Information Technology Activities (Banks) Regulations

SOR/2003-61

Registration 13 February, 2003

BANK ACT

Information Technology Activities (Banks) Regulations

P.C. 2003-181 13 February, 2003

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 474^a and 978^b of the Bank Act^c, hereby makes the annexed Information Technology Activities (Banks) Regulations.

^a S.C. 2001, c. 9, s. 127^b S.C. 2001, c. 9, s. 183^c S.C. 1991, c. 46

INFORMATION TECHNOLOGY ACTIVITIES (BANKS) REGULATIONS

INTERPRETATION

Definitions

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)

"member of a bank's group" « membre du groupe d'une banque »

"member of a bank's group" has the same meaning as in subsection 464(2) of the Act. (membre du groupe d'une banque)

PRESCRIBED PURPOSE OR CIRCUMSTANCE

Prescribed purpose or circumstance

2. For the purposes of subparagraph 410(1)(c.1)(iii) of the Act and subject to the approval required under paragraph 410(1)(c.1) of the Act, a bank may develop, design, hold, manage, manufacture, sell or otherwise deal with data transmission systems, information sites, communication devices or information platforms or portals that are used for a purpose or in a circumstance that is materially related to the provision of financial products or services by the bank or a member of the bank's group.

INVESTMENTS

Prescribed activity

3. (1) For the purposes of paragraph 468(2)(f) of the Act and subject to subsections (2) and (3), a prescribed activity in relation to an entity is developing, designing, holding, managing, manufacturing, selling or otherwise dealing with any data transmission system, information site, communication device or information platform or portal that is used to provide information services.

Limit on size of investment

(2) A bank may not acquire control of, or hold, acquire or increase a substantial investment in, an entity engaging in an activity described in subsection (1) if the sum of the following exceeds 5% of the bank's regulatory capital:

(a) the aggregate book value of the shares and ownership interests that the bank and its subsidiaries, whether individually or jointly, would acquire in the entity under paragraph 468(2)(f) of the Act,

(b) the aggregate book value of the shares and ownership interests held by the bank and its subsidiaries, whether individually or jointly, in entities engaging in an activity described in subsection (1) that the bank holds control of, or a substantial investment in, under paragraph 468(2)(f) of the Act, and

(c) the aggregate value of outstanding loans made by the bank and its subsidiaries, whether individually or jointly, to entities engaging in an activity described in subsection (1) that the bank holds control of, or a substantial investment in, under paragraph 468(2)(f) of the Act.

Restricted activities

(3) A bank may not acquire control of, or hold, acquire or increase a substantial investment in, an entity engaging in an activity described in subsection (1) if the entity engages in the business of accepting deposit liabilities or if the activities of the entity include

(a) activities that a bank is not permitted to engage in under any of sections 412, 417 and 418 of the Act;

(b) dealing in securities, except as may be permitted under paragraph 468(2)(e) of the Act or as may be permitted to a bank under paragraph 409(2)(c) of the Act;

(c) dealing in goods, wares or merchandise that a bank is not permitted to deal in under subsection 410(2) of the Act, other than as permitted under subsection (1);

(d) activities that a bank is not permitted to engage in under section 416 of the Act if the entity engages in the activities of a finance entity or of any other entity prescribed under paragraph 468(3)(c) of the Act;

(e) acquiring control of or acquiring or holding a substantial investment in another entity unless

(i) in the case of an entity that is controlled by the bank, the bank itself would be permitted under Part IX of the Act to acquire a substantial investment in the other entity, or

(ii) 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 466(2), paragraph 466(3)(b) or (c) or subsection 466(4) or 468(1) or (2) of the Act; or

(f) any activity prescribed under paragraph 468(3)(e) of the Act.

EXEMPTION FROM RESTRICTIONS ON INVESTMENTS

Exemption from restrictions

4. For the purposes of subparagraph 3(3)(e)(ii), subsections 468(4) to (6) of the Act do not apply in determining whether a bank would be permitted to acquire a substantial investment in an entity under subsection 466(2), paragraph 466(3)(b) or (c) or subsection 466(4) or 468(1) or (2) of the Act.

NON-APPLICATION OF SUBSECTION 468(5) OF THE ACT

Non-application

5. Subsection 468(5) of the Act does not apply where, under paragraph 468(2)(f) of the Act, a bank acquires control of, or acquires or increases a substantial investment in, an entity whose business is limited to activities described in subsection 3(1). Nothing in this section limits the operation of subsections 3(2) and (3).

COMING INTO FORCE

Coming into force

6. These Regulations come into force on the day on which they are registered.