Specialized Financing (Foreign Banks) Regulations

SOR/2001-432

Registration 4 October, 2001

BANK ACT

Specialized Financing (Foreign Banks) Regulations

P.C. 2001-1803 4 October, 2001

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 522.23^a and 978^b of the Bank Act^c, hereby makes the annexed Specialized Financing (Foreign Banks) Regulations.

^a S.C. 2001, c. 9, s. 132^b S.C. 2001, c. 9, s. 183^c S.C. 1991, c. 46

SPECIALIZED FINANCING (FOREIGN BANKS) REGULATIONS

INTERPRETATION

Definitions

1. (1) The following definitions apply in these Regulations.

"Act" « Loi »

"Act" means the Bank Act. (Loi)

"book value" « valeur comptable »

"book value", in respect of the shares and ownership interests held by an entity, means the book value reported on the entity's balance sheet on an unconsolidated basis. (valeur comptable)

"specialized financing entity of an entity associated with a foreign bank" « entité s'occupant de financement spécial d'une entité liée à une banque étrangère »

"specialized financing entity of an entity associated with a foreign bank" means a specialized financing entity that is controlled by an entity associated with a foreign bank or in which an entity associated with a foreign bank has a substantial investment. (entité s'occupant de financement spécial d'une entité liée à une banque étrangère)

"specialized financing entity of a foreign bank" « entité d'une banque étrangère s'occupant de financement spécial »

"specialized financing entity of a foreign bank" means a specialized financing entity that is controlled by a foreign bank or in which a foreign bank has a substantial investment. (entité d'une banque étrangère s'occupant de financement spécial)

Meaning of "specialized financing entity"

(2) In these Regulations and for the purpose of the definition "specialized financing entity" in subsection 507(1) of the Act, "specialized financing entity" means a Canadian entity that acquires or holds shares of, or ownership interests in, entities that a bank may acquire control of, or hold, acquire or increase a substantial investment in, under subsection 466(4) of the Act.

GENERAL

Prescribed Canadian entity

2. For the purpose of subsection 522.11(1) of the Act, a specialized financing entity is a prescribed Canadian entity.

ACQUISITION OF SPECIALIZED FINANCING ENTITY

Ownership restrictions -- foreign banks

3. (1) A foreign bank shall not acquire or hold control of, or a substantial investment in, a specialized financing entity if

(a) the aggregate book value of the shares and the ownership interests, other than shares or ownership interests held by the specialized financing entity in a specialized financing entity of the foreign bank that it controls, that the following entities hold or would hold in an entity that the specialized financing entity holds control of, or a substantial investment in, is more than $250 million, namely,

(i) the specialized financing entity,

(ii) the specialized financing entities of the foreign bank,

(iii) the specialized financing entities of the entities associated with the foreign bank,

(iv) the foreign bank, and

(v) the entities associated with the foreign bank; or

(b) the specialized financing entity controls or holds shares of, or ownership interests in,

(i) an entity referred to in any of paragraphs 468(1)(a) to (j) of the Act,

(ii) 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,

(iii) 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, or

(iv) an entity that acts as an insurance broker or agent in Canada.

13 year limit

(2) A foreign bank shall not hold control of, or a substantial investment in, a specialized financing entity of the foreign bank if either the specialized financing entity of the foreign bank or the specialized financing entity of the foreign bank and one or more of the following entities, one after another, have held control of, or a substantial investment in, an entity, other than an entity described in subsection (3), for more than 13 consecutive years:

(a) the foreign bank;

(b) an entity associated with the foreign bank;

(c) any other specialized financing entity of the foreign bank; or

(d) a specialized financing entity of an entity associated with the foreign bank.

Exception

(3) A specialized financing entity of the foreign bank controlled by the specialized financing entity of the foreign bank shall not be considered for the purpose of subsection (2).

Prior periods not included

(4) If a specialized financing entity of the foreign bank or an entity referred to in any of paragraphs (2)(a) to (d) held control of, or a substantial investment in, an entity for a period before becoming that entity, that period shall not be considered for the purpose of subsection (2).

Ownership restrictions -- entities associated with foreign banks

4. (1) An entity associated with a foreign bank shall not acquire or hold control of, or a substantial investment in, a specialized financing entity if

(a) the aggregate book value of the shares and the ownership interests, other than shares or ownership interests held by the specialized financing entity in a specialized financing entity of the entity associated with the foreign bank that it controls, that the following entities hold or would hold in an entity that the specialized financing entity holds control of, or a substantial investment in, is more than $250 million, namely,

(i) the specialized financing entity,

(ii) the specialized financing entities of the foreign bank,

(iii) the specialized financing entities of the entity associated with the foreign bank,

(iv) the specialized financing entities of any other entities associated with the foreign bank,

(v) the foreign bank,

(vi) the entity associated with the foreign bank, and

(vii) any other entities associated with the foreign bank; or

(b) the specialized financing entity controls or holds shares of, or ownership interests in, any of the entities referred to in subparagraphs 3(1)(b)(i) to (iv).

13 year limit

(2) An entity associated with a foreign bank shall not hold control of, or a substantial investment in, a specialized financing entity of the entity associated with the foreign bank if either the specialized financing entity of the entity associated with the foreign bank or the specialized financing entity of the entity associated with the foreign bank and one or more of the following entities, one after another, have held control of, or a substantial investment in, an entity, other than an entity described in subsection (3), for more than 13 consecutive years:

(a) the foreign bank;

(b) the entity associated with the foreign bank;

(c) any other entity associated with the foreign bank;

(d) any specialized financing entity of the foreign bank;

(e) any other specialized financing entity of the entity associated with the foreign bank; or

(f) a specialized financing entity of any other entity associated with the foreign bank.

Exception

(3) A specialized financing entity of the entity associated with the foreign bank controlled by the specialized financing entity of the entity associated with the foreign bank shall not be considered for the purpose of subsection (2).

Prior periods not included

(4) If a specialized financing entity of the entity associated with the foreign bank or an entity referred to in any of paragraphs (2)(a) to (f) held control of, or a substantial investment in, an entity for a period before becoming that entity, that period shall not be considered for the purpose of subsection (2).

COMING INTO FORCE

Coming into force

5.* These Regulations come into force on the day on which sections 522.11, 522.23 and 978 of the Bank Act, as enacted by sections 132 and 183 of the Financial Consumer Agency of Canada Act, chapter 9 of the Statutes of Canada, 2001, come into force.

*[Note: Regulations in force October 24, 2001, see SI/2001-102.]