Bank Act (S.C. 1991, c. 46)

Marginal note:Increase of capital

896 If 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.

Marginal note:Exemption by order of the Minister

• 897 (1) On 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.

• Marginal note:Compliance with section 893

  (2) If 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.

• Marginal note:Limit on assets

  (3) If 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.

• Marginal note:Application of ss. 895(2) and (3)

  (4) Subsections 895(2) and (3) apply for the purposes of subsection (3).

Marginal note:Exception

• 898 (1) If 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) a distribution to the public of voting shares of the bank holding company;

  • (b) a redemption or purchase of voting shares of the bank holding company;

  • (c) the exercise of any option to acquire voting shares of the bank holding company; or

  • (d) the conversion of any convertible securities into voting shares of the bank holding company.

• Marginal note:Shares acquiring voting rights

  (2) If, 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.

Marginal note:Acquisition of control permitted

• 899 (1) Subject 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.

• Marginal note:Undertaking required

  (2) Subsection (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 are

  • (a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and

  • (b) shares 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.

Marginal note:Application of section 893

900 At 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.

Marginal note:Restriction on voting rights

• 901 (1) If, 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 rights

  • (a) that are attached to shares of the bank holding company beneficially owned by the particular person or any entity controlled by the particular person; or

  • (b) that 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.

• Marginal note:Subsection (1) ceases to apply

  (2) Subsection (1) shall cease to apply in respect of a person when, as the case may be,

  • (a) the shares to which the contravention relates have been disposed of;

  • (b) the person ceases to control the bank holding company within the meaning of paragraph 3(1)(d);

  • (c) if the person failed to comply with an undertaking referred to in subsection 899(2), the bank holding company complies with section 893; or

  • (d) if the person failed to comply with a term or condition imposed under section 907, the person complies with the term or condition.

• Marginal note:Saving

  (3) Despite 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.

Marginal note:Loss of control — bank and bank holding company

• 902 (1) Despite 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.

• Marginal note:Extension

  (2) If 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.

Marginal note:Loss of control — other entities

• 903 (1) Despite 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.

• Marginal note:Extension

  (2) If 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.

Marginal note:Change in status

• 904 (1) If 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,

  • (a) it does not control, within the meaning of paragraph 3(1)(d), the bank holding company; and

  • (b) it is not a major shareholder of the bank holding company.

• Marginal note:Extension

  (2) If 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.

Approval Process

Marginal note:Application for approval

• 905 (1) An 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.

• Marginal note:Applicant

  (2) If, 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.

Marginal note:Matters for consideration

• 906 (1) Subject 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, including

  • (a) the 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;

  • (b) 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;

  • (c) the business record and experience of the applicant or applicants;

  • (d) 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;

  • (e) 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;

  • (f) 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; and

  • (g) the best interests of the financial system in Canada.

• Marginal note:Exception

  (2) Except 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 holding

  • (a) more 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; or

  • (b) more 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.

• Marginal note:Favourable treatment

  (3) The 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.

Marginal note:Terms and conditions

907 The 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.

Marginal note:Certifying receipt of application

• 908 (1) If, 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.

• Marginal note:Incomplete application

  (2) If, 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.

Marginal note:Notice of decision

• 909 (1) Subject 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 applicant

  • (a) a notice approving the transaction to which the application relates; or

  • (b) if 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.

• Marginal note:Notice of decision

  (2) Subject 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:

  • (a) the application involves the acquisition of control of a bank holding company;

  • (b) the application is made by an eligible agent or an entity controlled by an eligible agent; or

  • (c) an application is made for the approval referred to in subsection 913(3).

• Marginal note:Extension of period for notice

  (3) If the Minister is unable to complete the consideration of an application within the period referred to in subsection (1), the Minister shall,

  • (a) within that period, send a notice to that effect to the applicant; and

  • (b) within 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.

• Marginal note:Further extensions

  (4) If 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.