that a bank is permitted to engage in under paragraph 410(1)(c.2), andthe provision of investment counselling services and portfolio management services.ControlSubject to subsection (8) and the regulations, a bank holding company may not acquire control of, or acquire or increase a substantial investment in,an entity referred to in paragraph (1)(a) or (b), unlessthe bank holding company controls, within the meaning of paragraphs 3(1)(a) and (d), the entity or would thereby acquire control, within the meaning of those paragraphs, of the entity, orthe bank holding company is permitted by regulations made under paragraph 936(a) to acquire or increase the substantial investment;an entity referred to in any of paragraphs (1)(c) to (j), unlessthe bank holding company controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, orthe bank holding company is permitted by regulations made under paragraph 936(a) to acquire or increase the substantial investment;an entity whose business includes one or more of the activities referred to in paragraph (2)(a) and that engages, as part of its business, in any financial intermediary activity that exposes the entity to material market or credit risk, including a finance entity, a factoring entity and a financial leasing entity, unlessthe bank holding company controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, orthe bank holding company is permitted by regulations made under paragraph 936(a) to acquire or increase the substantial investment; oran entity whose business includes an activity referred to in paragraph (2)(b), including a specialized financing entity, unlessthe bank holding company controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity,the bank holding company is permitted by regulations made under paragraph 936(a) to acquire or increase the substantial investment, orsubject to prescribed terms and conditions, if any are prescribed, the activities of the entity do not include the acquisition or holding of control of, or the acquisition or holding of shares or other ownership interests in, an entity referred to in any of paragraphs (a) to (c) or an entity that is not a permitted entity.Minister’s approvalSubject to the regulations, a bank holding company may not, without the prior written approval of the Minister,acquire control of an entity referred to in paragraphs (1)(g) to (i) from a person who is not a member of the bank holding company’s group;acquire control of an entity referred to in paragraph (1)(j) or (4)(c), other than an entity whose activities are limited to the activities of one or more of the following entities, if the control is acquired from an entity referred to in any of paragraphs (1)(a) to (f) that is not a member of the bank holding company’s group:a factoring entity, ora financial leasing entity;acquire control of an entity referred to in paragraph (1)(j) if the bank holding company is a bank holding company with equity of two billion dollars or more andA + B > CwhereAis the value of the entity’s consolidated assets, as it would have been reported in the entity’s annual financial statements if those statements had been prepared immediately before the acquisition,Bis the aggregate of the values of the consolidated assets of all other entities referred to in paragraph (1)(j) that the bank holding company has acquired control of within the preceding 12 months, as the value for each entity would have been reported in its annual financial statements if those statements had been prepared immediately before the acquisition of control of that entity, andCis 10% of the value of the bank holding company’s consolidated assets, as shown in the bank holding company’s last annual statement that was prepared before its first acquisition of control of an entity referred to in paragraph (1)(j) within the preceding 12 months;acquire control of, or acquire or increase a substantial investment in, an entity whose business includes one or more of the activities referred to in paragraph (2)(d);acquire control of, or acquire or increase a substantial investment in, an entity that engages in Canada in an activity described in paragraph 410(1)(c);acquire control of, or acquire or increase a substantial investment in, an entity that engages in an activity described in paragraph 410(1)(c.1); oracquire control of, or acquire or increase a substantial investment in, an entity engaging in an activity prescribed for the purposes of paragraph (2)(f).Matters for considerationIn addition to any matters or conditions provided for in this Act that are relevant to the granting of an approval, the Minister may, in considering whether to grant the approval under paragraph (5)(b.1), take into account all matters that he or she considers relevant in the circumstances, includingthe stability of the financial system in Canada; andthe best interests of the financial system in Canada.Superintendent’s approvalSubject to subsection (7) and the regulations, a bank holding company may not acquire control of, or acquire or increase a substantial investment in, an entity referred to in any of paragraphs (1)(g) to (j) and (4)(c) and (d) unless the bank holding company obtains the approval of the Superintendent.ExceptionSubsection (6) does not apply in respect of a particular transaction ifthe bank holding company is acquiring control of an entity, other than a specialized financing entity, and the only reason for which the bank holding company would, but for this subsection, require approval for the acquisition is that the entity carries on activities referred to in paragraph (2)(b);the bank holding company is acquiring control of an entity whose activities are limited to the activities of a factoring entity or a financial leasing entity;the Minister has approved the transaction under subsection (5) or is deemed to have approved it under subsection 931(1);subject to subsection (7.1), the bank holding company is acquiring control of an entity (referred to in this paragraph as the “target entity”) referred to in paragraph (4)(c) or (d) andA/B < CwhereAis the aggregate of the values, as they would have been reported in the bank holding company’s annual financial statements if those statements were prepared on the day of the acquisition of control of the target entity, ofthe target entity’s consolidated assets,the assets of the bank holding company and of any subsidiary of the bank holding company that were acquired, at any time within the 12 months preceding the acquisition of control of the target entity, from any entity that, at that time, held any of the assets referred to in subparagraph (i), andthe consolidated assets of any entity referred to in paragraph 4(c) or (d) the control of which is acquired by the bank holding company at the same time as the acquisition of control of the target entity — or within the 12 months preceding the acquisition of control of the target entity if, at any time within those 12 months, that entity and the target entity were affiliates — excluding any assets referred to in subparagraph (i) or (ii) and the consolidated assets of an entity in respect of which no approval of the Superintendent is required under any of paragraphs (a) to (c),Bis the value of the bank holding company’s consolidated assets, as shown in its last annual statement prepared before the acquisition of control of the target entity, andCis0.01, in the case of a bank holding company with equity of 12 billion dollars or more, or0.02, in the case of any other bank holding company; orthe bank holding company is acquiring or increasing a substantial investment in an entity (referred to in this paragraph as the “target entity”) without acquiring control of it, andA/B < CwhereAis the aggregate of the values, as they would have been reported in the bank holding company’s annual financial statements if those statements were prepared on the day of the acquisition or increase of the substantial investment in the target entity, ofthe shares of, or other ownership interests in, the target entity that the bank holding company or a subsidiary of the bank holding company is acquiring in the transaction that results in the acquisition or increase of a substantial investment in the target entity, and the shares of, or other ownership interests in, the target entity that are held by an entity the control of which the bank holding company is acquiring in the transaction that results in the acquisition or increase of a substantial investment in the target entity,the shares of, or other ownership interests in, the target entity that are held by the bank holding company or a subsidiary of the bank holding company and that were acquired by the bank holding company or the subsidiary within the 12 months preceding the transaction referred to in subparagraph (i), andthe shares of, or other ownership interests in, the target entity that are held by a subsidiary of the bank holding company the control of which was acquired by the bank holding company within the 12 months preceding the transaction referred to in subparagraph (i), excluding any shares or other ownership interests referred to in subparagraph (ii),Bis the value of the bank holding company’s consolidated assets, as shown in its last annual statement prepared before the transaction that results in the acquisition or increase of the substantial investment in the target entity, andCis0.005, in the case of a bank holding company with equity of 12 billion dollars or more, or0.01, in the case of any other bank holding company.No exception for deemed acquisitionThe exception in paragraph (7)(d) does not apply with respect to a deemed acquisition of control under subsection 928(6).Control not requiredA bank holding company need not control an entity referred to in paragraph (1)(j), or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province, if the laws or customary business practices of the country under the laws of which the entity was incorporated or formed do not permit the bank holding company to control the entity.Giving up control prohibitedA bank holding company that controls, within the meaning of paragraphs 3(1)(a) and (d), an entity referred to in paragraph (1)(a) or (b) may not give up control, within the meaning of paragraph 3(1)(a) or (d), of the entity while continuing to control, within the meaning of the other paragraph, the entity.Prohibition on giving up control in factA bank holding company that, under paragraph (4)(b), (c) or (d), controls an entity may not, without the prior written approval of the Minister, give up control, within the meaning of paragraph 3(1)(d), of the entity while it continues to control the entity.Giving up controlA bank holding company that, under subsection (4), controls an entity may, with the prior written approval of the Superintendent, give up control of the entity while keeping a substantial investment in the entity ifthe bank holding company is permitted to do so by regulations made under paragraph 936(c); orthe entity meets the conditions referred to in subparagraph (4)(d)(iii).Subsections do not applyIf a bank holding company controls, within the meaning of paragraph 3(1)(a), (b) or (c), an entity, subsections (5) and (6) do not apply in respect of any subsequent increases by the bank holding company of its substantial investment in the entity so long as the bank holding company continues to control the entity.2001, c. 9, s. 183; 2007, c. 6, ss. 122, 134(F); 2012, c. 5, s. 101; 2018, c. 27, s. 132
Approval for indirect investmentsIf a bank holding company obtains the approval of the Minister under subsection 930(5) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase, the bank holding company indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Minister under subsection 930(5) or the Superintendent under subsection 930(6) and that indirect acquisition or increase is disclosed to the Minister in writing before the approval is obtained, the bank holding company is deemed to have obtained the approval of the Minister or the Superintendent for that indirect acquisition or increase.Approval for indirect investmentsIf a bank holding company obtains the approval of the Superintendent under subsection 930(6) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase the bank holding company indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Superintendent under that subsection and that indirect acquisition or increase is disclosed to the Superintendent in writing before the approval is obtained, the bank holding company is deemed to have obtained the approval of the Superintendent for that indirect acquisition or increase.2001, c. 9, s. 183
UndertakingsIf a bank holding company controls a permitted entity, other than an entity referred to in any of paragraphs 930(1)(a) to (f), the bank holding company shall provide the Superintendent with any undertakings that the Superintendent may require regardingthe activities of the entity; andaccess to information about the entity.UndertakingsIf a bank holding company acquires control of an entity referred to in any of paragraphs 930(1)(g) to (j), the bank holding company shall provide the Superintendent with any undertakings concerning the entity that the Superintendent may require.Agreements with other jurisdictionsThe Superintendent may enter into an agreement with the appropriate official or public body responsible for the supervision of any entity referred to in any of paragraphs 930(1)(g) to (j) 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.Access to recordsDespite any other provision of this Division, a bank holding company shall not control a permitted entity, other than an entity referred to in any of paragraphs 930(1)(a) to (f), unless, in the course of the acquisition of control or within a reasonable time after the control is acquired, the bank holding company obtains from the permitted entity an undertaking to provide the Superintendent with reasonable access to the records of the permitted entity.2001, c. 9, s. 183
Exceptions and Exclusions
Temporary investments in entitySubject to subsection (3), a bank holding company 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.ExtensionThe Superintendent may, in the case of any particular bank holding company 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) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.Temporary investmentIf a bank holding company, 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 930(5) if the bank holding company had acquired the control, or acquired or increased the substantial investment, under section 930, the bank holding company must, within 90 days after acquiring control or after acquiring or increasing the substantial investment,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; ordo 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.Indeterminate extensionIf a bank holding company, by way of temporary investment, acquires control of, or acquires or increases a substantial investment in, an entity for which the approval of the Superintendent would have been required under subsection 930(6) if the bank holding company had acquired the control, or acquired or increased the substantial investment, under section 930, the Superintendent may, on application, permit the bank holding company to retain control of the entity or to continue to hold the substantial investment in the entity for an indeterminate period, on any terms and conditions that the Superintendent considers appropriate.2001, c. 9, s. 183; 2007, c. 6, s. 123
Loan workoutsDespite anything in this Division, if any subsidiary of a bank holding company has made a loan to an entity and, under the terms of the agreement between the subsidiary and the entity with respect to the loan and any other documents governing the terms of the loan, a default has occurred, the bank holding company may acquire, through the subsidiary,a substantial investment in the entity to which the loan was made;a substantial investment in any entity that is an affiliate of the entity; ora substantial investment in an entity that is primarily engaged in holding shares of, ownership interests in or assets acquired from the entity to which the loan was made or any of the affiliates of that entity.Obligation of bank holding companyIf a bank holding company acquires a substantial investment in an entity under subsection (1), the bank holding company shall, within five years after acquiring the substantial investment, cause the subsidiary that made the loan to do all things necessary to ensure that the bank holding company does not control the entity or have a substantial investment in the entity.ExtensionThe Superintendent may, in the case of any particular bank holding company that makes an application under this subsection, extend the period of five years referred to in subsection (2) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.Exception — entities controlled by foreign governmentsDespite anything in this Division, if a subsidiary of a bank holding company 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 subsidiary 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 bank holding company may acquire, through the subsidiary, a substantial investment 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.Time for holding substantial investmentIf a bank holding company acquires a substantial investment in any entity under subsection (4), the bank holding company may, on any terms and conditions that the Superintendent considers appropriate, continue to hold the substantial investment for an indeterminate period or for any other period that the Superintendent may specify.ExceptionIf, under subsection (1), a bank holding company 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 930, the bank holding company 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), including any extension of it granted under subsection (3).2001, c. 9, s. 183
RealizationsDespite anything in this Part, a bank holding company may acquire control of, or a substantial investment in, an entity if the control or the substantial investment is acquired through the realization of a security interest held by a subsidiary of the bank holding company.DispositionSubject to subsection 717(2), if a bank holding company acquires control of, or a substantial investment in, an entity by way of the realization of a security interest held by any of its subsidiaries, the bank holding company shall, within five years after the day on which control or the substantial investment is acquired, cause the subsidiary to do all things necessary to ensure that the bank holding company no longer controls the entity or has a substantial investment in the entity.ExtensionThe Superintendent may, in the case of any particular bank holding company that makes an application under this subsection, extend the period of five years referred to in subsection (2) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.ExceptionIf, under subsection (1), a bank holding company 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 930, the bank holding company 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), including any extension of it granted under subsection (3).2001, c. 9, s. 183
Regulations restricting ownershipThe Governor in Council may make regulationsfor the purposes of subsection 930(4), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which that subsection does not apply or the bank holding companies or other entities in respect of which that subsection does not apply, including prescribing bank holding companies or other entities on the basis of the activities they engage in;for the purposes of subsection 930(5) or (6), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which either of those subsections does not apply or the bank holding companies or other entities in respect of which either of those subsections does not apply, including prescribing bank holding companies or other entities on the basis of the activities they engage in;for the purposes of subsection 930(11), permitting a bank holding company to give up control of an entity; andrestricting the ownership by a bank holding company of shares of a body corporate or of ownership interests in an unincorporated entity under sections 930 to 935 and imposing terms and conditions applicable to bank holding companies that own such shares or interests.2001, c. 9, s. 183
Portfolio Limits
Exclusion from portfolio limitsSubject to subsection (3), the value of all loans, investments and interests acquired by a bank holding company and any of its prescribed subsidiaries under section 934 or as a result of a realization of a security interest is not to be included in calculating the value of loans, investments and interests of the bank holding company and its prescribed subsidiaries under sections 938 to 940for a period of twelve years following the day on which the interest was acquired, in the case of an interest in real property; andfor 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.ExtensionThe Superintendent may, in the case of any particular bank holding company, extend any period referred to in subsection (1) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.ExceptionSubsection (1) does not apply to an investment or interest described in that subsection if the investment or interest is defined by a regulation made under section 941 to be an interest in real property andthe bank holding company or the subsidiary acquired the investment or interest as a result of the realization of a security interest securing a loan that was defined by a regulation made under section 941 to be an interest in real property; orthe bank holding company or the subsidiary acquired the investment or interest under section 934 as a result of a default referred to in that section in respect of a loan that was defined by a regulation made under section 941 to be an interest in real property.2001, c. 9, s. 183
Real Property
Limit on total property interestA bank holding company shall not, and shall not permit its prescribed subsidiaries to, purchase or otherwise acquire an interest in real property or make an improvement to any real property in which the bank holding company or any of its prescribed subsidiaries has an interest if the aggregate value of all interests of the bank holding company in real property exceeds, or the acquisition of the interest or the making of the improvement would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank holding company.2001, c. 9, s. 183
Equities
Limits on equity acquisitionsA bank holding company shall not, and shall not permit its prescribed subsidiaries to,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 bank holding company has, or by virtue of the acquisition would have, a substantial investment, oracquire control of an entity that holds shares or ownership interests referred to in paragraph (a),if the aggregate value ofall participating shares, excluding participating shares of permitted entities in which the bank holding company has a substantial investment, andall ownership interests in unincorporated entities, other than ownership interests in permitted entities in which the bank holding company has a substantial investment,beneficially owned by the bank holding company and its prescribed subsidiaries exceeds, or the purchase or acquisition would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank holding company.2001, c. 9, s. 183
Aggregate Limit
Aggregate limitA bank holding company shall not, and shall not permit its prescribed subsidiaries to,purchase or otherwise acquireparticipating shares of a body corporate, other than those of a permitted entity in which the bank holding company has, or by virtue of the acquisition would have, a substantial investment,ownership interests in an unincorporated entity, other than ownership interests in a permitted entity in which the bank holding company has, or by virtue of the acquisition would have, a substantial investment, orinterests in real property, ormake an improvement to real property in which the bank holding company or any of its prescribed subsidiaries has an interestif the aggregate value ofall participating shares and ownership interests referred to in subparagraphs (a)(i) and (ii) that are beneficially owned by the bank holding company and its prescribed subsidiaries, andall interests of the bank holding company 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, the prescribed percentage of the regulatory capital of the bank holding company.2001, c. 9, s. 183
Miscellaneous
RegulationsFor the purposes of this Division, the Governor in Council may make regulationsdefining the interests of a bank holding company in real property;determining the method of valuing those interests; orexempting classes of bank holding companies from the application of sections 937 to 940.2001, c. 9, s. 183
Divestment orderThe Superintendent may, by order, direct a bank holding company to dispose of, within any period that the Superintendent considers reasonable, any loan, investment or interest made or acquired in contravention of this Division.Divestment orderIf, in the opinion of the Superintendent,an investment by a bank holding company or any entity it controls in shares of a body corporate or in ownership interests in an unincorporated entity enables the bank holding company to control the body corporate or the unincorporated entity, orthe bank holding company or any entity it controls has entered into an arrangement whereby it or its nominee may veto any proposal put beforethe board of directors of a body corporate, ora similar group or committee of an unincorporated entity,or whereby no proposal may be approved except with the consent of the bank holding company, the entity it controls or the nominee,the Superintendent may, by order, require the bank holding company, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the bank holding company no longer controls the body corporate or unincorporated entity or has the ability to veto or otherwise defeat any proposal referred to in paragraph (b).Divestment orderIfa bank holding companyfails to provide or obtain within a reasonable time the undertakings referred to in subsection 932(1), (2) or (4), oris in default of an undertaking referred to in subsection 932(1) or (2) and the default is not remedied within ninety days after the day of receipt by the bank holding company of a notice from the Superintendent of the default, ora permitted entity referred to in subsection 932(4) is in default of an undertaking referred to in subsection 932(4) and the default is not remedied within ninety days after the day of receipt by the bank holding company of a notice from the Superintendent of the default,the Superintendent may, by order, require the bank holding company, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the bank holding company no longer has a substantial investment in the entity to which the undertaking relates.ExceptionSubsection (2) does not apply in respect of an entity in which a bank holding company has a substantial investment permitted by this Division.2001, c. 9, s. 183
Deemed temporary investmentIf a bank holding company controls or has a substantial investment in an entity as permitted by this Division and the bank holding company becomes aware of a change in the business or affairs of the entity that, if the change had taken place before the acquisition of control or of the substantial investment, would have caused the entity not to be a permitted entity or would have been such that approval for the acquisition would have been required under subsection 930(5) or (6), the bank holding company is deemed to have acquired, on the day the bank holding company becomes aware of the change, a temporary investment in respect of which section 933 applies.2001, c. 9, s. 183
Asset transactionsA bank holding company shall not, and shall not permit its subsidiaries to, without the approval of the Superintendent, acquire assets from a person or transfer assets to a person ifA + B > CwhereAis the value of the assets;Bis the total value of all assets that the bank holding company and its subsidiaries acquired from or transferred to that person in the twelve months ending immediately before the acquisition or transfer; andCis ten per cent of the total value of the assets of the bank holding company, as shown in the last annual statement of the bank holding company prepared before the acquisition or transfer.Approval of series of transactionsThe Superintendent may, for the purposes of subsection (1), approve a transaction or series of transactions relating to the acquisition or transfer of assets that may be entered into with a person, or with persons of any class of persons, regardless of whether those persons are known at the time of the granting of the approval or not.ExceptionSubsection (1) does not apply in respect ofassets that are debt obligations that areguaranteed by any financial institution,fully secured by deposits with any financial institution, orfully secured by debt obligations that are guaranteed by any financial institution;assets that are debt obligations issuedby, or by any agency of,the Government of Canada,the government of a province,a municipality, orthe government of a foreign country or any political subdivision of a foreign country, orby a prescribed international agency;assets that are debt obligations that are guaranteed by, or fully secured by securities issued by, a government, a municipality or an agency referred to in paragraph (b);assets that are debt obligations that are widely distributed, as that expression is defined by the regulations;assets that are debt obligations of an entity controlled by the bank holding company; orassets acquired or transferred under a transaction or series of transactions by a subsidiary of the bank holding company with a financial institution as a result of the subsidiary’s participation in one or more syndicated loans with that financial institution.ExceptionThe approval of the Superintendent is not required ifthe bank holding company or its subsidiary acquires shares of, or ownership interests in, an entity for which the approval of the Minister under Division 7 or subsection 930(5) is required or the approval of the Superintendent under subsection 930(6) is required; orthe transaction has been approved by the Minister under subsection 678(1) of this Act or subsection 715(1) of the Insurance Companies Act.Value of assetsFor the purposes of “A” in subsection (1), the value of the assets isin the case of assets that are acquired, the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which will be included in the annual statement of the bank holding company after the acquisition, the fair market value of the assets; andin the case of assets that are transferred, the value of the assets as reported in the last annual statement of the bank holding company prepared before the transfer or, if the value of the assets is not reported in that annual statement, the value of the assets as it would be reported in the annual statement of the bank holding company if the annual statement had been prepared, in accordance with the accounting principles referred to in subsection 840(4), immediately before the transfer.Total value of all assetsFor the purposes of subsection (1), the total value of all assets that the bank holding company or any of its subsidiaries has acquired during the period of twelve months referred to in subsection (1) is the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which immediately after the acquisition were included in the annual statement of the bank holding company, the fair market value of the assets of the entity at the date of the acquisition.Total value of all assetsFor the purposes of subsection (1), the total value of all assets that the bank holding company or any of its subsidiaries has transferred during the 12-month period referred to in subsection (1) is the total of the value of each of those assets as reported in the last annual statement of the bank holding company prepared before the transfer of the asset or, if the value of any of those assets is not reported in that annual statement, as it would be reported in the annual statement of the bank holding company if the annual statement had been prepared, in accordance with the accounting principles referred to in subsection 840(4), immediately before the transfer of the asset.2001, c. 9, s. 183; 2007, c. 6, s. 124
TransitionalNothing in this Division requiresthe termination of a loan made before February 7, 2001;the termination of a loan made after that date as a result of a commitment made before that date;the disposal of an investment made before that date; orthe disposal of an investment made after that date as a result of a commitment made before that date.But if the loan or investment would be precluded or limited by this Division, the amount of the loan or investment may not be increased after that date.2001, c. 9, s. 183
SavingA loan or investment referred to in section 945 is deemed not to be prohibited by the provisions of this Division.2001, c. 9, s. 183
Meaning of non-bank entitySubject to subsection (2), for the purpose of section 948 non-bank entity means a Canadian entity, other than a bank, that is controlled by a bank holding company or in which a bank holding company has a substantial investment.ExceptionA Canadian entity is not a non-bank entity by reason only that a subsidiary of a bank holding company that is a bank controls, or has a substantial investment in, the Canadian entity.2001, c. 9, s. 183
Prohibited activitiesA non-bank entity shall not, in Canada,engage in the business of accepting deposit liabilities; orrepresent to the public that any instrument issued by the non-bank entity is a deposit or that any liability incurred by the non-bank entity is a deposit.Disclosure of statusA non-bank entity that carries on as part of its business the provision of financial services shall not borrow money in Canada from the public without disclosing thatthe non-bank entity is not a member institution of the Canada Deposit Insurance Corporation;the liability incurred by the non-bank entity through the borrowing is not a deposit; andthe non-bank entity is not regulated as a financial institution in Canada.Manner of disclosureThe disclosure shall bein a prospectus, information circular or other offering document related to the borrowing or in a similar document related to the borrowing or, if there is no such document, in a statement delivered to the lender; orin any other manner that may be prescribed.Exception for certain borrowingsSubsection (2) does not applyto a borrowing of a prescribed class or type or to a borrowing in prescribed circumstances or in a prescribed manner; orexcept as may be provided in any regulations, to a borrowingfrom a person in an amount of $150,000 or more, orthrough the issue of instruments in denominations of $150,000 or more.ExceptionSubsections (1) and (2) do not apply if the non-bank entity isa trust or loan corporation incorporated under an Act of Parliament or of the legislature of a province;an entity referred to in paragraph 930(1)(d) or (h); ora prescribed entity.ExceptionSubsection (2) does not apply if the non-bank entity isan insurance company incorporated under an Act of Parliament or of the legislature of a province;a bank holding company or an insurance holding company;an entity that is controlled by an insurance holding company or in which an insurance holding company has a substantial investment;a financial institution that is described in paragraph (g) of the definition financial institution in section 2; ora prescribed entity.2001, c. 9, s. 183
Adequacy of Capital and Liquidity
Adequacy of capital and liquidityA bank holding company shall, in relation to its business, maintainadequate capital, andadequate and appropriate forms of liquidity,and shall comply with any regulations in relation thereto.Regulations and guidelinesThe Governor in Council may make regulations and the Superintendent may make guidelines respecting the maintenance by bank holding companies of adequate capital and adequate and appropriate forms of liquidity.DirectivesNotwithstanding that a bank holding company is complying with regulations or guidelines made under subsection (2), the Superintendent may, by order, direct the bank holding companyto increase its capital; orto provide additional liquidity in such forms and amounts as the Superintendent may require.ComplianceA bank holding company shall comply with an order made under subsection (3) within such time as the Superintendent specifies therein.2001, c. 9, s. 183
Regulation of Bank Holding CompaniesSupervisionReturns
Required informationA bank holding company shall provide the Superintendent with such information, at such times and in such form as the Superintendent may require.2001, c. 9, s. 183
Names of directors and auditorA bank holding company shall, within thirty days after each annual meeting of the bank holding company, provide the Superintendent with a return showingthe name, residence and citizenship of each director holding office immediately following the meeting;the mailing address of each director holding office immediately following the meeting;the bodies corporate of which each director referred to in paragraph (a) is an officer or director and the firms of which each director is a member;the names of the directors referred to in paragraph (a) who are officers or employees of the bank holding company or any affiliate of the bank holding company, and the positions they occupy;the name of each committee of the bank holding company on which each director referred to in paragraph (a) serves;the date of expiration of the term of each director referred to in paragraph (a); andthe name, address and date of appointment of the auditor of the bank holding company.ChangesWhereany information relating to a director or an auditor of a bank holding company shown in the latest return made to the Superintendent under subsection (1), other than information referred to in paragraph (1)(c), becomes inaccurate or incomplete,a vacancy in the office of auditor of the bank holding company occurs or is filled by another person, ora vacancy on the board of directors of the bank holding company occurs or is filled,the bank holding company shall forthwith provide the Superintendent with such information as is required to maintain the return in a complete and accurate form.2001, c. 9, s. 183
Copy of by-lawsA bank holding company shall send to the Superintendent within thirty days after the coming into effect of a by-law or an amendment to a by-law, a copy of the by-law or amendment.2001, c. 9, s. 183
Register of bank holding companiesThe Superintendent shall, in respect of each bank holding company, cause a register to be maintained containing a copy ofthe incorporating instrument of the bank holding company; andthe information referred to in paragraphs 951(1)(a) and (c) to (g) contained in the latest return sent to the Superintendent pursuant to section 951.FormThe register may be maintained ina bound or loose-leaf form or in a photographic film form; ora system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.AccessPersons are entitled to reasonable access to the register and may make copies of or take extracts from the information in it.EvidenceA statement containing information in the register and purporting to be certified by the Superintendent is admissible in evidence in all courts as proof, in the absence of evidence to the contrary, of the facts stated in the statement without proof of the appointment or signature of the Superintendent.2001, c. 9, s. 183
Production of information and documentsThe Superintendent may, by order, direct a person who controls a bank holding company or any entity that is affiliated with a bank holding company to provide the Superintendent with the information or documents that are specified in the order if the Superintendent believes that the production of the information or documents is necessary in order todetermine whether the bank holding company is complying with the provisions of this Act;ascertain the financial condition of the bank holding company; ordetermine whether the bank holding company has adequate policies and procedures to protect itself against threats to its integrity or security.TimeAny person to whom a direction has been issued under subsection (1) shall provide the information or documents specified in the order within the time specified in the order and, where the order does not specify a time, the person shall provide the information or documents within a reasonable time.ExemptionSubsection (1) does not apply in respect of an entity that controls a bank holding company or is affiliated with a bank holding company where that entity is a financial institution regulatedby or under an Act of Parliament; orby or under an Act of the legislature of a province where the Superintendent has entered into an agreement with the appropriate official or public body responsible for the supervision of financial institutions in that province concerning the sharing of information on such financial institutions.2001, c. 9, s. 1832023, c. 26, s. 569
Confidential informationAll information regarding the business or affairs of a bank holding company, or regarding a person dealing with a bank holding company, that is obtained by the Superintendent, or by any person acting under the direction of the Superintendent, as a result of the administration or enforcement of any Act of Parliament, and all information prepared from that information, is confidential and shall be treated accordingly.Disclosure permittedNothing in subsection (1) prevents the Superintendent from disclosing any informationto any government agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision,to any other agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision,to the Canada Deposit Insurance Corporation or any compensation association designated by order of the Minister pursuant to subsection 449(1) of the Insurance Companies Act, for purposes related to its operation, andto the Deputy Minister of Finance or any officer of the Department of Finance authorized in writing by the Deputy Minister of Finance or to the Governor of the Bank of Canada or any officer of the Bank of Canada authorized in writing by the Governor of the Bank of Canada, for the purposes of policy analysis related to the regulation of financial institutions,if the Superintendent is satisfied that the information will be treated as confidential by the agency, body or person to whom it is disclosed.2001, c. 9, s. 183
RegulationsThe Governor in Council may make regulations prohibiting, limiting or restricting the disclosure by bank holding companies of prescribed supervisory information.2001, c. 9, s. 183
Evidentiary privilegePrescribed supervisory information shall not be used as evidence in any civil proceedings and is privileged for that purpose.No testimony or productionNo person shall by an order of any court, tribunal or other body be required in any civil proceedings to give oral testimony or to produce any document relating to any prescribed supervisory information.Exceptions to subsection (1)Despite subsection (1),the Minister, the Superintendent or the Attorney General of Canada may, in accordance with the regulations, if any, use prescribed supervisory information as evidence in any proceedings; anda bank holding company may, in accordance with the regulations, if any, use prescribed supervisory information as evidence in any proceedings in relation to the administration or enforcement of this Act or the Winding-up and Restructuring Act that are commenced by the bank holding company, the Minister, the Superintendent or the Attorney General of Canada.Exceptions to subsections (1) and (2)Despite subsections (1) and (2) and section 39.1 of the Office of the Superintendent of Financial Institutions Act, a court, tribunal or other body may, by order, require the Minister, the Superintendent or a bank holding company to give oral testimony or to produce any document relating to any prescribed supervisory information in any civil proceedings in relation to the administration or enforcement of this Act that are commenced by the Minister, the Superintendent, the Attorney General of Canada or the bank holding company.No waiverThe disclosure of any prescribed supervisory information, other than under subsection (3) or (4), does not constitute a waiver of the privilege referred to in subsection (1).RegulationsThe Governor in Council may, for the purposes of subsection (3), make regulations respecting the circumstances in which prescribed supervisory information may be used as evidence.2015, c. 36, s. 235
No waiverFor greater certainty, the disclosure by a bank holding company — or by a person who controls a bank holding company or by an entity that is affiliated with a bank holding company — to the Superintendent of any information that is subject to a privilege under the law of evidence, solicitor-client privilege or the professional secrecy of advocates and notaries or to litigation privilege does not constitute a waiver of any of those privileges or that secrecy.No disclosureThe Superintendent shall not disclose any information referred to in subsection (1) to any person whose powers, duties or functions includethe investigation or prosecution of an offence under any Act of Parliament or of the legislature of a province; orthe investigation of, or conduct of proceedings in respect of, a violation under an Act referred to in paragraph (a).2018, c. 27, s. 171
Inspection of Bank Holding Companies
Examination of bank holding companiesThe Superintendent, from time to time, shall make or cause to be made any examination and inquiry into the business and affairs of each bank holding company that the Superintendent considers to be necessary or expedient to determine whether the bank holding company is complying with the provisions of this Act and to ascertain the financial condition of the bank holding company or to determine whether the bank holding company has adequate policies and procedures to protect itself against threats to its integrity or security.Access to records of bank holding companyThe Superintendent or a person acting under the Superintendent’s directionhas a right of access to any records, cash, assets and security held by or on behalf of a bank holding company; andmay require the directors, officers and the auditor of a bank holding company to provide information and explanations, to the extent that they are reasonably able to do so, in respect of the condition and affairs of the bank holding company or any entity in which the bank holding company has a substantial investment.2001, c. 9, s. 1832023, c. 26, s. 570
Power of Superintendent on inquiryThe Superintendent has all the powers of a person appointed as a commissioner under Part II of the Inquiries Act for the purpose of obtaining evidence under oath, and may delegate those powers to any person acting under the Superintendent’s direction.2001, c. 9, s. 183
Remedial PowersPrudential Agreements
Prudential agreementThe Superintendent may enter into an agreement, called a “prudential agreement”, with a bank holding company for the purposes of implementing any measure designed to protect the interests of depositors, policyholders and creditors of any federal financial institution affiliated with it or establishing adequate policies and procedures to protect the bank holding company against threats to its integrity or security.2001, c. 9, s. 1832023, c. 26, s. 571
Directions of Compliance
Superintendent’s directions to bank holding companyIf, in the opinion of the Superintendent, a bank holding company, one of its affiliates or any person with respect to a bank holding company is committing, or is about to commit, an act — or is pursuing or is about to pursue a course of conduct — that may directly or indirectly be prejudicial to the interest of depositors, policyholders or creditors of a federal financial institution that is affiliated with the bank holding company, the Superintendent may direct the bank holding company tocease or refrain from committing the act or pursuing the course of conduct;cause the affiliate or person to cease or refrain from committing the act or pursuing the course of conduct, to the extent that the bank holding company is able to do so;perform any act that in the opinion of the Superintendent is necessary to remedy the situation or to minimize the prejudice; orcause the affiliate or person to perform any act that in the opinion of the Superintendent is necessary to remedy the situation or to minimize the prejudice, to the extent that the bank holding company is able to do so.Directions — policies and proceduresIf, in the opinion of the Superintendent, a bank holding company does not have adequate policies and procedures to protect itself against threats to its integrity or security, the Superintendent may direct the bank holding company to take any measures that in the opinion of the Superintendent are necessary to remedy the situation.Opportunity for representationsSubject to subsection (4), no direction shall be issued under subsection (1) or (1.1) unless the bank holding company is provided with a reasonable opportunity to make representations in respect of the matter.Temporary directionIf, in the opinion of the Superintendent, the length of time required for representations to be made might be prejudicial to the public interest, the Superintendent may make a temporary direction with respect to the matters referred to in paragraphs (1)(a) to (d) or subsection (1.1) having effect for a period of not more than 15 days.Continued effectA temporary direction made under subsection (3) continues to have effect after the expiration of the fifteen day period referred to in that subsection if no representations are made to the Superintendent within that period or, if representations have been made, the Superintendent notifies the bank holding company that the Superintendent is not satisfied that there are sufficient grounds for revoking the direction.2001, c. 9, s. 1832023, c. 26, s. 572
Court enforcementIf a bank holding company is contravening or has failed to comply with a prudential agreement entered into under section 959 or a direction of the Superintendent issued to the bank holding company under section 960 or is contravening this Act or has omitted to do any thing under this Act that it is required to do, the Superintendent may, in addition to any other action that may be taken under this Act, apply to a court for an order requiring the bank holding company to comply with the prudential agreement or the direction, cease the contravention or do any thing that is required to be done, and on such application the court may so order and make any other order it thinks fit.AppealAn appeal from a decision of a court under subsection (1) lies in the same manner, and to the same court, as an appeal from any other order of the court.2001, c. 9, s. 1832023, c. 26, s. 573(F)
Disqualification and Removal of Directors or Senior Officers
Meaning of senior officerIn sections 963 and 964, senior officer means the chief executive officer, secretary, treasurer or controller of a bank holding company or any other officer reporting directly to the bank holding company’s board of directors or chief executive officer.2001, c. 9, s. 183
ApplicationThis section applies only in respect of a bank holding companythat has been notified by the Superintendent that this section applies to it where the bank holding company is subject to measures designed to protect the interests of depositors, policyholders and creditors of any federal financial institution affiliated with it, which measures are contained in a prudential agreement entered into under section 959 or an undertaking given by the bank holding company to the Superintendent; orthat is the subject of a direction made under section 960, or an order made under subsection 949(3).Information to be providedA bank holding company shall provide the Superintendent with the name ofeach person who has been nominated for election or appointment as a member of its board of directors,each person who has been selected by the bank holding company for appointment as a senior officer, andeach person who is newly elected as a director of the bank holding company at a meeting of shareholders and who was not proposed for election by anyone involved in the management of the bank holding company,together with such other information about the background, business record and experience of the person as the Superintendent may require.When information to be providedThe information required by subsection (2) shall be provided to the Superintendentat least 30 days prior to the date or proposed date of the election or appointment or within such shorter period as the Superintendent may allow; orin the case of a person referred to in paragraph (2)(c), within 15 days after the date of the election of the person.Disqualification or removalIf the Superintendent is of the opinion that, on the basis of the competence, business record, experience, conduct or character of a person, he or she is not suitable to hold that position, the Superintendent may, by order,in the case of a person referred to in paragraph (2)(a) or (b), disqualify the person from being elected or appointed as a director of a bank holding company or from being appointed as a senior officer; orin the case of a person referred to in paragraph (2)(c), remove the person from office as a director of the bank holding company.Risk of prejudiceIn forming an opinion under subsection (4), the Superintendent must consider whether the interests of the depositors, policyholders and creditors of any federal financial institution affiliated with the bank holding company would likely be prejudiced if the person were to take office or continue to hold office, as the case may be.Representations may be madeThe Superintendent must in writing notify the person concerned and the bank holding company of any action that the Superintendent proposes to take under subsection (4) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.ProhibitionWhere an order has been made under subsection (4)disqualifying a person from being elected or appointed to a position, the person shall not be, and the bank holding company shall not permit the person to be, elected or appointed to the position; orremoving a director from office, the person shall not continue to hold, and the bank holding company shall not permit the person to continue to hold, office as a director.2001, c. 9, s. 183
Removal of directors or senior officersThe Superintendent may, by order, remove a person from office as a director or senior officer of a bank holding company if the Superintendent is of the opinion that the person is not suitable to hold that officeon the basis of the competence, business record, experience, conduct or character of the person; orbecause the person has contravened or, by action or negligence, has contributed to the contravention ofthis Act or the regulations made under it,a direction made under section 960,an order made under subsection 949(3), ora prudential agreement entered into under section 959 or an undertaking given by the bank holding company to the Superintendent.Risk of prejudiceIn forming an opinion under subsection (1), the Superintendent must consider whether the interests of the depositors, policyholders and creditors of any federal financial institution affiliated with the bank holding company have been or are likely to be prejudiced by the person’s holding office as a director or senior officer.Representations may be madeThe Superintendent must in writing notify the person concerned and the bank holding company of any removal order that the Superintendent proposes to make under subsection (1) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.SuspensionIf the Superintendent is of the opinion that the public interest may be prejudiced by the director or senior officer continuing to exercise the powers or carry out the duties and functions of that office during the period for making representations, the Superintendent may make an order suspending the director or senior officer. The suspension may not extend beyond 10 days after the expiration of that period.Notice of orderThe Superintendent shall, without delay, notify the director or senior officer, as the case may be, and the bank holding company of a removal order or suspension order.Consequences of removal orderThe director or senior officer, as the case may be, ceases to hold that office as of the date the removal order is made or any later date specified in the order.AppealThe director or senior officer, as the case may be, or the bank holding company may, within 30 days after the date of receipt of notice of the removal order under subsection (5), or within any longer period that the Court allows, appeal the matter to the Federal Court.Powers of Federal CourtThe Federal Court, in the case of an appeal, may dismiss the appeal or set aside the removal order.Order not stayed by appealA removal order is not stayed by an appeal.2001, c. 9, s. 183
AdministrationNotices and Other Documents
Execution of documentsAny by-law, notice, resolution, requisition, statement or other document required or permitted to be executed or signed by more than one person for the purposes of this Act may be executed or signed in several documents of like form, each of which is executed or signed by one or more of the persons. The documents if duly executed or signed by all persons required or permitted to sign them are deemed to constitute one document for the purposes of this Act.2005, c. 54, s. 132
Notice to directors, shareholders and membersA notice or document required by this Act or the regulations or by the incorporating instrument or by-laws of a bank or a bank holding company to be sent to a shareholder, member or director of the bank, or to a shareholder or director of the bank holding company, may be sent by prepaid mail addressed to, or may be delivered personally to,the shareholder at the shareholder’s latest address as shown in the records of the bank or bank holding company, or its transfer agent;the director at the director’s latest address as shown in the records of the bank or bank holding company, or in the latest return made under section 632 or 951; andthe member at the member’s latest address as shown in the records of the bank.2001, c. 9, s. 183; 2010, c. 12, s. 2085
Presumption from returnA director named in the latest return sent by a bank or a bank holding company to the Superintendent under section 632 or 951 is presumed for the purposes of this Act to be a director of the bank or bank holding company referred to in the return.2001, c. 9, s. 183
Presumption of receiptA notice or document sent by mail in accordance with section 965 to a shareholder, member or director is deemed to be received by that person at the time it would be delivered in the ordinary course of mail unless there are reasonable grounds for believing that that person did not receive the notice or document at that time or at all.Undelivered noticesIf a bank or bank holding company sends a notice or document to a shareholder or member in accordance with section 965 and it is returned on two consecutive occasions because the shareholder or member cannot be found, the bank or bank holding company is not required to send any further notices or documents to the shareholder or member until it is informed in writing of their new address.2001, c. 9, s. 183; 2005, c. 54, s. 133; 2010, c. 12, s. 2086
Service on a bank, bank holding company or authorized foreign bankA notice or document required by this Act to be sent to or served on a bank, a bank holding company or an authorized foreign bank may be sent by registered mail to the head office of the bank or bank holding company, or to the principal office of the authorized foreign bank, as the case may be, and, if sent, is deemed to be received or served at the time it would be delivered in the ordinary course of mail unless there are reasonable grounds for believing that the bank, bank holding company or authorized foreign bank did not receive it at that time or at all.2001, c. 9, s. 183
CertificateA certificate issued on behalf of a bank or a bank holding company stating any fact that is set out in the incorporating instrument, the by-laws, the minutes of the meetings of the directors, a committee of directors or the shareholders or members, or in a contract to which the bank or bank holding company is a party, may be signed by a director or an officer of the bank or bank holding company.Proof of certain casesWhen introduced as evidence in any civil, criminal or administrative action or proceeding, the following are, in the absence of evidence to the contrary, proof of the facts so certified without proof of the signature or official character of the person appearing to have signed the certificate:a fact stated in a certificate referred to in subsection (1);a certified extract from a securities register of a bank or a bank holding company;a certified extract from the members register of a federal credit union; ora certified copy of, or an extract from, minutes of a meeting of shareholders, directors or a committee of directors of a bank or a bank holding company or of a meeting of members of a federal credit union.2001, c. 9, s. 183; 2010, c. 12, s. 2087
Entry in securities registerAn entry in the securities register of, or on a security certificate issued by, a bank or a bank holding company is evidence that the person in whose name the security is registered is the owner of the securities described in the register or in the certificate.Entry in members registerAn entry in the members register of a federal credit union is evidence that the person in whose name the membership share is registered is the owner of the membership share in the register.2001, c. 9, s. 183; 2005, c. 54, s. 134(F); 2010, c. 12, s. 2088
Verification of documents or factThe Superintendent may require that a document or a fact stated in a document that is required by or under this Act to be sent to the Superintendent or to the Minister be verified in accordance with subsection (2).Form of proofA document or fact required by this Act or by the Superintendent to be verified may be verified by affidavit made under oath or by statutory declaration under the Canada Evidence Act before any commissioner for oaths or for taking affidavits.2001, c. 9, s. 183
Alternative means of publicationAnything that is required by a provision of this Act to be published in the Canada Gazette or to be published in any other way may, instead of being published in that way, be published in any manner that may be prescribed for the purpose of that provision.Alternative means of publishing summariesAnything that is required by a provision of this Act to be summarized in a publication may instead be summarized and published in any manner that may be prescribed for the purpose of that provision.Publication conditionsAny condition under a provision of this Act that something be published in the Canada Gazette or in any other way is satisfied if that thing is published instead in any manner that may be prescribed for the purpose of that provision.Other consequencesIf a provision of this Act provides for consequences to follow the publication of something in the Canada Gazette or in any other manner, the same consequences follow the publication of that thing in any other manner that may be prescribed for the purpose of that provision.2001, c. 9, s. 183
Approvals
Definition of approvalIn sections 973.01 to 973.06, approval includes any consent, designation, order, exemption, extension or other permission granted by the Minister or the Superintendent under this Act, and includes the issuance of letters patent.2001, c. 9, s. 183; 2007, c. 6, s. 125
Matters to take into account — MinisterIn addition to any matters or conditions provided for in this Act that are relevant to the granting of an approval, the Minister may, in considering whether to grant the approval, take into account all matters that he or she considers relevant in the circumstances, includingnational security;Canada’s international relations and its international legal obligations; andif the approval relates to a federal credit union, whether the approval will affect its ability to be organized and carry on business on a cooperative basis in accordance with section 12.1.Matters to take into account — SuperintendentIn addition to any matters or conditions provided for in this Act that are relevant to the granting of an approval and to any prudential considerations that the Superintendent considers relevant in the circumstances, the Superintendent may, in considering whether to grant the approval, take into accountnational security;Canada’s international relations and its international legal obligations; andif the approval relates to a federal credit union, whether the approval will affect its ability to be organized and carry on business on a cooperative basis in accordance with section 12.1.2007, c. 6, s. 125; 2010, c. 12, s. 2089
Minister — terms, conditions and undertakingsIn addition to any other action that may be taken under this Act, the Minister may, in granting an approval, impose any terms and conditions or require any undertaking that the Minister considers appropriate, including any terms, conditions or undertakings specified by the Superintendent to maintain or improve the safety and soundness of any financial institution regulated under an Act of Parliament to which the approval relates or that might be affected by it or to ensure that such a financial institution has adequate policies and procedures to protect itself against threats to its integrity or security.Commissioner — supervision of terms, conditions and undertakingsIf the Minister specifies that the Commissioner is to supervise a bank to determine if it is complying with any terms and conditions that are imposed, or undertakings that are required, by the Minister for the protection of the bank’s customers, the Commissioner may take the same measures that the Commissioner could take if the terms and conditions or undertaking were a consumer provision.Superintendent — terms, conditions and undertakingsIn addition to any other action that may be taken under this Act, the Superintendent may, in granting an approval, impose any terms and conditions or require any undertaking that the Superintendent considers appropriate.2007, c. 6, s. 125; 2010, c. 12, s. 18582023, c. 26, s. 574
Revocation, suspension or amendment of approval — MinisterThe Minister may revoke, suspend or amend any approval granted by the Minister if he or she considers it appropriate to do so. In deciding whether to take any of those actions, the Minister may take into account all matters that he or she considers relevant in the circumstances, includingnational security; andCanada’s international relations and its international legal obligations.Revocation, suspension or amendment of approval — SuperintendentThe Superintendent may revoke, suspend or amend any approval granted by the Superintendent if he or she considers it appropriate to do so. In deciding whether to take any of those actions, the Superintendent may take into account any prudential considerations that he or she considers relevant in the circumstances andnational security; andCanada’s international relations and its international legal obligations.RepresentationsBefore taking any action under subsection (1) or (2), the Minister or the Superintendent, as the case may be, shall give the person concerned a reasonable opportunity to make representations.Temporary amendment or suspensionIf, in the Minister’s opinion, the length of time required for representations to be made under subsection (3) might be prejudicial to the public interest, the Minister may temporarily suspend or amend any approval granted by the Minister.Cessation of effectA temporary suspension or amendment of an approval ceases to have effect on the earlier ofthe expiry of 30 days after the day on which it takes effect or of a shorter period that is specified by the Minister, andif the approval is revoked, suspended or amended under subsection (1), the day on which the revocation, suspension or amendment takes effect.2007, c. 6, s. 1252023, c. 26, s. 575
Confidential undertakingIf, in the Minister’s opinion, the disclosure of information about an undertaking required under subsection 973.02(1) or 973.03(1) or (4), or information that could reveal the existence of the undertaking, could pose a threat to the integrity or security of the financial institution to which the undertaking relates or could be injurious to national security, the Minister may specify that the information is confidential and shall be treated accordingly.ProhibitionDespite anything in this Act but subject to subsection (3), it is prohibited to disclose any confidential information referred to in subsection (1) except in accordance with any terms or conditions that the Minister may specify in the undertaking.Notice — Committee and Review AgencyIf the Minister specifies under subsection (1) that information referred to in that subsection is confidential for reasons related to national security, the Minister shall, within 30 days after the day on which the undertaking in question is required, notifythe Committee, as defined in section 2 of the National Security and Intelligence Committee of Parliamentarians Act; andthe Review Agency, as defined in section 2 of the National Security and Intelligence Review Agency Act.2023, c. 26, s. 576
Effect of non-compliance on approvalUnless otherwise expressly provided in this Act, a failure to comply with a term, condition or undertaking imposed or required under any provision of this Act does not invalidate the approval to which the term, condition or undertaking relates.Non-complianceIn addition to any other action that may be taken under this Act, in the case of non-compliance by a person with a term, condition or undertaking imposed or required under any provision of this Act, the Minister or the Superintendent, as the case may be, mayrevoke, suspend or amend the approval to which the term, condition or undertaking relates; orapply to a court for an order directing the person to comply with the term, condition or undertaking, and on such an application the court may make the order and any other order that it thinks fit.RepresentationsBefore taking any action under subsection (2), the Minister or the Superintendent, as the case may be, shall give the person concerned a reasonable opportunity to make representations.Revocation, suspension or amendmentAt the request of the person concerned, the Minister or the Superintendent, as the case may be, may revoke, suspend or amend any terms or conditions imposed by him or her and may revoke or suspend an undertaking given to him or her or approve its amendment.2007, c. 6, s. 125
Multiple approval — other approvalsThe Minister or the Superintendent may grant more than one approval, other than letters patent, in a single instrument if he or she considers it appropriate to do so, and if the Minister or Superintendent does so, he or she may specify different effective dates for each of the approvals.2007, c. 6, s. 125
Exemption in relation to notices of intentionThe Superintendent may, on application, exempt an applicant or applicants from the provisions of this Act respecting the publication of a notice of intention in respect of applications for approvals and impose any terms and conditions respecting the publication of the notice of intention that he or she considers appropriate.2007, c. 6, s. 125
Exceptions to Generally Accepted Accounting Principles
Calculations — generally accepted accounting principlesIf, as a result of a change to the accounting principles referred to in subsections 308(4) and 840(4) — whether the change is made before or after this section comes into force — the Superintendent considers, given any prudential considerations that he or she considers relevant, that any amount, calculation or valuation under this Act or the regulations is not appropriate, the Superintendent may specify the amount that is to be used or the calculation or valuation that is to be performed instead.Canada GazetteThe Superintendent shall cause a notice of the specification to be published in the Canada Gazette within 60 days after the day on which the specification has effect.Five-year limitThe specification ceases to have effect on the day indicated in the notice, which may be no later than five years after the day on which the specification is made.2012, c. 5, s. 102
Short-term Exemption Order
Short-term exemption orderDespite sections 378.1 and 378.2, paragraph 522.32(2)(b), subsection 522.32(4), paragraphs 522.32(7)(c) and (d) and sections 524.1, 524.2, 885 and 886, the Minister may, by order, provide that any of those provisions do not apply in respect of a person specified in the order for a period of up to twelve months, subject to any terms and conditions that the Minister considers appropriate.RestrictionIf section 516 or 517 applies in respect of a foreign bank or an entity associated with a foreign bank, the Minister may only make an order under subsection (1) to the extent that the aggregate of the period that applied under that section and the period specified in the order under subsection (1) does not exceed twelve months.2001, c. 9, s. 183
Orders to Exempt or Adapt
OrderOn the recommendation of the Minister, the Governor in Council may, by order,provide that any provision of this Act or the regulations shall not apply to a bank, to Her Majesty in right of Canada or an agent or agency of Her Majesty or to any other person otherwise subject to the provision; andprovide that any provision of this Act or the regulations applies to a bank, to Her Majesty in right of Canada or Her Majesty’s agent or agency or to any other person subject to the provision only in the manner and to the extent provided for in the order, and adapt the provision for the purposes of that application.Minister’s recommendationThe Minister may make a recommendation under subsection (1) only if the Ministeris of the opinion that the order would relate tothe acquisition, holding, sale or other disposition of, or other dealing with, shares of a bank by, or the transfer or issue of shares of a bank to, Her Majesty in right of Canada or Her Majesty’s agent or agency, orthe management of the business and affairs or the regulation and supervision of a bank during the time that Her Majesty or Her Majesty’s agent or agency is acquiring, holding, selling or otherwise disposing of, or otherwise dealing with, shares of the bank, or during the time that shares of the bank are transferred or issued to Her Majesty or Her Majesty’s agent or agency; andis of the opinion — after considering measures other than an order under that subsection and after consulting with the Superintendent, the Governor of the Bank of Canada and the Chief Executive Officer of the Canada Deposit Insurance Corporation — that the order will promote the stability of the financial system in Canada.Terms and conditionsOn the recommendation of the Minister, the Governor in Council may, by order, impose any terms and conditions relating to the acquisition of shares of a bank by, or transfer or issue of shares of a bank to, Her Majesty in right of Canada or Her Majesty’s agent or agency.Repeal of order under subsection (1)The Minister may recommend the repeal of an order made under subsection (1) without regard to subsection (2).Terms, conditions and undertakingsFrom the time that Her Majesty in right of Canada or an agent or agency of Her Majesty acquires shares of a bank to the time that the shares are sold or otherwise disposed of, the Minister may, by order, impose any terms and conditions on — or require any undertaking from — the bank that the Minister considers appropriate, including any terms and conditions or undertakings relating tothe remuneration of the bank’s senior officers, as defined in section 646.1, and directors;the appointment or removal of the bank’s senior officers, as defined in section 646.1, and directors;the payment of dividends by the bank; andthe bank’s lending policies and practices.AcquisitionDespite Part X of the Financial Administration Act, the Minister or an agent or agency of Her Majesty in right of Canada may, on any terms and conditions imposed under subsection (3), acquire and hold shares of a bank on behalf of or in trust for Her Majesty if, as a result of an order under subsection (1), the bank may record in its securities register or members register, as the case may be, the transfer or issue of shares to Her Majesty or an agent or agency of Her Majesty.Payment out of C.R.F.On the requisition of the Minister, there may be paid out of the Consolidated Revenue Fund the amount that the Minister or an agent or agency of Her Majesty in right of Canada is required to pay for the acquisition of shares under subsection (6) and any costs and expenses incurred in connection with the acquisition, holding, sale or other disposition of, or other dealing with, the shares.Registration of sharesShares acquired under subsection (6) by the Minister or an agent or agency of Her Majesty in right of Canada are to be registered in the name of the Minister, agent or agency, as the case may be, in the bank’s securities register or members register, as the case may be, if they are capable of being registered in it, and they are to be held by the Minister, agent or agency, as the case may be, on behalf of or in trust for Her Majesty.Disposition by MinisterThe Minister may, at any time, sell or otherwise dispose of shares acquired under subsection (6). The Surplus Crown Assets Act and section 61 of the Financial Administration Act do not apply to the sale or disposition.Disposition by agent or agencyAn agent or agency of Her Majesty in right of Canada — at the request of the Minister, which may be made at any time — shall sell or otherwise dispose of shares acquired under subsection (6). The Surplus Crown Assets Act and section 61 of the Financial Administration Act do not apply to the sale or disposition.Consideration by MinisterIf the Minister or an agent or agency of Her Majesty in right of Canada is holding shares of a bank on behalf of or in trust for Her Majesty on the day that is two years after the day on which the shares were acquired, the Minister shall consider whether holding the shares continues to promote the stability of the financial system in Canada.Mandatory dispositionIf the Minister, under subsection (11), considers that holding shares acquired under subsection (6) no longer continues to promote the stability of the financial system in Canada, the Minister — or, at the request of the Minister, the agent or agency of Her Majesty in right of Canada — shall take the measures that the Minister considers practicable in the circumstances to sell or otherwise dispose of the shares. The Surplus Crown Assets Act and section 61 of the Financial Administration Act do not apply to the sale or disposition.Not a Crown corporationEven if the acquisition of a bank’s shares under subsection (6) would otherwise cause the bank to be a Crown corporation, as defined in subsection 83(1) of the Financial Administration Act, the bank is not a Crown corporation for the purposes of that Act.Statutory Instruments ActThe Statutory Instruments Act does not apply to an order made under this section.Definition of sharesFor the purposes of this section, shares includes membership shares and any conversion or exchange privilege, option or right to acquire shares.Bank holding companyFor the purposes of this section, a reference to a “bank” includes a reference to a “bank holding company”, and the references to “section 646.1” in paragraphs (5)(a) and (b) are to be read, in relation to a bank holding company, as references to “section 962”.2009, c. 2, s. 275; 2010, c. 12, s. 2090; 2016, c. 7, s. 175
Orders and Directives
Not statutory instrumentsAn instrument issued or made under this Act and directed to a single bank, bank holding company, authorized foreign bank or person, other than a regulation made under paragraph 627.998(o) or an order referred to in section 499, is not a statutory instrument for the purposes of the Statutory Instruments Act.2001, c. 9, s. 183; 2010, c. 25, s. 1552018, c. 27, s. 3332023, c. 26, s. 138
FormThe Superintendent may, by order, establish the form of any application to be made to the Minister or the Superintendent under this Act.2001, c. 9, s. 183
Applications to Superintendent
Content of applicationsThe following applications to the Superintendent must contain the information, material and evidence that the Superintendent may require:applications for approval under subsection 65(1), 72(2), 75(4), 79(5), 79.1(2), 80(1), 170(1), 192.03(6), 217(3), 421(1), 468(6) or (11), 471(1) or (2) or 482(1), subparagraph 487(2)(a)(vi), section 490 or subsection 494(3) or (4), 495.3(1), 553.1(1), 709(1), 716(2), 718(4), 723(1), 758(1), 924(1), 930(6) or (11), 933(1) or 944(1);applications for consent under subsection 71(1) or 715(1);applications for exemptions under subsection 156.05(3); andapplications for extensions of time under subsection 471(3) or (5), 472(4), 473(4), 933(2) or (4), 934(3) or 935(3).ReceiptWithout delay after receiving the application, the Superintendent shall send a receipt to the applicant certifying the date on which it was received.Notice of decision to applicantSubject to subsection (4), the Superintendent shall, within a period of thirty days after the receipt of the application, send to the applicanta notice approving the application, subject to any terms and conditions that the Superintendent considers appropriate; orif the Superintendent is not satisfied that it should be approved, a notice to that effect.Extension of periodIf the Superintendent is unable to complete the consideration of the application within the period referred to in subsection (3), the Superintendent shall, within that period, send a notice to the applicant informing the applicant that the Superintendent has extended the period for a further period set out in the notice.Deemed approvalIf the applicant does not receive the notice required by subsection (3) and, where applicable, subsection (4), within the required period, the Superintendent is deemed to have approved the application and granted the approval, consent, extension or exemption to which the application relates, regardless of whether the approval, consent, extension or exemption is to be in writing or not.2001, c. 9, s. 183; 2007, c. 6, s. 126; 2010, c. 12, s. 2091
Applications for Certain Approvals
Application for certain approvalsAn application for the prior written approval of the Minister in respect of any of the following provisions must be filed with the Superintendent and contain the information, material and evidence that the Superintendent may require:paragraphs 410(1)(c) and (c.1);paragraphs 468(5)(b.1), (c), (d) and (d.1);paragraphs 522.22(1)(c), (d) and (d.1);paragraphs 539(1)(b.1) and (b.2); andparagraphs 930(5)(b.1), (c), (d) and (d.1).Certification of receipt of applicationIf, in the opinion of the Superintendent, the application contains all the required information, the Superintendent must refer it to the Minister, together with his or her analysis in relation to the application, and send a receipt to the applicant certifying the date on which the application was referred to the Minister.Incomplete applicationIf, in the opinion of the Superintendent, the application is incomplete, the Superintendent must send a notice to the applicant specifying the information required by the Superintendent to complete it.Notice of decisionSubject to subsection (5), the Minister must, within 30 days after the certified date referred to in subsection (2), send to the applicanta notice approving the application; orif the Minister is not satisfied that the application should be approved, a notice to that effect.Extension of periodIf the Minister is unable to complete the consideration of an application within the 30-day period, the Minister must, within that period, send a notice to the applicant informing the applicant that the Minister has extended the period for a further period set out in the notice.Deemed approvalIf the Minister does not send the notice referred to in subsection (4) or, where applicable, subsection (5), within the required period, the Minister is deemed to have approved the application.2007, c. 6, s. 127; 2012, c. 5, s. 103
Appeals
Appeal to Federal CourtAn appeal lies to the Federal Court from any direction of the Minister made under subsection 401.2(7), 402(1), 402.2(1), 913(7) or 915(1).PowersThe Federal Court may, in an appeal under subsection (1),dismiss the appeal;set aside the direction or decision; orset aside the direction or decision and refer the matter back for re-determination.CertificateFor the purposes of an appeal under subsection (1), the Minister shall, at the request of the bank, bank holding company or person making the appeal, provide the bank, bank holding company or person with a certificate in writing setting out the direction or decision appealed from and the reasons why the direction or decision was made.2001, c. 9, s. 183; 2012, c. 31, s. 1302023, c. 26, s. 577
Regulations
Power to make regulationsThe Governor in Council may make regulationsprescribing anything that is required or authorized by this Act to be prescribed;prescribing the way in which anything that is required or authorized by this Act to be prescribed is to be determined;respecting, for any purpose of any provision of the Act, the determination of the equity of a bank or a bank holding company;defining words and expressions to be defined for the purposes of this Act;requiring the payment of a fee in respect of the filing, examining or issuing of any document or in respect of any action that the Superintendent is required or authorized to take under this Act, and fixing the amount of the fee or the manner of determining its amount;respecting the regulatory capital and total assets of a bank or a bank holding company;respecting the retention, in Canada, of assets of a bank or a bank holding company;respecting the value of assets of a bank or a bank holding company to be held in Canada and the manner in which those assets are to be held;respecting the protection and maintenance of assets of a bank or a bank holding company, including regulations respecting the bonding of directors, officers and employees of a bank or a bank holding company;respecting the holding of shares, membership shares and ownership interests for the purposes of sections 70, 74 and 714;respecting information, in addition to the information required by section 634 or 953, to be maintained in the register referred to in that section; andgenerally for carrying out the purposes and provisions of this Act.Incorporation by referenceThe regulations may incorporate any material by reference regardless of its source and either as it exists on a particular date or as amended from time to time.Incorporated material is not a regulationMaterial does not become a regulation for the purposes of the Statutory Instruments Act because it is incorporated by reference.2001, c. 9, s. 183; 2005, c. 54, s. 135; 2010, c. 12, s. 2092
Delegation
DelegationThe Minister may delegate any of the Minister’s powers, duties and functions under this Act to any Minister of State appointed under the Ministries and Ministers of State Act to assist the Minister.2001, c. 9, s. 183
Whistleblowing
Definition of wrongdoingIn this Part, wrongdoing includes a contravention ofany provision of this Act or the regulations;a voluntary code of conduct that a bank or authorized foreign bank has adopted or a public commitment that it has made; anda policy or procedure established by a bank or authorized foreign bank.2018, c. 27, s. 334
WhistleblowingAny employee of a bank or authorized foreign bank who has reasonable grounds to believe that the bank, authorized foreign bank or any person has committed or intends to commit a wrongdoing may report the particulars of the matter to the bank or authorized foreign bank or to the Commissioner, the Superintendent, a government agency or body that regulates or supervises financial institutions or a law enforcement agency.ConfidentialityThe bank, authorized foreign bank, Commissioner, Superintendent, government agency or body or law enforcement agency shall keep confidential the identity of the employee and any information that could reasonably be expected to reveal their identity.Exception — bank or authorized foreign bankDespite subsection (2), the bank or authorized foreign bank may disclose the identity of the employee and information that could reasonably be expected to reveal their identity to the Commissioner, Superintendent, government agency or body or law enforcement agency if the Commissioner, Superintendent, government agency or body or law enforcement agency considers the disclosure necessary for purposes related to an investigation.Exception — Commissioner, Superintendent, agency and bodyDespite subsection (2), the Commissioner, Superintendent, government agency or body or law enforcement agency may disclose to each other the identity of the employee and information that could reasonably be expected to reveal their identity for purposes related to an investigation.Informing of disclosureIf the bank, authorized foreign bank, Commissioner, Superintendent, government agency or body or law enforcement agency has disclosed, under subsection (3) or (4), the identity of the employee or any information that could reasonably be expected to reveal their identity, the bank, authorized foreign bank, Commissioner, Superintendent, government agency or body or law enforcement agency shall make every reasonable effort to inform the employee of the disclosure.2018, c. 27, s. 334
Procedures — wrongdoingA bank or authorized foreign bank shall establish and implement procedures for dealing with matters the particulars of which have been reported to it by employees under subsection 979.2(1).2018, c. 27, s. 334
ProhibitionNo bank or authorized foreign bank shall dismiss, suspend, demote, discipline, harass or otherwise disadvantage an employee, or deny an employee a benefit of employment, by reason thatthe employee, acting on the basis of reasonable belief, has reported particulars under subsection 979.2(1);the employee, acting on the basis of reasonable belief, has refused or stated an intention of refusing to do anything that is a wrongdoing;the employee, acting on the basis of reasonable belief, has done or stated an intention of doing anything that is required to be done in order to prevent a wrongdoing from being committed; orthe bank or authorized foreign bank believes that the employee will do anything referred to in paragraphs (a) to (c).SavingNothing in this section impairs any right of an employee either at law or under an employment contract or collective agreement.2018, c. 27, s. 334
Sanctions
OffenceEvery person who, without reasonable cause, contravenes any provision of this Act or the regulations is guilty of an offence.2001, c. 9, s. 183
False or misleading informationEvery person who knowingly provides false or misleading information in relation to any matter under this Act or the regulations is guilty of an offence.2007, c. 6, s. 128
Undue preference to creditorEvery director, officer or employee of a bank or an authorized foreign bank who wilfully gives or concurs in giving to any creditor of the bank or authorized foreign bank any fraudulent, undue or unfair preference over other creditors, by giving security to the creditor, by changing the nature of the creditor’s claim or otherwise, is guilty of an offence.2001, c. 9, s. 183
Failure to provide informationEvery person who, without reasonable cause, refuses or fails to comply with a requirement made under paragraph 643(2)(b) or 957(2)(b) is guilty of an offence.2001, c. 9, s. 183
Use of nameExcept to the extent permitted by the regulations, every person who uses the name of a bank or of a bank holding company in a prospectus, offering memorandum, takeover bid circular, advertisement for a transaction related to securities or in any other document in connection with a transaction related to securities is guilty of an offence.Unauthorized nameSubject to the regulations and subsections (4) to (5.1), (6) and (12), every entity, other than a bank, that acquires, adopts or retains a name, a domain name or an identifying mark that includes the word “bank”, “banker” or “banking”, either alone or in combination with other words, to indicate or describe a business in Canada or any part of a business in Canada, without being authorized to do so by this Act or any other Act of Parliament, is guilty of an offence.Unauthorized name — “credit union” and “bank”Subject to the regulations and subsections (4) to (5.1) and (12), every entity, other than a federal credit union, that acquires, adopts or retains a name that includes both the phrase “credit union” and the word “bank”, either alone or in combination with other words, to indicate or describe a business in Canada or any part of a business in Canada, without being authorized to do so by this Act or any other Act of Parliament, is guilty of an offence.Unauthorized name — “credit union” and “federal”Subject to the regulations and subsections (4) to (5.1) and (12), every entity, other than a federal credit union, that acquires, adopts or retains a name that includes both the phrase “credit union” and the word “federal”, either alone or in combination with other words, to indicate or describe a business in Canada or any part of a business in Canada, without being authorized to do so by this Act or any other Act of Parliament, is guilty of an offence.Unauthorized name — “cooperative” and “bank”Subject to the regulations and subsections (4) to (5.1) and (12), every entity, other than a federal credit union, that acquires, adopts or retains a name that includes both of the words “cooperative” and “bank”, either alone or in combination with other words, to indicate or describe a business in Canada or any part of a business in Canada, without being authorized to do so by this Act or any other Act of Parliament, is guilty of an offence.Unauthorized name — “cooperative” and “federal”Subject to the regulations and subsections (4) to (5.1) and (12), every entity, other than a federal credit union, that acquires, adopts or retains a name that includes both of the words “cooperative” and “federal”, either alone or in combination with other words, to indicate or describe a business in Canada or any part of a business in Canada, without being authorized to do so by this Act or any other Act of Parliament, is guilty of an offence.Unauthorized use of word “bank”, “banker” or “banking”Subject to the regulations and subsections (4) to (5.1), (6) and (12), every person, other than a bank, who uses the word “bank”, “banker” or “banking”, without being authorized to do so by this Act or any other Act of Parliament, to indicate or describe a business in Canada or any part of a business in Canada, including any of its products or services or the means by which any of those products or services may be obtained, is guilty of an offence.Unauthorized use of word “bank”, “banker” or “banking”Subject to the regulations and subsections (4) to (5.1), (6) and (12), every person, other than a bank, who, in respect of their own business, causes or authorizes another person to use the word “bank”, “banker” or “banking”, without being authorized to do so by this Act or any other Act of Parliament, to indicate or describe that business in Canada, or any part of that business in Canada, including any of its products or services or the means by which any of those products or services may be obtained, is guilty of an offence.Unauthorized use of name or identifying mark of bank or foreign bankSubject to the regulations and subsections (4), (5), (5.2), (5.3) and (10) to (12), every person who uses the name or any identifying mark of a bank or a foreign bank to indicate or describe a business in Canada or any part of a business in Canada, without being authorized to do so by this Act or any other Act of Parliament, is guilty of an offence.Unauthorized statements regarding association with a bank, etc.Subject to the regulations and subsections (4), (5.2) and (12), every person is guilty of an offence who, without being authorized to do so by this Act or any other Act of Parliament, makes any statement that a business is connected, associated or affiliated with a bank or a foreign bank.Unauthorized use of name or identifying mark of a bank holding companySubject to the regulations and subsections (7) to (9.1) and (12), every entity that acquires, adopts or retains the name of a bank holding company and every person who uses the name or any identifying mark of a bank holding company to indicate or describe a business in Canada or any part of a business in Canada, without being authorized to do so by this Act or any other Act of Parliament, is guilty of an offence.Permitted useNo person commits an offence under any of subsections (2) to (2.3) if the activity referred to in that subsection is donein a description of the corporate relationship between a bank and an entity controlled by the bank;subject to the regulations, in a description of a corporate relationship between a bank and an entity affiliated with the bank;in a description of the corporate relationship between a bank holding company and an entity controlled by the bank holding company;[Repealed, 2007, c. 6, s. 129]in an advertisement in Canada by or on behalf of a foreign bank in respect of its facilities outside Canada;in the identification of representative offices of a foreign bank in Canada;in relation to the business in Canada of an authorized foreign bank;in a description of the corporate relationship between a bank or a bank holding company and a foreign bank that controls the bank or the bank holding company;in a description of the corporate relationship between a bank or a bank holding company and an entity that is associated with a foreign bank and that controls the bank or the bank holding company;subject to the regulations, in a description of the corporate relationship between a non-bank affiliate of a foreign bank, within the meaning of subsection 507(1), and a foreign bank that controls the non-bank affiliate, if the non-bank affiliate is not a bank holding company or an entity that is controlled by a bank holding company;subject to the regulations, in a description of the corporate relationship between a non-bank affiliate of a foreign bank, within the meaning of subsection 507(1), and an entity that is associated with a foreign bank that controls the non-bank affiliate, ifthe non-bank affiliate is not a bank holding company or an entity that is controlled by a bank holding company, andthe entity is not a bank, a bank holding company, a foreign bank or an entity controlled by a bank or a bank holding company;in the identification of a body corporate that was a non-bank affiliate of a foreign bank within the meaning of subsection 303(1) of the Bank Act, being chapter B-1 of the Revised Statutes of Canada, 1985, at any time before June 1, 1981;in the identification of a Canadian financial institution thatwas controlled by a bank that was a subsidiary of a foreign bank before June 15, 1997 but that has ceased to be so controlled,is controlled by a foreign bank that, before June 15, 1997, controlled the subsidiary, andused, before June 15, 1997, the word “bank”, “banker” or “banking” to identify itself; orin the identification of a bank holding company.Permitted useNo person commits an offence under any of subsections (2.01) to (2.04) if the activity referred to in that subsection is donein relation to a prescribed use;under prescribed circumstances; orin accordance with a prescribed approval and any terms and conditions that the Minister may impose.Permitted useSubject to the regulations, no person commits an offence under subsection (2.1) or (2.11) if they meet the requirements set out in subsection (4.3) and they area body corporate to which the Trust and Loan Companies Act applies;a trust or loan corporation incorporated or formed by or under an Act of the legislature of a province;a central cooperative credit society;a local cooperative credit society;a federation of cooperative credit societies;the corporation known as “ATB Financial” and referred to in section 2 of the ATB Financial Act, chapter A-45.2 of the Revised Statutes of Alberta 2000, or a successor of that corporation; ora prescribed entity.RequirementsFor the purposes of subsection (4.2), the requirements are the following:subject to the regulations, the entity disclosesthe type of entity it is, as described in any of paragraphs (4.2)(a) to (g) or in the regulations,the jurisdiction under whose laws the entity is primarily regulated,whether it participates in a deposit insurance system in Canada, and if so, the name of that system, andany other prescribed information; andthe entity complies with any prescribed requirements or conditions.Permitted useNo subsidiary of a bank commits an offence by reason only that it uses the name of the bank of which it is a subsidiary in its corporate name or a name under which it carries on business or by reason only that it uses any identifying mark or domain name of that bank in carrying on its business.Permitted useNo person commits an offence under subsections (2) to (2.1) if the activity referred to in that subsection is in relation to a business that is not engaged in financial activities, unless the business is carried out by a prescribed entity.Permitted useNo bank commits an offence under subsection (2.2) or (2.3) if it is affiliated with the bank or the foreign bank.Permitted useSubject to the regulations, no entity affiliated with a bank commits an offence by reason only that the entity uses the name of the bank in the entity’s corporate name or in a name under which the entity carries on business or by reason only that it uses any identifying mark of the bank in carrying on its business, if the entity does not use any of the words “bank”, “banker” or “banking” or the phrase “federal credit union” in its corporate name, in a name under which it carries on business or in any of its identifying marks.Permitted useNo financial institution that was controlled by a bank on June 25, 1999 and that had a name that included the word “bank”, “banker” or “banking” on that day commits an offence by reason only that it uses that word in its corporate name or in a name under which it carries on business if the financial institution is a subsidiary of a bank holding company that controls the bank.[Repealed, 2007, c. 6, s. 129]Permitted useNo subsidiary of a bank holding company commits an offence by reason only that it uses the name of the bank holding company in the subsidiary’s corporate name or in a name under which it carries on business, or by reason only that it uses any identifying mark of the bank holding company in carrying on its business, so long as, if the subsidiary is not a bank or a subsidiary of a bank, it does not use the word “bank”, “banker” or “banking” in its corporate name, in a name under which it carries on business or in any of its identifying marks.[Repealed, 2007, c. 6, s. 129]Permitted useSubject to the regulations, no entity affiliated with a bank holding company commits an offence by reason only that the entity uses the name of the bank holding company in the entity’s corporate name or in a name under which the entity carries on business or by reason only that it uses any identifying mark of the bank holding company in carrying on its business, if the entity does not use the word “bank”, “banker” or “banking” in its corporate name, in a name under which it carries on business or in any of its identifying marks.[Repealed, 2007, c. 6, s. 129]Permitted useNo subsidiary of a bank holding company commits an offence by reason only that it uses the name of the bank holding company in a description of its corporate relationship to the bank holding company.Permitted useSubject to the regulations, no entity affiliated with a bank holding company commits an offence by reason only that the entity uses the name of the bank holding company in a description of the entity’s corporate relationship with the bank holding company.Permitted useSubject to the regulations, no Canadian entity that is an entity associated with a foreign bank commits an offence by reason only that it uses the name of the foreign bank in its corporate name or in a name under which it carries on business, or by reason only that it uses any identifying mark of the foreign bank in carrying on its business, ifit does not use the word “bank”, “banker” or “banking” in its corporate name, in a name under which it carries on business or in any of its identifying marks; andthe foreign bank has consented to the use.[Repealed, 2007, c. 6, s. 129]Permitted useSubject to the regulations, no foreign bank that carries on a business or activity referred to in section 510.1, 522.05, 522.18 or 522.19, and no entity incorporated or formed by or under the laws of a country other than Canada that carries on a business or activity referred to in any of those provisions and that is an entity associated with a foreign bank, commits an offence by reason only that it uses its name or any of its identifying marks if it does not use the word “bank”, “banker” or “banking”.Permitted use — consentNo person commits an offence under any of subsections (2) to (3) if the activity referred to in that subsection has been approved by the Superintendent and is in accordance with any terms and conditions that the Superintendent may impose and, if the activity involves the use of the name or any identifying mark of a bank, a bank holding company or a foreign bank, the bank, bank holding company or foreign bank has consented to the use.Words bank, banker or bankingFor the purposes of this section, the word bank, banker or banking includesany of those words in any language; andany word or words, in any language, that are equivalent to any of those words.Phrase credit unionFor the purposes of this section, the phrase credit union includesthat phrase in any language; andany word or words, in any language, that are equivalent to any of the words in that phrase.Words cooperative and federalFor the purposes of this section, the words cooperative and federal includeany of those words in any language; andany word or words, in any language, that are equivalent to any of those words.Entity’s nameFor the purposes of this section, other than subsection (1), an entity’s name includesa name that is substantially similar to the entity’s name; andthe entity’s name in any language.Identifying marksFor the purposes of this section, an identifying mark of an entity includesany logogram, insignia or logo of the entity;the initials or any acronym of the entity;any trademark of the entity; andany mark that is substantially similar to any identifying mark of the entity.Definition of foreign bankIn this section, foreign bank means a foreign bank to which Part XII applies.Entity associated with a foreign bankFor the purposes of this section, an entity is associated with a foreign bank if the entity is or is deemed to be associated with the foreign bank within the meaning of section 507 and is an entity to which Part XII applies.RegulationsThe Governor in Council may make regulations for the purposes of subsections (1) to (3), paragraphs (4)(b), (g) and (h) and subsections (4.2), (4.3), (5.3), (8) and (9.1) to (11).2001, c. 9, s. 183; 2007, c. 6, s. 129; 2010, c. 12, s. 2093; 2018, c. 12, s. 352
Making false statementsEvery person is guilty of an offence who wilfully makes a false statementin a warehouse receipt or bill of lading given to a bank or authorized foreign bank under the authority of this Act; orin a document giving or purporting to give security on property to a bank under section 426 or 427 or to an authorized foreign bank under either of those sections as incorporated by section 555.Wilfully disposing of or withholding goods covered by securityEvery person is guilty of an offence who, having possession or control of property mentioned in or covered by a warehouse receipt, bill of lading or any security given to a bank under section 426 or 427 or to an authorized foreign bank under either of those sections as incorporated by section 555, and having knowledge of the receipt, bill of lading or security, without the consent of the bank or authorized foreign bank in writing before the loan, advance, debt or liability secured by it has been fully paidwilfully alienates or parts with any of the property; orwilfully withholds from the bank or authorized foreign bank possession of any of the property if demand for its possession is made by the bank or authorized foreign bank after failure to pay the loan, advance, debt or liability.Non-compliance with requirements for saleIf a debt or liability to a bank or authorized foreign bank is secured by a warehouse receipt or bill of lading or security on property given to a bank under section 426 or 427 or to an authorized foreign bank under either of those sections as incorporated by section 555 and is not paid, the bank or authorized foreign bank is guilty of an offence if it sells the property covered by the warehouse receipt, bill of lading or security under the power of sale conferred on it by this Act without complying with the provisions of this Act applicable to the exercise of the power of sale.Acquisition of warehouse receipts, bills of lading, etc.Every bank or authorized foreign bank that acquires or holds a warehouse receipt or bill of lading or a document signed and delivered to it giving or purporting to give to the bank security on property under section 426 or 427, or to give the authorized foreign bank security or property under either of those sections as incorporated by section 555, to secure the payment of any debt, liability, loan or advance, is guilty of an offence unlessthe debt, liability, loan or advance is contracted or made at the time of the acquisition by the bank or authorized foreign bank of the warehouse receipt, bill of lading or document;the debt, liability, loan or advance was contracted or made on the written promise or agreement that the warehouse receipt, bill of lading or security would be given to the bank or authorized foreign bank; orthe acquisition or holding by the bank or authorized foreign bank of the warehouse receipt, bill of lading or security is otherwise authorized by an Act of Parliament.DefinitionsFor the purposes of this section, the expressions warehouse receipt and bill of lading have the meaning assigned to those expressions by section 425.2001, c. 9, s. 183
PunishmentEvery person who is guilty of an offence under any of sections 980 to 984 isin the case of a natural person, liableon summary conviction, to a fine of not more than $100,000 or to imprisonment for a term of not more than twelve months, or to both, oron conviction on indictment, to a fine of not more than $1,000,000 or to imprisonment for a term of not more than five years, or to both; andin the case of an entity, liableon summary conviction, to a fine of not more than $500,000, oron conviction on indictment, to a fine of not more than $5,000,000.Order to complyIf a person has been convicted of an offence under this Act, the court may, in addition to any punishment it may otherwise impose, order the person to comply with the provisions of this Act or the regulations in respect of which the person was convicted.Additional fineIf a person has been convicted of an offence under this Act, the court may, if it is satisfied that as a result of the commission of the offence the convicted person acquired any monetary benefits or that monetary benefits accrued to the convicted person or their spouse, common-law partner or other dependant, order the convicted person to pay, despite the maximum amount of any fine that may otherwise be imposed under this Act, an additional fine in an amount equal to three times the court’s estimation of the amount of those monetary benefits.2001, c. 9, s. 183; 2005, c. 54, s. 136
Liability of officers, directors, etc.If an entity commits an offence under this Act, any officer, director, agent or principal officer of the entity who directed, authorized, assented to, acquiesced in or participated in the commission of the offence is a party to and guilty of the offence and liable on summary conviction or on conviction on indictment to the punishment provided under paragraph 985(1)(a) for the offence, whether or not the entity has been prosecuted or convicted.2001, c. 9, s. 183
Limitation periodProceedings by way of summary conviction in respect of an offence under a provision of this Act may be commenced at any time within, but not later than, two years after the day on which the subject-matter of the proceedings became known, in the case of an offence under a consumer provision, to the Commissioner and, in any other case, to the Superintendent.Certificate of Superintendent or CommissionerA document appearing to have been issued by the Superintendent or the Commissioner, as the case may be, certifying the day on which the subject-matter of any proceedings became known to the Superintendent or the Commissioner is admissible in evidence without proof of the signature or official character of the person appearing to have signed it and is, in the absence of evidence to the contrary, proof of the matter asserted in it.2001, c. 9, s. 183
Effect of offence on contractsUnless otherwise expressly provided in this Act, a contravention of any provision of this Act or the regulations does not invalidate any contract entered into in contravention of the provision.2001, c. 9, s. 183
Compliance or restraining order — bankIf a bank or a bank holding company or any director, officer, employee or agent of one does not comply with any provision of this Act or the regulations other than a consumer provision, or of the incorporating instrument or any by-law of the bank or bank holding company, the Superintendent, any complainant or any creditor of the bank or bank holding company may, in addition to any other right that that person has, apply to a court for an order directing the bank, bank holding company, director, officer, employee or agent to comply with — or restraining the bank, bank holding company, director, officer, employee or agent from acting in breach of — the provision and, on the application, the court may so order and make any further order it thinks fit.Compliance or restraining order — authorized foreign bankIf an authorized foreign bank or any of its directors, officers, employees or agents does not comply with any provision of this Act or the regulations other than a consumer provision, or of an order made under subsection 524(1), 528(1) or (1.1) or 534(1) in respect of the authorized foreign bank, the Superintendent, any complainant or any creditor of the authorized foreign bank may, in addition to any other right that that person has, apply to a court for an order directing the authorized foreign bank, director, officer, employee or agent to comply with — or restraining the authorized foreign bank, director, officer, employee or agent from acting in breach of — the provision and, on the application, the court may so order and make any further order that it thinks fit.Compliance or restraining order — consumer provisionsIf a bank or an authorized foreign bank or any director, officer, employee or agent of one does not comply with any applicable consumer provision, the Commissioner or any complainant may, in addition to any other right that that person has, apply to a court for an order directing the bank, authorized foreign bank, director, officer, employee or agent to comply with — or restraining the bank, authorized foreign bank, director, officer, employee or agent from acting in breach of — the consumer provision and, on the application, the court may so order and make any further order it thinks fit.2001, c. 9, s. 183; 2007, c. 6, s. 130
Production of information and documentsThe Superintendent may direct an entity to provide him or her with the information or documents that he or she specifies if he or she is of the opinion that their production is necessary in order to be satisfied that the entity is meeting the requirements of subsection 983(4.3).2018, c. 12, s. 353
Superintendent’s directionsIf, in the opinion of the Superintendent, a person is acting in a manner that is prohibited by section 983, the Superintendent may direct the person tocease or refrain from acting in that manner; andperform the acts that in the opinion of the Superintendent are necessary to remedy the situation.Opportunity for representationsSubject to subsection (3), no direction is to be issued to a person under subsection (1) unless the person is provided with a reasonable opportunity to make representations in respect of the matter.Temporary directionIf, in the opinion of the Superintendent, the length of time required for representations to be made might be prejudicial to the public interest, the Superintendent may make a temporary direction with respect to the matters referred to in paragraphs (1)(a) and (b) having effect for a period of not more than 15 days.Continued effectA temporary direction under subsection (3) continues to have effect after the expiration of the 15-day period referred to in that subsection if no representations are made within that period or, if representations have been made, the Superintendent notifies the person that the Superintendent is not satisfied that there are sufficient grounds for revoking the direction.2018, c. 12, s. 353
Court enforcementIf a person contravenes a direction made under subsection 989.2(1) or (3), the Superintendent may, in addition to any other action that may be taken under this Act or the Office of the Superintendent of Financial Institutions Act, apply to a court for an order requiring the person to comply with the direction, and on such application the court may so order and make any other order it thinks fit.AppealAn appeal from an order of a court under subsection (1) lies in the same manner, and to the same court, as an appeal from any other order of the court.2018, c. 12, s. 353
Appeal of final orderAn appeal lies to the court of appeal of a province from any final order made by a court of that province under this Act.Appeal with leaveAn appeal lies to the court of appeal of a province from any order, other than a final order made by a court of that province, only with leave of the court of appeal in accordance with the rules applicable to that court.2001, c. 9, s. 183; 2005, c. 54, s. 137
Recovery and application of finesAll fines payable under this Act are recoverable and enforceable, with costs, at the suit of Her Majesty in right of Canada, instituted by the Attorney General of Canada, and, when recovered, belong to Her Majesty in right of Canada.2001, c. 9, s. 183
Documents in Electronic or Other Form
DefinitionsThe following definitions apply in this Part.electronic document means, except in section 1001, any form of representation of information or concepts that is fixed in any medium in or by electronic, optical or other similar means and that can be read or perceived by a person or by any means. (document électronique)information system means a system used to generate, send, receive, store or otherwise process an electronic document. (système de traitement de l’information)2005, c. 54, s. 138
ApplicationThis Part other than sections 1004 and 1005 does not apply in respect of any notice, document or other information that under this Act or the regulations is sent to or issued by the Minister, the Superintendent, the Commissioner or the Bank of Canada or any prescribed notice, document or information.2005, c. 54, s. 138
Use not mandatoryNothing in this Act or the regulations requires a person to create or provide an electronic document.2005, c. 54, s. 138
Consent and other requirementsDespite anything in this Part, a requirement under this Act or the regulations to provide a notice, document or other information is not satisfied by providing an electronic document unlessthe addressee consents and designates an information system for the receipt of the electronic document;the electronic document is, unless otherwise prescribed, provided to the designated information system; andthe prescribed requirements are complied with.Consent and notice in electronic formDespite subsection (1), the requirements referred to in paragraph (1)(c) may provide that the consent referred to in paragraph (1)(a) and any notice related to that consent may be provided in electronic form.Regulations — revocation of consentThe Governor in Council may make regulations respecting the revocation of the consent referred to in paragraph (1)(a).2005, c. 54, s. 138; 2018, c. 27, s. 153
Creation or provision of informationA requirement under this Act or the regulations to create or provide a notice, document or other information is satisfied by creating or providing an electronic document ifthe incorporating instrument or by-laws of the bank, bank holding company or authorized foreign bank, as the case may be, do not provide otherwise; andthe prescribed requirements are complied with.2005, c. 54, s. 138
Creation of information in writingA requirement under this Act or the regulations to create a notice, document or other information in writing is satisfied by creating an electronic document if in addition to the conditions set out in section 996the information in the electronic document is accessible so as to be usable for subsequent reference; andthe prescribed requirements are complied with.2005, c. 54, s. 138
Provision of information in writingA requirement under this Act or the regulations to provide a notice, document or other information in writing is satisfied by providing an electronic document if in addition to the conditions set out in section 996the information in the electronic document is accessible by the addressee and capable of being retained by them so as to be usable for subsequent reference; andthe prescribed requirements are complied with.2005, c. 54, s. 138
Multiple copiesA requirement under this Act or the regulations to provide two or more copies of a document at the same time to one addressee is satisfied by providing one copy of the electronic document.2005, c. 54, s. 138
Registered mailA requirement under this Act or the regulations to provide a document by registered mail is not satisfied by providing an electronic document except in the prescribed circumstances.2005, c. 54, s. 138
Statutory declarations and affidavitsA statutory declaration or affidavit required under this Act or the regulations may be created or provided in an electronic document ifthe person who makes the statutory declaration or affidavit signs it with their secure electronic signature;the authorized person before whom the statutory declaration or affidavit is made signs it with their secure electronic signature; andthe requirements of sections 994 to 1000 are complied with.DefinitionsFor the purposes of this section, electronic document and secure electronic signature have the same meaning as in subsection 31(1) of the Personal Information Protection and Electronic Documents Act.References to “electronic document”For the purpose of complying with paragraph (1)(c), references to “electronic document” in sections 994 to 1000 are to be read as references to “electronic document within the meaning of subsection 31(1) of the Personal Information Protection and Electronic Documents Act”.2005, c. 54, s. 138
SignaturesA requirement under this Act or the regulations for a signature or for a document to be executed, except in respect of a statutory declaration or affidavit, is satisfied in respect of an electronic document if the prescribed requirements are complied with and the signature results from the application by the person of a technology or process that permits the following to be proved:the signature resulting from the use by the person of the technology or process is unique to the person;the technology or process is used by the person to incorporate their signature into, attach it to or associate it with the electronic document; andthe technology or process can be used to identify the person using the technology or process.2005, c. 54, s. 138
Regulations — provision and receipt of documentsThe Governor in Council may make regulations respecting the time and place at which and the circumstances under which an electronic document is considered to be provided or received.2005, c. 54, s. 138
Content and form of notices and documentsThe Minister, Superintendent, Commissioner or Bank of Canada may establish the requirements for the content and fix the form, including electronic and other forms, of notices and documents sent to or issued by each of them under this Act or the regulations, includingthe notices and documents that may be sent in electronic or other form;the persons or classes of persons who may send notices and documents;their signature in electronic or other form or their execution, adoption or authorization in a manner that is to have the same effect for the purposes of this Act as their signature;the time and place at which and the circumstances under which electronic documents are considered to be sent or received; andany matter necessary for the purposes of the application of this section.2005, c. 54, s. 138
ExemptionIn the prescribed circumstances, the Minister, Superintendent, Commissioner or Bank of Canada may, on any conditions that they consider appropriate, exempt from the application of any provision of this Act requiring a notice or document to be sent to them any notice or document, or class of notice or document, containing information similar to that contained in a notice or document required to be made public under any other Act of Parliament or any Act of the legislature of a province.2005, c. 54, s. 138
(Section 14)As at December 31, 2024Name of BankHead OfficeB2B BankOntarioBank of MontrealQuebecBank of Nova Scotia (The)Nova ScotiaBridgewater BankAlbertaCaisse populaire acadienne ltéeNew BrunswickCanadian Imperial Bank of CommerceOntarioCanadian Tire BankOntarioCoast Capital Savings Federal Credit UnionBritish ColumbiaConcentra BankSaskatchewanCS Alterna BankOntarioDigital Commerce BankAlbertaEquitable BankOntarioExchange Bank of CanadaOntarioFairstone Bank of CanadaOntarioFirst Nations Bank of CanadaSaskatchewanGeneral Bank of CanadaAlbertaHaventree BankOntarioHome BankOntarioHomeEquity BankOntarioInnovation Federal Credit UnionSaskatchewanLaurentian Bank of CanadaQuebecManulife Bank of CanadaOntarioMotus BankOntarioNational Bank of CanadaQuebecPeoples Bank of CanadaBritish ColumbiaPresident’s Choice BankOntarioRFA Bank of CanadaOntarioRogers BankOntarioRoyal Bank of CanadaQuebecTangerine BankOntarioToronto-Dominion Bank (The)OntarioVancity Community Investment BankBritish ColumbiaVersaBankOntarioWealth One Bank of CanadaOntario
1991, c. 46, Sch. I; 2005, c. 54, s. 139; 2007, c. 6, s. 131(F)Canada Gazette Part I, Volume 159, page 543(Section 14)As at December 31, 2024Name of BankHead OfficeAmex Bank of CanadaOntarioBank of China (Canada)OntarioCidel Bank CanadaOntarioCitco Bank CanadaOntarioCitibank CanadaOntarioCTBC Bank Corp. (Canada)British ColumbiaHabib Canadian BankOntarioICICI Bank CanadaOntarioIndustrial and Commercial Bank of China (Canada)OntarioJ.P. Morgan Bank CanadaOntarioKEB Hana Bank CanadaOntarioSantander Consumer BankAlbertaSBI Canada BankOntarioShinhan Bank CanadaOntarioUBS Bank (Canada)Ontario
1991, c. 46, Sch. II; 2005, c. 54, s. 139; 2007, c. 6, s. 131(F)Canada Gazette Part I, Volume 159, page 543(Section 14.1)As at December 31, 2024Name of Authorized Foreign Bank (FB)Name under which FB is permitted to carry on business in CanadaType of Foreign Bank Branch (FBB)*Principal OfficeBank of America, National AssociationBank of America, National AssociationFull-serviceOntarioBank of China LimitedBank of China, Toronto BranchFull-serviceOntarioBank of New York Mellon (The)Bank of New York Mellon (The)Full-serviceOntarioBarclays Bank PLCBarclays Bank PLC, Canada BranchFull-serviceOntarioBNP ParibasBNP ParibasFull-serviceQuebecCapital One, National AssociationCapital One Bank (Canada Branch)Full-serviceOntarioChina Construction BankChina Construction Bank Toronto BranchFull-serviceOntarioCitibank, N.A.Citibank, N.A.Full-serviceOntarioComerica BankComerica BankFull-serviceOntarioCoöperatieve Rabobank U.A.Rabobank CanadaFull-serviceOntarioCrédit Agricole Corporate and Investment BankCrédit Agricole Corporate and Investment Bank (Canada Branch)LendingQuebecDeutsche Bank AGDeutsche Bank AGFull-serviceOntarioFifth Third Bank, National AssociationFifth Third Bank, National AssociationFull-serviceOntarioFirst Commercial BankFirst Commercial BankFull-serviceBritish ColumbiaJPMorgan Chase Bank, National AssociationJPMorgan Chase Bank, National AssociationFull-serviceOntarioM&T BankM&T BankFull-serviceOntarioMaple Bank GmbH (in wind-up under the Winding-up and Restructuring Act) [in liquidation]Maple Bank (in wind-up under the Winding-up and Restructuring Act) [in liquidation]Full-serviceOntarioMega International Commercial Bank Co., Ltd.Mega International Commercial Bank Co., Ltd.Full-serviceOntarioMizuho Bank, Ltd.Mizuho Bank, Ltd., Canada BranchFull-serviceOntarioMUFG Bank, Ltd.MUFG Bank, Ltd., Canada BranchFull-serviceOntarioNatixisNatixis Canada BranchLendingQuebecNorthern Trust Company (The)Northern Trust Company, Canada Branch (The)Full-serviceOntarioPNC Bank, National AssociationPNC Bank Canada BranchFull-serviceOntarioSilicon Valley Bank (in wind-up under the Winding-up and Restructuring Act) [in liquidation]Silicon Valley Bank (in wind-up under the Winding-up and Restructuring Act) [in liquidation]LendingOntarioSociété GénéraleSociété Générale (Canada Branch)Full-serviceQuebecState Street Bank and Trust CompanyState StreetFull-serviceOntarioSumitomo Mitsui Banking CorporationSumitomo Mitsui Banking Corporation, Canada BranchFull-serviceOntarioU.S. Bank National AssociationU.S. Bank National AssociationFull-serviceOntarioUnited Overseas Bank LimitedUnited Overseas Bank LimitedFull-serviceBritish ColumbiaWells Fargo Bank, National AssociationWells Fargo Bank, National Association, Canadian BranchFull-serviceOntario
An FBB, whose order is subject to the restrictions and requirements referred to in subsection 524(2) of the Bank Act, is referred to as a “lending” branch.1999, c. 28, s. 75; 2005, c. 54, s. 139Canada Gazette Part I, Volume 159, page 543(Sections 2 and 14.11 and subsections 239(3.1), 251(3), 597(2.1), 816(1.1) and 828(3))Agreement within the meaning of subsection 2(1) of the Canada-Chile Free Trade Agreement Implementation ActAgreement within the meaning of section 2 of the Canada–Peru Free Trade Agreement Implementation ActAgreement within the meaning of section 2 of the Canada–Colombia Free Trade Agreement Implementation ActAgreement within the meaning of section 2 of the Canada–Panama Economic Growth and Prosperity ActAgreement within the meaning of section 2 of the Canada–Honduras Economic Growth and Prosperity ActAgreement within the meaning of section 2 of the Canada–Korea Economic Growth and Prosperity ActAgreement within the meaning of section 2 of the Canada–European Union Comprehensive Economic and Trade Agreement Implementation ActAgreement within the meaning of section 2 of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation ActAgreement within the meaning of section 2 of the Canada–United States–Mexico Agreement Implementation ActAgreement within the meaning of section 2 of the Canada–United Kingdom Trade Continuity Agreement Implementation Act2020, c. 1, s. 170SOR/2021-146, s. 1RELATED PROVISIONS — 2007, c. 6, s. 75(3)
TransitionalOrders made under paragraph 528(1)(a) of the Act, as that paragraph read immediately before the coming into force of this section, that are in force immediately before that coming into force are deemed to be orders made under subsection 528(1.1) of the Act.
 — 2015, c. 36, s. 240
Retroactivity — section 608 of Bank ActSection 608 of the Bank Act applies to information referred to in that section that has been used or in relation to which oral testimony has been given or a document has been produced, before the day on which this Division comes into force, in any civil proceedings in respect of which a final decision has not been made before that day.
 — 2015, c. 36, s. 241
Retroactivity — section 638 of Bank ActSection 638 of the Bank Act applies to information referred to in that section that has been used or in relation to which oral testimony has been given or a document has been produced, before the day on which this Division comes into force, in any civil proceedings in respect of which a final decision has not been made before that day.
 — 2015, c. 36, s. 242
Retroactivity — section 956.1 of Bank ActSection 956.1 of the Bank Act applies to information referred to in that section that has been used or in relation to which oral testimony has been given or a document has been produced, before the day on which this Division comes into force, in any civil proceedings in respect of which a final decision has not been made before that day.
 — 2015, c. 36, s. 247
Regulations apply — section 608 of Bank ActThe regulations made under paragraph 978(1)(a) of the Bank Act that prescribe supervisory information for the purposes of section 607 of that Act apply for the purposes of section 608 of that Act until regulations made under that paragraph for the purposes of that section 608 are in force.
 — 2015, c. 36, s. 248
Regulations apply — section 638 of Bank ActThe regulations made under paragraph 978(1)(a) of the Bank Act that prescribe supervisory information for the purposes of section 637 of that Act apply for the purposes of section 638 of that Act until regulations made under that paragraph for the purposes of that section 638 are in force.
 — 2015, c. 36, s. 249
Regulations apply — section 956.1 of Bank ActThe regulations made under paragraph 978(1)(a) of the Bank Act that prescribe supervisory information for the purposes of section 956 of that Act apply for the purposes of section 956.1 of that Act until regulations made under that paragraph for the purposes of that section 956.1 are in force.
 — 2018, c. 27, s. 335
Body corporate deemed to be approvedA body corporate that has been approved under section 455.01 of the Bank Act, as it read immediately before the day on which section 329 comes into force, is deemed to have been approved under section 627.48 of that Act as enacted by that section 329.
 — 2023, c. 26, s. 139
DefinitionsThe following definitions apply in this section.former external complaints body means an external complaints body as defined in section 2 of the Bank Act as it read before the day on which section 128 of this Act comes into force. (ancien organisme externe de traitement des plaintes)new external complaints body means the body corporate designated under subsection 627.48(1) of the Bank Act, as amended by section 129 of this Act. (nouvel organisme externe de traitement des plaintes)Revocation of approvalAny approval given to a former external complaints body under subsection 627.48(1) of the Bank Act, as it read immediately before the day on which section 129 of this Act comes into force, is revoked on the later of the day on which the designation of the new external complaints body takes effect and the day on which the former external complaints body resolves every complaint pending before it.Application before designationOn the day on which section 129 of this Act comes into force, sections 627.48 and 627.49 of the Bank Act, as they read immediately before that day, continue to apply in respect of former external complaints bodies until the day on which the designation of the new external complaints body takes effect.Application on designationOn the day on which the designation of the new external complaints body takes effect,unless otherwise specified by the Commissioner, a former external complaints body shall continue the resolution of any complaint pending before it;sections 627.48 and 627.49 of the Bank Act, as they read immediately before the day on which section 129 of this Act comes into force, continue to apply for the purposes of paragraph (a); andthe new external complaints body shall resolve all complaints that are not pending before any former external complaints body.
AMENDMENTS NOT IN FORCE — 2012, c. 5, s. 54
Section 507 of the Act is amended by adding the following after subsection (1):Definition of foreign bankFor the purposes of this Part, foreign bank means a foreign bank as defined in section 2 but without regard to the portion of that definition after paragraph (g).Subsection 507(15) of the Act is amended by striking out “or” at the end of paragraph (c), by adding “or” at the end of paragraph (d) and by adding the following after paragraph (d):is a subsidiary of a federal financial institution.Subsection 507(16) of the Act is amended by striking out “or” at the end of paragraph (c), by adding “or” at the end of paragraph (d) and by adding the following after paragraph (d):is a subsidiary of a federal financial institution.
 — 2012, c. 5, s. 56
Section 522.09 of the Act is amended by adding the following after subsection (3):Exception — subsidiary of federal financial institutionSubsections (1) to (3) do not apply to a foreign bank — or an entity associated with a foreign bank — that is a subsidiary of a federal financial institution.
 — 2012, c. 5, s. 57
Section 522.19 of the Act is amended by adding the following after subsection (2):Exception — subsidiary of federal financial institutionSubsection (1) does not apply to a foreign bank — or an entity associated with a foreign bank — that is a subsidiary of a federal financial institution.
 — 2012, c. 5, s. 58
Subsection 522.21(2) of the Act is amended by striking out “or” at the end of paragraph (c), by adding “or” at the end of paragraph (d) and by adding the following after paragraph (d):is a subsidiary of a federal financial institution.
 — 2012, c. 5, s. 59
Subsection 522.211(2) of the Act is amended by striking out “or” at the end of paragraph (c), by adding “or” at the end of paragraph (d) and by adding the following after paragraph (d):is a subsidiary of a federal financial institution.
 — 2018, c. 12, s. 316(1), as amended by 2024, c. 15, s. 171(1)
Paragraphs 410(1)(c) and (c.1) of the Bank Act are replaced by the following:subject to sections 416 and 417 and the regulations, engage in any activity that relates to the provision of financial services by the bank or any of its affiliates;subject to the regulations, engage in any of the following activities:collecting, manipulating and transmitting information, anddesigning, developing, manufacturing, selling and otherwise dealing with information technology, if those activities relate toan activity referred to in this subsection that is engaged in by the bank or any of its affiliates, orthe provision of financial services by any other entity,
 — 2018, c. 12, ss. 316(3) to (5), as amended by 2024, c. 15, s. 171(2)(F)
Paragraph 410(3)(a) of the Act is replaced by the following:respecting what a bank may or may not do with respect to the carrying on of the activities referred to in paragraphs (1)(b.1), (c) and (c.2);Subparagraph 410(3)(b)(iii) of the English version of the Act is replaced by the following:the carrying on of the activities referred to in paragraphs (1)(b.1), (c) and (c.2); andParagraph 410(3)(c) of the Act is replaced by the following:respecting the circumstances in which a bank may engage in the activities referred to in paragraphs (1)(b.1) and (c), including the circumstances in which banks may collect, manipulate and transmit information under subparagraph (1)(c)(i).
 — 2018, c. 12, s. 317
Section 411 of the Act is replaced by the following:
NetworkingSubject to section 416 and the regulations, a bank mayact as agent for any person in respect ofthe carrying on of any activity referred to in subsection 410(1) that is engaged in by a financial institution, by a permitted entity as defined in subsection 464(1), if that definition were read without reference to the requirements of subsections 468(4) to (6), or by a prescribed entity, orthe provision of any service that relates to financial services and that is provided by an institution or entity referred to in subparagraph (i);enter into an arrangement with any person in respect of the carrying on of an activity referred to in subparagraph (a)(i) or the provision of a service referred to in subparagraph (a)(ii); andrefer any person to another person.RegulationsThe Governor in Council may make regulationsrespecting the disclosure of the name of the person for whom a bank is acting as agent under subsection (1);respecting the disclosure of any commission being earned by a bank when acting as agent under subsection (1);respecting the circumstances in which a bank may act as an agent, enter into an arrangement or refer a person under subsection (1); andimposing terms and conditions in respect of the carrying on of activities under that subsection.
RegulationsThe Governor in Council may, for the purposes of section 409 and subsection 411(1), make regulations respecting what a bank is prohibited from doing when acting as an agent or when making referrals.
 — 2018, c. 12, s. 318, as amended by 2024, c. 15, s. 172(F)
Section 468 of the Act is amended by adding the following after subsection (2):Permitted investmentsSubject to subsections (3) to (6), Part XI and the regulations made under paragraphs (2.2)(b) and (c), a bank may acquire control of, or acquire or increase a substantial investment in, an entity, other than an entity referred to in any of paragraphs (1)(a) to (j), if a majority, as defined in the regulations, of the entity’s business consists of financial service activities that a bank is permitted to engage in under any of paragraphs 409(2)(a) to (d).RegulationsThe Governor in Council may make regulationsdefining, for the purposes of subsection (2.1), the word “majority”;imposing terms and conditions in respect of the acquisition of control of, or acquisition or increase of a substantial investment in, an entity that a bank may acquire control of, or acquire or increase a substantial investment in, under subsection (2.1); andrespecting the circumstances in which a bank may acquire control of, or acquire or increase a substantial investment in, an entity under subsection (2.1).Subparagraph 468(3)(d)(ii) of the Act is replaced by the following:in the case of an entity that is not controlled by the bank, the bank itself would be permitted to acquire a substantial investment in the other entity under subsection (1), (2) or (2.1) or 466(2), paragraph 466(3)(b) or (c) or subsection 466(4); orSubsection 468(5) of the Act is amended by adding “or” at the end of paragraph (c) and by repealing paragraphs (d) and (d.1).Paragraph 468(7)(a) of the Act is replaced by the following:the bank is acquiring control of an entity, other than a specialized financing entity, under subsection (2) or (2.1) and the only reason for which the bank would, but for this subsection, require approval for the acquisition is that the entity carries on activities referred to in paragraph (2)(b);
 — 2018, c. 12, s. 319, as amended by 2024, c. 15, s. 173(F)
The Act is amended by adding the following after section 468:
RegulationsThe Governor in Council may make regulationsrespecting the circumstances in which a bank may acquire control of, or acquire or increase a substantial investment in, an entity that engages in activities that a bank is permitted to engage in under paragraph 410(1)(b.1) or (c), including the circumstances in which a bank is prohibited from doing so; andimposing terms and conditions in respect of the acquisition of control of, or acquisition or increase of a substantial investment in, an entity referred to in paragraph (a).
 — 2018, c. 12, s. 320
Paragraph 495(1)(c) of the Act is replaced by the following:consists of a written contract with the related party for the purpose of having either one of them act as an agent or make referrals;
 — 2018, c. 12, s. 321, as amended by 2024, c. 15, s. 174(F)
Section 522.08 of the Act is amended by adding the following after subsection (1):Permitted investmentsSubject to subsection (2) and the regulations made under paragraphs (1.2)(a) and (b), a foreign bank or an entity associated with a foreign bank may acquire or hold control of, or acquire or hold a substantial investment in, a Canadian entity that a bank may acquire control of, or acquire or increase a substantial investment in, under subsection 468(2.1).RegulationsThe Governor in Council may make regulationsimposing terms and conditions in respect of the acquisition or holding of control of, or acquisition or holding of a substantial investment in, a Canadian entity that a foreign bank or an entity associated with a foreign bank may acquire or hold control of, or acquire or hold a substantial investment in, under subsection (1.1); andrespecting the circumstances in which a foreign bank or an entity associated with a foreign bank may acquire or hold control of, or acquire or hold a substantial investment in, a Canadian entity under subsection (1.1).
 — 2018, c. 12, s. 322, as amended by 2024, c. 15, s. 175(F)
The Act is amended by adding the following after section 522.08:
RegulationsThe Governor in Council may make regulationsrespecting the circumstances in which a foreign bank or an entity associated with a foreign bank may acquire or hold control of, or acquire or hold a substantial investment in, a Canadian entity that engages in activities that a bank is permitted to engage in under paragraph 410(1)(b.1) or (c); andimposing terms and conditions in respect of the acquisition or holding of control of, or acquisition or holding of a substantial investment in, an entity referred to in paragraph (a).
 — 2018, c. 12, s. 323
Paragraphs 522.22(1)(d) and (d.1) of the Act are repealed.
 — 2018, c. 12, s. 324(1), as amended by 2024, c. 15, s. 176(1)
Paragraphs 539(1)(b.1) and (b.2) of the Act are replaced by the following:subject to sections 549 and 550 and the regulations, engage in any activity that relates to the provision of financial services by the authorized foreign bank or any of its affiliates;subject to the regulations, engage in any of the following activities:collecting, manipulating and transmitting information, anddesigning, developing, manufacturing, selling and otherwise dealing with information technology, if those activities relate toan activity referred to in this subsection that is engaged in by the authorized foreign bank or any of its affiliates, orthe provision of financial services by any other entity,
 — 2018, c. 12, s. 324(3), as amended by 2024, c. 15, s. 176(2)
Paragraph 539(3)(c) of the Act is replaced by the following:respecting the circumstances in which an authorized foreign bank may engage in the activities referred to in paragraphs (1)(b.1) and (b.2), including the circumstances in which it may collect, manipulate and transmit information under subparagraph (1)(b.2)(i).
 — 2018, c. 12, s. 325
Section 543 of the Act is replaced by the following:
NetworkingSubject to sections 540, 546 and 549 and the regulations, an authorized foreign bank may, in Canada,act as agent for any person in respect ofthe carrying on of any activity referred to in subsection 410(1) or 539(1) that is engaged in by a financial institution, by an entity in which a bank is permitted to acquire a substantial investment under section 468, if that section were read without reference to the requirements of subsections 468(4) to (6), or by a Canadian entity acquired or held under section 522.08, orthe provision of any service that relates to financial services and that is provided by an institution or entity referred to in subparagraph (i);enter into an arrangement with any person in respect of the carrying on of an activity referred to in subparagraph (a)(i) or the provision of a service referred to in subparagraph (a)(ii); andrefer any person to another person.RegulationsThe Governor in Council may make regulationsrespecting the disclosure of the name of the person for whom an authorized foreign bank is acting as agent under subsection (1);respecting the disclosure of any commission being earned by an authorized foreign bank when acting as agent under subsection (1);respecting the circumstances in which an authorized foreign bank may act as an agent, enter into an arrangement or refer a person under subsection (1); andimposing terms and conditions in respect of the carrying on of activities under that subsection.
RegulationsThe Governor in Council may, for the purposes of section 538 and subsection 543(1), make regulations respecting what an authorized foreign bank is prohibited from doing when acting as an agent or when making referrals.
 — 2018, c. 12, s. 326, as amended by 2024, c. 15, s. 177(F)
Section 930 of the Act is amended by adding the following after subsection (2):Permitted investmentsSubject to subsections (3) to (6) and the regulations made under paragraphs (2.2)(a) and (b), a bank holding company may acquire control of, or acquire or increase a substantial investment in, an entity that a bank may acquire control of, or acquire or increase a substantial investment in, under subsection 468(2.1).RegulationsThe Governor in Council may make regulationsimposing terms and conditions in respect of the acquisition of control of, or acquisition or increase of a substantial investment in, an entity that a bank holding company may acquire control of, or acquire or increase a substantial investment in, under subsection (2.1); andrespecting the circumstances in which a bank holding company may acquire control of, or acquire or increase a substantial investment in, an entity under subsection (2.1).Subparagraph 930(3)(d)(ii) of the Act is replaced by the following:in the case of an entity that is not controlled by the bank holding company, a bank would be permitted to acquire a substantial investment in the other entity under subsection 466(2), paragraph 466(3)(b) or (c) or subsection 466(4) or 468(1), (2) or (2.1); orSubsection 930(5) of the Act is amended by adding “or” at the end of paragraph (c) and by repealing paragraphs (5)(d) and (d.1).Paragraph 930(7)(a) of the Act is replaced by the following:the bank holding company is acquiring control of an entity, other than a specialized financing entity, under subsection (2) or (2.1) and the only reason for which the bank holding company would, but for this subsection, require approval for the acquisition is that the entity carries on activities referred to in paragraph (2)(b);
 — 2018, c. 12, s. 327, as amended by 2024, c. 15, s. 178(F)
The Act is amended by adding the following after section 930:
RegulationsThe Governor in Council may make regulationsrespecting the circumstances in which a bank holding company may acquire control of, or acquire or increase a substantial investment in, an entity that engages in activities that a bank is permitted to engage in under paragraph 410(1)(b.1) or (c), including the circumstances in which a bank holding company is prohibited from doing so; andimposing terms and conditions in respect of the acquisition of control of, or acquisition or increase of a substantial investment in, an entity referred to in paragraph (a).
 — 2018, c. 12, s. 328
Subsection 976.1(1) of the Act is replaced by the following:
Application for certain approvalsAn application for the prior written approval of the Minister in respect of any of paragraphs 468(5)(b.1) or (c), 522.22(1)(c) or 930(5)(b.1) or (c) must be filed with the Superintendent and contain the information, material and evidence that the Superintendent may require.
 — 2024, c. 15, s. 188
Subsection 136(1) of the French version of the Bank Act is replaced by the following:
Lieu des assembléesLes assemblées des actionnaires ou des membres se tiennent au Canada, au lieu que prévoient les règlements administratifs ou, à défaut, que choisissent les administrateurs.
Subsection 136(2) of the Act is replaced by the following:Participation by electronic meansUnless the by-laws provide otherwise and in accordance with any regulations, any person who is entitled to attend a meeting of shareholders or members may participate in the meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting if the bank makes one available. A person who is participating in a meeting by one of those means is deemed for the purposes of this Act to be present at the meeting.Meeting held by electronic meansIf the directors, shareholders or members of a bank call a meeting of shareholders or members under this Act, those directors, shareholders or members may determine that the meeting shall be held, in accordance with any regulations, entirely by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting, if the by-laws so provide.
 — 2024, c. 15, s. 189
Subsection 151(4) of the Act is replaced by the following:Voting while participating electronicallyUnless the by-laws provide otherwise and in accordance with any regulations, any person who is participating in a meeting under subsection 136(2) or (2.1) and entitled to vote at that meeting may vote by means of the telephonic, electronic or other communication facility that the bank has made available for that purpose.
 — 2024, c. 15, s. 190
Subsection 725(1) of the French version of the Act is replaced by the following:
Lieu des assembléesLes assemblées des actionnaires se tiennent au Canada, au lieu que prévoient les règlements administratifs ou, à défaut, que choisissent les administrateurs.
Subsection 725(2) of the Act is replaced by the following:Participation by electronic meansUnless the by-laws provide otherwise and in accordance with any regulations, any person who is entitled to attend a meeting of shareholders may participate in the meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting if the bank holding company makes one available. A person who is participating in a meeting by one of those means is deemed for the purposes of this Part to be present at the meeting.Meeting held by electronic meansIf the directors or shareholders of a bank holding company call a meeting of shareholders under this Act, those directors or shareholders may determine that the meeting shall be held, in accordance with any regulations, entirely by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting, if the by-laws so provide.
 — 2024, c. 15, s. 191
Subsection 740(4) of the Act is replaced by the following:Voting while participating electronicallyUnless the by-laws provide otherwise and in accordance with any regulations, any person who is participating in a meeting of shareholders under subsection 725(2) or (2.1) and entitled to vote at that meeting may vote by means of the telephonic, electronic or other communication facility that the bank holding company has made available for that purpose.
 — 2024, c. 17, s. 398
The Bank Act is amended by adding the following after section 214:Disclosure Relating to Diversity
DiversityThe directors of a bank of a prescribed class must make available, in accordance with regulations made under subsection (2), information respecting diversity among directors and members of senior management, as defined by regulation, at the same time that a notice of annual meeting is sent under subsection 138(1) to shareholders or members entitled to receive that notice and to the Superintendent.RegulationsFor the purposes of subsection (1), the Governor in Council may make regulations respecting the disclosure of information related to diversity among the directors and members of senior management of a bank of a prescribed class.
 — 2024, c. 17, s. 399
The Act is amended by adding the following after section 801:Disclosure Relating to Diversity
DiversityThe directors of a bank holding company of a prescribed class must make available, in accordance with regulations made under subsection (2), information respecting diversity among directors and members of senior management, as defined by regulation, at the same time that a notice of annual meeting is sent under subsection 727(1) to shareholders entitled to receive that notice and to the Superintendent.RegulationsFor the purposes of subsection (1), the Governor in Council may make regulations respecting the disclosure of information related to diversity among the directors and members of senior management of a bank holding company of a prescribed class.
Canada Gazette Part I, Vol. 159, no. 10, page 543-5462025-03-082005, c. 54, s. 1022024-07-112005, c. 54, s. 272024-07-112024, c. 172024-06-20Canada Gazette Part I, Vol. 158, no. 13, page 662-6662024-03-302023, c. 262024-01-012021, c. 232023-06-302023, c. 262023-06-22Canada Gazette Part I, Vol. 157, no. 9, page 686-6902023-03-042018, c. 27, s. 3152022-06-30