14 General
prohibition
15 Person
previously a related party
16 Exceptions
17 Form of
approval
18 Limits
19 Transactions
with Crown
20 Notice of
contravention
21 Onus
22 Conduct review
committee and procedures
23 Interpretation
23.1 Guidelines
23.2 Compliance with legislation and guidelines
24 Maintenance of
assets
25 Risk weighting
26 Partial guarantees
27 Privately
issued mortgage backed securities
28 Investments in
mutual fund units
29 Liquidity
investments
30 Transitional
31 Consequential
amendment
32 Coming into
force
Schedule
Definitions
1(1) In this Regulation,
(a) “ATB”
means Alberta Treasury Branches;
(a.1) “bank”,
without limiting section 28(1)(d) of the Interpretation Act, includes a
bank named in Schedule III to the Bank Act (Canada);
(a.2) “financial
futures agreement” means a contract to buy or sell a standard quantity of a specified
financial instrument on or before a specified future date at an agreed price;
(b) “financial
institution” means
(i) a bank,
(ii) a loan corporation or trust corporation incorporated or continued
by or under an Act of Canada or a province,
(iii) a credit union incorporated or continued by or under an Act of
Canada or a province,
(iii.1) an association or a central cooperative credit society within the
meanings of the Cooperative Credit Associations Act (Canada), including
(to avoid any doubt) a federation of credit unions, being a financial services
cooperative, referred to in An Act Respecting Financial Services
Cooperatives (Quebec) (R.S.Q, cC‑67.3) and La Caisse centrale
Desjardins du Québec (commonly called the “Caisse centrale Desjardins”),
(iii.2) a credit union central incorporated or continued by or under the Credit
Union Act,
(iv) a Canadian authorized company or an insurance company constituted
or continued by or under an Act of Canada or a province, and
(v) a securities dealer within the meaning of the Securities Act;
(b.1) “fiscal
year” means ATB’s fiscal year;
(c) “forward
contract” means a contract to buy or sell currency or a specified financial
instrument on or before a specified future date at an agreed price;
(c.1) “guidelines”
means guidelines made under section 23.1(1);
(d) “improved
real estate” means
(i) land on which there exists a building or on which a building is
being or is about to be constructed and the adjacent land used or to be used in
connection with the building,
(ii) land on which bona fide farming operations are being conducted,
and
(iii) vacant land that is restricted by law in its use to commercial,
industrial or residential purposes, whether by zoning or otherwise;
(e) “option
agreement” means a contract under which a person acquires the right to buy or
sell a particular security at a specified future date at an agreed price;
(f) “participating
share” means a share of a corporation that carries the right to participate in
the earnings of the corporation to an unlimited degree and to participate in a
distribution of the remaining property of the corporation on dissolution;
(g) “swap”
means an agreement between two parties to exchange cash flows in the future in
accordance with a prearranged formula.
(2) For
the purposes of section 19 of the Act and section 12 of the Act, where
applicable,
(a) “asset
management corporation” means a corporation that administers and disposes of
property acquired through realization of a security interest held by or for the
benefit of ATB;
(b) “factoring
corporation” means a corporation whose activities are limited to acting as a
factor in relation to accounts receivable, including the lending of money and
the raising of money for the purpose of financing those activities;
(c) “financial
leasing corporation” means a corporation that enters into or acquires
agreements as defined in section 5.1;
(d) “information
management corporation” means a corporation whose activities are limited to
(i) the collection, manipulation and transmission of information,
(ii) the design, development, marketing and sale of computer software,
(iii) the provision of advisory and other services related to the
design and development of information management systems,
(iv) the design, development, marketing and sale of equipment integral
to information management systems, and
(v) the design, development, management, manufacturing, marketing and
sale of data transmission services, information sites, communication devices
and information platforms or portals,
in respect of information
that is primarily financial or economic in nature or information that relates
to the business of ATB or of a corporation in which ATB beneficially owns
shares pursuant to section 19(4) of the Act;
(e) “insurer”
means a corporation that is an insurer within the meaning of the Insurance
Act and whose activities are limited to underwriting term‑life
insurance and annuities and providing risk management and financial advisory
services;
(f) “investment
counselling corporation” means a corporation that is registered as an
investment counsel under the Securities Act;
(g) “mutual
fund distribution corporation” means a corporation that is registered as a
mutual fund dealer under the Securities Act;
(h) “portfolio
management corporation” means a corporation that is registered as a portfolio
manager under the Securities Act;
(i) “real
property brokerage corporation” means a corporation whose activities are
limited to acting as agent for vendors or purchasers of real estate where the
real estate is owned or administered by ATB;
(j) “real
property corporation” means a corporation whose primary business activity
consists of holding, managing or otherwise dealing with
(i) real property, or
(ii) shares of a corporation (including another real property
corporation) or ownership interests in an unincorporated entity that is
primarily engaged in holding, managing or otherwise dealing with real property;
(k) “securities
dealer” means a corporation that is a dealer within the meaning of the Securities
Act;
(l) “service
corporation” means a corporation whose activities are limited to the provision
of management services to
(i) ATB,
(ii) a financial institution that is affiliated with ATB, or
(iii) a corporation in which ATB or a financial institution that is
affiliated with ATB, or both of them, holds or beneficially owns more than 50%
of the outstanding voting shares.
(3) For the purposes of section 14 of
the Act,
(a) “interest
payable” includes interest that has accrued but is not yet payable;
(b) “money
deposited” includes debt instruments issued by ATB that
(i) repealed AR 169/2006 s2,
(ii) have an original term to maturity of not more than 10 years, and
(iii) are not subordinate to any other money
deposited with ATB.
AR 187/97
s1;54/98;164/2002;110/2004;169/2006
Interpretation
2(1) For the purposes of the Act and this
Regulation,
(a) an
entity is affiliated with another entity if one of them is controlled by the
other or both of them are controlled by the same person, and
(b) the
affiliates of an entity are deemed to be affiliated with all other entities
with which the entity is affiliated.
(2) For
the purposes of the Act and this Regulation,
(a) a
person controls a corporation if securities of the corporation to which are
attached more than 50% of the votes that may be cast to elect directors of the
corporation are held or 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 corporation;
(b) a
person controls a trust, partnership, fund or other unincorporated entity if
more than 50% of the beneficial interest, however designated, into which the
entity is divided is held or beneficially owned by that person and the person
is able to direct the affairs of the entity;
(c) notwithstanding
clauses (a) and (b), a person controls an entity if the person has, in relation
to the entity, any direct or indirect influence that, if exercised, would
result in control in fact of the entity;
(d) a
holding corporation is deemed to control any entity that is controlled or
deemed to be controlled by a subsidiary of the holding corporation;
(e) an
entity that controls another entity is deemed to control any entity that is
controlled or deemed to be controlled by the other entity;
(f) a
corporation is the holding corporation of all of its subsidiaries.
(3) For
the purposes of the Act and this Regulation, a corporation is a subsidiary of
another corporation if
(a) it
is controlled by
(i) that other,
(ii) that other and one or more corporations each of which is
controlled by that other, or
(iii) 2 or more corporations each of which is controlled by that other,
or
(b) it
is a subsidiary of a corporation that is that other’s subsidiary.
(4) For
the purposes of the Act and this Regulation, a person has, or a group of
persons have, a significant interest in a corporation if
(a) in
the case of a person, the person holds or beneficially owns, either directly or
indirectly, more than 10% of the outstanding shares of the corporation, or
(b) in
the case of a group of persons, they hold or beneficially own, either
individually or together and either directly or indirectly, more than 50% of
the outstanding shares of the corporation.
(5) For
the purposes of the Act and this Regulation, a person has, or a group of
persons have, a significant interest in an entity other than a corporation if,
(a) in
the case of a person, the person holds or beneficially owns, either directly or
indirectly, more than 10% of the beneficial interest, however designated, into
which the entity is divided, or
(b) in
the case of a group of persons, they hold or beneficially own, either
individually or together and either directly or indirectly, more than 50% of
the beneficial interest, however designated, into which the entity is divided.
(6) For
the purposes of the Act and this Regulation, a security or other interest is
beneficially owned by a person when it is held directly or through a personal
representative or other intermediary for the use or benefit of that person
otherwise than as a security interest.
(7) For
the purposes of the Act and this Regulation, a person shall be deemed to own
beneficially securities that are beneficially owned by a corporation that is
controlled by that person.
(8) For
the purposes of the Act and this Regulation, where a person beneficially owns
shares of a corporation, the person shall be deemed to beneficially own that
proportion of shares of every other corporation that is beneficially owned by
the first‑mentioned corporation that is equal to the proportion of shares
of the first‑mentioned corporation that is beneficially owned by the
person.
(9) Where
subsections (7) and (8) apply to a person, only the subsection under which the
person is deemed to beneficially own more securities applies to the person.
Corporations
prescribed for section 19(4)(l) of the Act
2.1 The following are the prescribed
corporations for the purposes of section 19(4)(l) of the Act:
(a) a
financial leasing corporation;
(b) a
mortgage broker within the meaning of the Real Estate Act that is a
corporation;
(c) a
loan servicing corporation, being a corporation that performs administrative
functions to carry out the obligations of a loan holder under a loan agreement;
(d) a payment processing corporation, being a
corporation that provides cheque clearing, remittance processing or similar
services or any 2 or all of them.
AR 164/2002
s3;110/2004;169/2006
Significant borrower
prescribed amounts
3(1) The prescribed amount of an entity’s
outstanding indebtedness for the purposes of section 4(1)(a) of the Act is an
amount equal to 25% of the equity of the entity.
(2) The
prescribed amount of an individual’s outstanding indebtedness for the purposes
of section 4(1)(b) of the Act is an amount equal to the greater of
(a) $200 000,
and
(b) 25%
of the individual’s net worth.
Trustee powers
4 The following are the prescribed
transactions in respect of which ATB may act as a trustee for a trust:
(a) a
self‑directed registered income fund under the Income Tax Act
(Canada);
(b) a
self‑directed registered education savings plan under the Income Tax
Act (Canada);
(c) a
self‑directed registered retirement savings plan under the Income Tax
Act (Canada);
(d) a mutual fund trust that ATB manages and for
which a prospectus or simplified prospectus has been filed and a final receipt
has been issued under the Securities Act.
AR 187/97 s4;110/2004
Limitation on real
estate investments
5(1) All subsidiaries of ATB, except subsidiaries
that are financial institutions, are prescribed subsidiaries for the purposes
of section 17 of the Act.
(2) The
prescribed amount for the purposes of section 17 of the Act is 3.5% of the
assets of ATB and its prescribed subsidiaries.
(3) An interest in real property that is acquired
through realization of a security interest is exempt from the application of
section 17 of the Act for a period of 7 years after the date of its
acquisition.
AR 187/97 s5;110/2004
Leasing and related
agreements
5.1(1) In this section,
(a) “agreement”
means
(i) a security agreement as defined in the Personal Property
Security Act, or
(ii) a financial lease agreement, being an agreement for a lease of
personal property in which credit is extended by the lessor to the lessee for
the purpose of enabling the lessee to meet the lessee’s obligations under the
lease;
(b) “property”
means the personal property to which an agreement relates.
(2) ATB
may not beneficially own shares in a financial leasing corporation unless
(a) the
aggregate of
(i) the book value of all of the property that is subject to
agreements held by the corporation, and
(ii) all amounts owing as receivables in respect of such agreements
is equal to at least 80% of
the assets of the corporation, and
(b) the
corporation meets the requirements of the agreements.
(3) A
financial leasing corporation may enter into or acquire agreements only if the
following requirements are met:
(a) the
corporation shall not direct its customers or potential customers to particular
dealers in the property;
(b) at
no time may the aggregate of the estimated residual values of all the property
of the corporation, excluding motor vehicles, leased under the financial lease
agreements exceed 10% of the aggregate of the costs of acquisition of that
leased property to the corporation;
(c) the
estimated residual value of property leased under a financial lease agreement
must not exceed 20% of its cost of acquisition to the corporation;
(d) the
agreement must be entered into or acquired for the purpose of extending credit
to the lessee or purchaser;
(e) the
property that is the subject of the agreement must be selected by the lessee or
buyer and
(i) must be acquired by the corporation at the request of the lessee
or buyer, or
(ii) must have been acquired by the corporation through the operation
of an earlier agreement;
(f) the
agreement must yield a return that
(i) will compensate the corporation for not less than its full
investment in the property,
(ii) is reasonable, taking into account
(A) the term of agreement and the other terms
and conditions of it,
(B) the technological obsolescence of the
property, and
(C) the rate of return sought by the other
lessors in respect of similar agreements in respect of similar property and
under the same terms and conditions,
and
(iii) is calculated by taking into account
(A) rental charges paid by the lessee or
purchaser,
(B) estimated tax benefits of the agreement to
the corporation, including tax credits and capital cost allowance claims, and
(C) the amount of,
(I) where the lessee or purchaser or a third
party who is dealing at arm’s length with the corporation has, on or before the
commencement of the agreement, contracted to purchase the property or
unconditionally guaranteed the resale value of the property at the date of
expiry of the agreement, the purchase price or the resale value so guaranteed,
or
(II) in any other case, but subject to clause
(c), the estimated residual value of the property;
(g) the
agreement must contain a provision
(i) assigning and conveying to the lessee or purchaser the benefit of
all warranties, guarantees or other undertakings made by a manufacturer or
supplier relating to property, or
(ii) setting out the responsibilities of the corporation with regard
to the warranties, guarantees or other undertakings referred to in subclause
(i);
(h) the
agreement must substantially transfer to the lessee or purchaser the benefits
and risks incidental to the operation of the property and must not place responsibility
on the part of the corporation to install, promote, service, clean, maintain or
repair the property;
(i) where
the lessee or purchaser defaults in the manner set out in the agreement and the
default is not waived or the agreement, including any renewals or extensions of
it, expires, the corporation shall
(i) liquidate its interest in the property, or
(ii) enter into a new agreement in respect of that property within 2
years of that default or expiry or, where proceedings in respect of that property
have prevented the corporation from complying with that requirement within that
period, within 2 years of the completion of those proceedings.
(4) An
agreement may be renewed on its expiry and may be extended during its terms.
(5) The
financial leasing corporation shall not enter into an agreement in respect of
(a) a
motor vehicle whose estimated residual value exceeds 50% of the cost of its
acquisition, or
(b) personal
household property.
(6) For
the purposes of subsection (5),
(a) repealed
AR 169/2006 s4;
(b) “personal household property” means personal
property that is leased by an individual pursuant to a financial lease
agreement or purchased by an individual pursuant to a conditional sales
agreement and intended primarily for the personal use or enjoyment of the
lessee or purchaser or of an individual who is not dealing at arm’s length with
the lessee or purchaser.
AR 164/2002
s4;110/2004;169/2006
Limitation on equity
investments
6(1) In this section and section 7 “subsidiary” does
not include a financial institution.
(2) For
the purposes of this section,
(a) a
purchase or acquisition by a subsidiary of ATB is considered to be a purchase
or acquisition by ATB;
(b) in
calculating beneficial ownership of participating shares in a corporation, no
regard shall be taken of the ownership of shares in a corporation referred to
in section 19(4) of the Act.
(3) Subject
to section 7, ATB shall not
(a) beneficially
own participating shares of a corporation or an ownership interest in an
unincorporated entity, or
(b) acquire
control of a corporation that beneficially owns shares or ownership interests
referred to in clause (a),
if, as a result of the transaction, the aggregate value of
all such shares and ownership interests beneficially owned by ATB and its
subsidiaries would exceed 3.5% of the assets of ATB and its subsidiaries.
AR 187/97 s6;110/2004
Combined limitation
7 Where ATB or its subsidiaries, or both of
them, have investments referred to in section 17 of the Act and investments
referred to in section 6 of this Regulation,
(a) the
aggregate value calculated under section 17 of the Act and section 5(2) of this
Regulation, plus
(b) the
aggregate value calculated under section 6 of this Regulation
shall not exceed 5% of the assets of ATB and its
subsidiaries.
AR 187/97
s7;110/2004;169/2006
Connected persons
8(1) For the purposes of section 18(1) of the Act a
person is connected to another person
(a) if
the person is an affiliate of the other person, or
(b) if,
in respect of a loan to or an investment in those persons,
(i) the loan or investment is for the same purpose in whole or in
part,
(ii) the expected source of repayment of the loan or investment is the
same in whole or in part, or
(iii) the security for the loan or investment is the same in whole or
in part.
(2) For
the purposes of section 18 of the Act, this section and section 30(2), “loan”
includes a guarantee.
(3) Notwithstanding
subsection (1), persons who are financially independent of each other to a
material extent are not connected persons for the purposes of section 18 of the
Act.
(4) The
prescribed amount for the purposes of section 18(1)(a) of the Act is the
aggregate of
(a) the
outstanding balance of principal and interest owing under loans other than
guarantees,
(b) the
face value of guarantees, and
(c) the
book value of investments
in an amount equal to
25% of ATB’s capital within the meaning of section 24(1)(a).
(5) The
following are prescribed as investment vehicles for the purpose of section
18(2)(c) of the Act:
(a) loans
to or investments in subsidiaries of ATB;
(b) an
investment that is authorized under section 19(4) of the Act;
(c) securities
that are issued by a university, a municipality or a hospital or school board
in Canada;
(d) loans
to the Government of Canada or the government of a province or to any of their
agencies, or to a university, a municipality or a hospital or school board in
Canada;
(e) loans
that are guaranteed by the Government of Canada or the government of a
province;
(f) securities
on which payment is ensured by rates or by the levy of a tax by a school or
municipal corporation under a law of Canada or a province on property situated
in the territory of the school or municipal corporation;
(g) a
residential mortgage loan referred to in section 9;
(h) securities
on which payment of principal and interest is guaranteed by the grant of a
subsidy by the Government of Canada or the government of a province that is
payable out of sums voted each year for that purpose;
(i) debt
securities including banker’s acceptances, (other than subordinated debt
securities) that are issued or guaranteed by a financial institution that is
authorized to take deposits in Canada;
(j) deposits
with financial institutions that are authorized to take deposits in Canada;
(k) demand
loans at book value, other than loans to an individual, that are fully secured
by any of the following securities:
(i) at market value, Treasury Bills of the Government of Canada or of
a province;
(ii) at book value, term deposits or other similar instruments issued
by a financial institution that mature within 100 days after the applicable
date;
(iii) at market value, bankers acceptances that mature within one year
from the date of issue and bearer deposit notes;
(iv) at market value, commercial paper that matures within 100 days
from the date of its issue and has at least a rating of P‑1 from Moody’s
Investors Service or the equivalent rating from another approved rating
organization, as that term is defined in the relevant Multilateral Instrument
issued by the Canadian Securities Administrators;
(v) at market value, securities, other than securities referred to in
clause (i), that are issued or guaranteed by the Government of Canada, the
government of a province or a municipality;
(l) a line of credit to a participant in the
Large Value Transfer System that has at least a rating referred to in clause
(k)(iv).
AR 187/97
s8;164/2002;110/2004;169/2006
Mortgage investments
9(1) Subject to this section, ATB may
(a) purchase
a mortgage, or
(b) make
a loan on the security of a mortgage,
in this section called
the “investment mortgage”, on improved real estate in Alberta.
(2) Where
the investment mortgage is a residential mortgage, the amount paid for or
advanced on the investment mortgage, together with the amount of indebtedness
under any other mortgage on the improved real estate that ranks equally with or
prior to the investment mortgage, must not exceed 75% of the market value of
the real estate at the time the investment mortgage is purchased or granted, as
the case may be, unless the excess amount is guaranteed or insured by the
Government of Alberta, the Government of Canada, the government of another
province, an agency of any of those governments or an insurance policy issued
by an insurance corporation authorized to carry on business in Canada.
(3) Where
the excess amount referred to in subsection (2) is guaranteed or insured by an
agency of the Government of Alberta, the guarantee or insurance must be on the
same basis and subject to the same conditions that would apply if the excess
amount were guaranteed or insured under the National Housing Act
(Canada).
(4) Subsection (2) does not apply where ATB makes a
loan to the purchaser of improved real estate that ATB acquired to protect its
investment and is disposing of.
AR 187/97 s9;110/2004
Mortgage loans re
eligible borrowers
9.1(1) In this section,
(a) “eligible
borrower” means
(i) a corporation that is incorporated or continued under the Business
Corporations Act or the Business Corporations Act (Canada) and has
its head office located in Alberta,
(ii) an entity (other than a corporation referred to in subclause (i))
that is registered with the Registrar appointed under the Business
Corporations Act and has its head office located in Alberta, or
(iii) an individual who resides in Alberta for the purposes of the Alberta
Income Tax Act;
(b) “head
office” means the place where the chief executive or equivalent of the
corporation or entity transacts the business of the corporation or entity.
(2) ATB
may make a loan on the security of improved real estate that is located outside
Alberta if
(a) the
loan is made to an eligible borrower, and
(b) section 9(2), (3) and (4) are complied with,
where the loan is in the form of a residential mortgage on improved real
estate.
AR 7/2000 s2;110/2004
Extra-provincial
syndicated loan agreements
9.2(1) In this section, “Canadian corporation” means a
corporation
(a) incorporated
or continued in a jurisdiction in Canada, outside of Alberta, and
(b) whose
head office is outside of Alberta.
(2) Subject
to subsection (3), ATB may enter into a syndicated loan agreement with one or
more financial institutions in respect of a Canadian corporation if the
corporation operates in Alberta.
(3) ATB’s participation in syndicated loan
agreements under subsection (2) must not exceed in the aggregate 10% of the
total amount of commercial loans made by ATB at any one time.
AR 164/2002 s6;110/2004
Hedging agreements
10(1) ATB may not enter into derivative contracts,
including exchange agreements, financial futures agreements, option agreements
and rate agreements or engage in any other similar transactions unless the
purpose of the transaction is to hedge against interest rates, exchange rates,
equity prices, commodity prices or similar risks associated with specific
assets or liabilities or groups of assets or liabilities of ATB or its
customers.
(2) ATB
may enter into a transaction listed in subsection (1) with a customer of ATB
only where
(a) the
purpose of the transaction is to hedge against risks of the customer relating
to interest rates, commodity prices or exchange rates, and
(b) if
the purpose of the transaction is to hedge against risks of the customer
relating to commodity prices, ATB takes an opposite position in the market to
offset the risk it assumes under the transaction.
(2.1) Notwithstanding
subsections (1) and (2), ATB may enter into a forward foreign exchange contract
with a customer if the exposure of ATB
(a) to
risks of the customer’s default under the contract has been hedged against, and
(b) to
adverse foreign exchange rate fluctuations has been fully hedged against
in accordance with
policies established by the board.
(2.2) ATB
may, for asset‑liability management purposes, negotiate the replacing or
unwinding of existing derivative contracts.
(2.3) ATB may enter into credit derivative
contracts with financial institutions in Canada that have at least one of the
credit ratings referred to in the guidelines referred to in subsection (3) in
respect of residential mortgage loans secured by land situated in Canada for
the purpose of diversifying its geographic concentration risk.
(3) Where
ATB enters into a swap with another party (referred to as the counter‑party),
the counter‑party must be an issuer of and have issued debt securities
that are outstanding and having at least one of the ratings referred to in the
guidelines whose primary subject-matter is derivatives.
(4) Subsection (3) does not apply where the
transaction is with a customer in accordance with subsection (2).
AR 234/99
s2;164/2002;110/2004;169/2006
Deposit guarantee fee
11(1) In
this section, “deposits” means
(a) money
whose repayment, taking into account section 1(3), is guaranteed by section
14(1) of the Act, and
(b) negotiable
instruments specified by notice in writing given by the Minister to ATB for the
purposes of this subsection.
(2) ATB shall, before July 1 in each
year, pay to the Minister in respect of the previous fiscal year the fee
required by section 14(2) of the Act, in the aggregate of the following amounts
based on deposits held by ATB:
(a) for
deposits that do not exceed $100 000 or for those portions of deposits
exceeding $100 000 that do not exceed $60 000, the lesser of
(i) an amount equal to the total of those deposits or those portions
of those deposits multiplied by Canada Deposit Insurance Corporation’s rate for
a deposit‑taking institution with a similar risk profile as ATB, as
determined by the Minister, and
(ii) an amount equal to 1/6 of 1% of all those deposits or those
portions of those deposits;
(b) for
those portions of deposits exceeding $100 000 that do exceed
$100 000, an amount equal to 1/6 of 1% of all those excess portions.
(3) For the purposes of subsection (2), the
amounts of the respective deposits are to be
(a) based
on the amount reported in ATB’s audited annual financial statements except that
the Minister may, for those purposes, accept estimates prepared by ATB of the
amounts of the deposits to the extent that they are not so reported, and
(b) subject
to clause (a), calculated in accordance with methodology approved by the
Minister.
(4) The fees payable under this section,
including those payable for the 2002‑03 and the 2003‑04 fiscal
years, may be paid in the form of subordinated debt issued by ATB to the Crown
in right of Alberta that meets the requirements of the Minister, but only until
the fiscal year after that in which the portion of ATB’s tier 2 capital that is
calculated under section 24(1)(c)(iii) falls to zero dollars.
(5) A
notice under subsection (1)(b) is deemed to be a document incorporated in this
Regulation for the purposes of section 1(1)(f) of the Regulations Act,
but the Minister shall ensure that its contents are given publicity in such a
form as the Minister considers likely to make it available, generally, to all
persons likely to be affected by it.
AR 187/97
s11;164/2002;110/2004;169/2006
Definitions
12 In sections 13 to 22,
(a) “fair
market rate” means
(i) in respect of a guarantee, investment in securities or other
transaction for which there is a competitive or open market, the most probable
price in terms of money that should be obtained for that guarantee, investment
in securities or other transaction under all conditions requisite to a fair
transaction, with both the seller and buyer acting prudently and knowledgeably,
or
(ii) in respect of a guarantee, investment in securities or other
transaction for which there is not an open and competitive market, a
consideration that might reasonably be expected to be obtained for that
guarantee, investment in securities or other transaction in an arm’s length
transaction between willing parties to a similar transaction;
(b) “senior
officer” of a corporation means
(i) a person who is both a director and a full‑time employee of
the corporation,
(ii) the chief executive officer, chief operating officer, president,
secretary, treasurer, controller, chief financial officer, chief inspector or
chief actuary of the corporation,
(iii) an individual who performs functions for the corporation similar
to those performed by a person referred to in subclause (ii),
(iv) the head of the strategic planning unit of the corporation,
(v) the head of the unit of the corporation that provides legal services
or human resources services to the corporation, or
(vi) any other officer who reports directly to the corporation’s board
of directors, chief executive officer or chief operating officer.
Related party status
13(1) For the purposes of the Act and this Regulation
and subject to this section, a person is a related party with respect to ATB if
that person
(a) is
a director or senior officer of ATB,
(b) holds
or is a beneficial owner of shares of an affiliate of ATB to which are attached
10% or more of the voting rights attaching to all of the outstanding voting
shares of the affiliate,
(c) is
the Auditor General or a senior or executive manager employed in the Office of
the Auditor General who is actually engaged in auditing ATB or any of its
affiliates,
(d) is
an individual who is the agent of the Auditor General or a partner in a firm
that is agent of the Auditor General, if that person is actually engaged in
auditing ATB or any of its affiliates,
(e) is
a spouse or adult interdependent partner of a person referred to in clause (a),
(f) is
a relative of, or a relative of the spouse or adult interdependent partner of,
a person referred to in clause (a), who has the same home as that person,
(g) is
a trust or estate in which a person referred to in clause (a), (e) or (f) has a
10% or greater beneficial interest or in respect of which the person serves as
a trustee or in a similar capacity,
(h) is
a corporation in which an individual referred to in clause (a) is the holder or
beneficial owner of shares to which are attached 10% or more of the voting
rights attaching to all of the outstanding voting shares of the corporation,
(i) is
a corporation that is controlled by a person referred to in clause (c), (d) or
(e),
(j) is
a corporation in which ATB holds or beneficially owns shares to which are
attached 10% or more of the voting rights attaching to all of the outstanding
voting shares of the corporation,
(k) is
the auditor of a corporation referred to in clause (j) or is a partner in the
firm that is the auditor of the corporation, if that person is actually engaged
in auditing the corporation,
(l) is
(i) a partner of ATB and has a 10% or greater beneficial interest in
the partnership, or
(ii) a party to and has a 10% or greater beneficial interest in a
joint venture agreement to which ATB is also a party,
where ATB has a 10% or
greater beneficial interest in the partnership or joint venture, as the case
may be,
(m) is
an affiliate of ATB or a director or senior officer of an affiliate of ATB, or
(n) is
designated as a related party under subsection (2).
(2) The
Minister may designate any person as a related party of ATB if the Minister is
of the opinion that
(a) the
person is acting or has acted jointly or in concert with a related party of ATB with respect to the
giving of a guarantee, the making of an investment in securities or the
entering into of another transaction that would be prohibited or restricted
under this Part if given, made or entered into by or with respect to that
related party, or
(b) there
exists or has existed between the person and ATB an interest or relationship
that might reasonably be expected to affect or that has affected the exercise
by ATB of its best judgment with respect to a guarantee, investment in
securities or other transaction.
(3) The Minister may, of his own motion or on
application by ATB or the related party
affected by a designation made under subsection (2), revoke the
designation.
AR 187/97
s13;109/2003;110/2004
General prohibition
14(1) Except as provided in the Act or this
Regulation,
(a) neither
ATB nor its subsidiary shall, directly or indirectly, give any guarantee on
behalf of a related party of ATB,
(b) neither
ATB nor its subsidiary shall, directly or indirectly, make an investment in any
securities of a related party of ATB,
(c) neither
ATB nor its subsidiary shall, directly or indirectly, enter into any other
transaction with a related party of ATB, and
(d) no
related party of ATB shall, directly or indirectly, enter into any other transaction
with ATB or its subsidiary.
(2) Subsection
(1) does not apply to
(a) the
payment of remuneration
(i) to the Auditor General, or
(ii) to the directors of ATB or its subsidiary if the remuneration has
been approved by the Lieutenant Governor in Council, in the case of
remuneration paid to a director of ATB, or by ATB, in the case of remuneration
paid to a director of its subsidiary,
or
(b) the
granting of indemnification in accordance with section 28 of the Act.
AR 187/97 s14;110/2004
Person previously a
related party
15(1) Neither ATB nor its subsidiary shall, directly
or indirectly, during the 12‑month period after a person ceases to be a
related party of ATB,
(a) give
any guarantee on behalf of,
(b) make
an investment in any securities of, or
(c) enter
into any other transaction with,
that person that would
have been prohibited or that would have required an approval in accordance with
procedures required under this Regulation had that person been a related party
of ATB at the time of the guarantee, investment or other transaction, unless
the proposed guarantee, investment or other transaction is at fair market rate.
(2) A person referred to in subsection (1) shall
disclose in writing to ATB the nature of the person’s interest in that guarantee,
investment or other transaction forthwith after becoming aware of the facts
that bring the person within the application of that subsection.
AR 187/97 s15;110/2004
Exceptions
16(1) Subject to the Act and regulations, ATB or its
subsidiary may give a guarantee on behalf of, make an investment in the
securities of or enter into any other transaction with a related party of ATB
if the transaction is at fair market rate and has prior approval of the board.
(2) Subject
to the Act and regulations, ATB or its subsidiary may
(a) make
a loan to
(i) a director or senior officer of ATB,
(ii) the spouse or adult interdependent partner of a director or
senior officer of ATB, or
(iii) a relative of, or a relative of the spouse or adult
interdependent partner of, a director or senior officer of ATB who has the same
home as the director or senior officer
on the security of the
residence of the person to whom the loan is made if the loan qualifies under
section 9 and, except in the case of a loan to a senior officer of ATB, the
loan is at fair market rate,
(b) make
a personal loan to
(i) a senior officer of ATB,
(ii) the spouse or adult interdependent partner of a senior officer of
ATB, or
(iii) a relative of, or a relative of the spouse or adult interdependent
partner of, a senior officer of ATB who has the same home as the senior
officer,
if, except in the case of a
loan to a senior officer of ATB, the loan is at fair market rate, and
(c) enter into an employment contract with a
senior officer of ATB or its subsidiary.
AR 187/97
s16;109/2003;110/2004
Form of approval
17 Where this Regulation requires that a
guarantee, investment in securities or other transaction have the prior
approval of the board, the approval
(a) must
be given
(i) in writing,
(ii) in accordance with the procedures established under this
Regulation, and
(iii) by a person authorized by the board of directors to give such an
approval,
and
(b) may
be given with respect to a specific guarantee, investment or transaction or
with respect to a class of guarantees, investments or transactions.
Limits
18(1) The aggregate of
(a) the
outstanding principal and interest owing on all loans to related parties of
ATB,
(b) the
book value of all current investments in securities of related parties of ATB,
and
(c) the
contracted amount of all outstanding guarantees on behalf of related parties of
ATB,
entered into, made or
given by ATB and its subsidiaries shall not exceed 2% of the assets of ATB.
(2) Neither
ATB nor its subsidiary shall make a loan to or give a guarantee on behalf of a
senior officer of ATB or any of its subsidiaries if the aggregate of the
outstanding principal and interest owning on all such loans and the contracted
amount of all outstanding guarantees to or on behalf of that senior officer
would exceed the greater of
(a) $100 000,
and
(b) twice
the annual salary of that senior officer.
(3) A
loan under section 16(2)(a) shall not be counted for the purposes of
calculating the limit under subsection (2) of this section.
(4) Neither
ATB nor its subsidiary shall give a
guarantee on behalf of or make a loan to or an investment in the securities of
a related party of ATB who is
(a) a
person referred to in section 21 of the Act, or
(b) a
senior officer of ATB or any of its subsidiaries,
if the aggregate of
(c) the
outstanding principal and interest owing on all loans by ATB and its
subsidiaries to all such related parties,
(d) the
book value of all current investments by ATB and its subsidiaries in securities
of all such related parties, and
(e) the
contracted amount of all outstanding guarantees by ATB and its subsidiaries on
behalf of all such related parties,
would exceed one half of 1% of the assets of ATB.
AR 187/97 s18;110/2004
Transactions with
Crown
19 Neither ATB nor its
subsidiaries shall enter into a business transaction with the Crown in right of
Alberta unless the transaction is at fair market rate.
AR 187/97 s19;110/2004
Notice of
contravention
20 Where ATB or its subsidiary
has given a guarantee, made an investment
in securities or entered into any other transaction contrary to this
Regulation, ATB shall, forthwith on becoming aware of that fact, notify the
Auditor General and the Minister of that fact.
AR 187/97 s20;110/2004
Onus
21 For the purposes of the Act
and this Regulation, the onus is on the related party and ATB or its
subsidiary, as the case may be, to establish that a particular guarantee,
investment in securities or other transaction is in compliance with the Act and
this Regulation.
AR 187/97 s21;110/2004
Conduct review
committee and procedures
22(1) The board shall establish a Governance and
Conduct Review Committee consisting of not fewer than 3 members of the board.
(2) At
least 2/3 of the members of the Committee must be unaffiliated directors.
(3) The
Committee shall not transact any business unless a majority of the members
present are unaffiliated directors.
(4) The
Committee shall develop for the consideration of the board written review and
approval procedures to be followed by ATB to ensure compliance with sections 13
to 21, including procedures respecting the obligations of related parties to
disclose information to ATB and procedures respecting approvals under this
Regulation.
(5) The
procedures may be passed as a by‑law under section 8 of the Act and shall
be published in The Alberta Gazette.
(6) The
procedures shall, at least once each year, be reviewed by the Committee.
(7) The Auditor General is entitled to attend and
be heard at all meetings of the Committee.
AR 187/97 s22;110/2004
Interpretation
23(1) In this section and sections 24 to 28 and the
Tables in the Schedule to this Regulation,
(a) “deductions
from capital” means, in relation to ATB, the aggregate of
(i) its goodwill and other intangible assets,
(ii) the following investments of ATB in its subsidiaries and
affiliates, if any, as determined using the equity method of accounting:
(A) where a subsidiary or affiliate is a trust
corporation or a loan corporation, a proportionate share of an amount equal to
the capital that the trust or loan corporation is required by the statute
incorporating or continuing it to maintain,
(B) where a subsidiary or affiliate is any other
financial institution, the book value of ATB’s investment in that corporation,
and
(C) where a subsidiary or affiliate is not one
described in paragraph (A) or (B), an amount equal to the amount by which the
book value of ATB’s investment in it exceeds 2% of ATB’s total assets,
(iii) an amount equal to the difference between the book value and the
value at fair market rate of securities, other than securities issued or
guaranteed by the government of Canada or of a province, beneficially owned by
ATB, and
(iv) an amount equal to the difference between the book value and the
value at fair market rate of land, other than land or the proportion of any
parcel of land that is occupied by it for its own purposes, that ATB has
acquired;
(b) “deposit‑taking
institution” means
(i) a loan corporation, trust corporation or credit union
incorporated or continued by or under an Act of Canada or a province, or
(ii) a bank;
(c) “residential
mortgage loan” means a mortgage loan by ATB to an individual to finance a
residential dwelling consisting of not more than 4 units, where at least one of
the units is to be owner‑occupied and the parcel of land on which it is
situated does not exceed 40 acres.
(2) With
respect to the interpretation of expressions that are used in this section,
sections 24 to 28 and the Tables in the Schedule and are not specifically
defined, reference shall be made to generally accepted accounting principles,
including the accounting recommendations of the Canadian Institute of Chartered
Accountants set out in the Handbook published by that Institute, as amended
from time to time.
(3) References in sections 24 to 28 to a Table are
references to the appropriate Table in the Schedule to this Regulation.
AR 187/97
s23;110/2004;221/2004
Guidelines
23.1(1) The
Minister may make guidelines for ATB on any matter referred to in section
34(1)(h.2) of the Act and shall make such guidelines on an identified subject‑matter
where a provision of this Regulation requires guidelines on that subject‑matter
in order to ensure the efficacy of the provision.
(2) Guidelines
(a) must
not be inconsistent with this Regulation,
(b) are
deemed to be regulations for the purposes, and only for the purposes, of
section 33 of the Act, and
(c) must
contain a commencement date from which they come into effect.
AR 164/2002 s9;110/2004
Compliance with
legislation and guidelines
23.2(1) ATB
shall provide to the Minister a report, in a form satisfactory to the Minister,
on its compliance with the Act, the regulations and the guidelines
(a) for
the fiscal year to which the financial statements submitted under section 23 of
the Act relate, within 90 days after the date on which it submits those
financial statements, and
(b) for
any other period specified by the Minister, if so required by the Minister, on
or before the date specified by the Minister.
(2) The
Minister shall annually specify subjects on which compliance by ATB with the
Act, the regulations and the guidelines is to be the subject of an examination
by the person and in the manner decided by the Minister.
AR 110/2004 s9
Maintenance of assets
24(1) In
this section, with reference to ATB,
(a) “capital”
means the aggregate of its tier 1 capital and tier 2 capital, less deductions
from capital;
(b) “tier
1 capital” means its retained earnings;
(c) “tier
2 capital” means the aggregate of
(i) the total value of its subordinated debt referred to in section
11(4), as adjusted in accordance with and subject to the maximum specified by
subsection (3),
(ii) the amount of its general allowances against loan losses subject
to the maximum specified by subsection (4), and
(iii) an amount equal to the greater of zero and an amount calculated
in accordance with the formula
(($750 million + R0)
- R1) - L
where
R0
= the retained earnings reported in
ATB’s audited annual financial statements as at March 31, 2003
R1
= the retained earnings reported in
ATB’s audited annual financial statements as at the end of the fiscal year
(starting with the 2003‑04 fiscal year) for which the calculation is done
L
= the absolute value of the sum
of all net losses reported in ATB’s audited annual financial statements as at a
date after March 31, 2003, up to and including the fiscal year for which the
calculation is done.
(2) ATB shall maintain its assets in
accordance with this Regulation so that its capital equals or exceeds the greatest
of
(a) 8%
of its risk weighted assets,
(b) 5%
of its assets, and
(c) the
amount specified by the Minister by notice in writing.
(3) The
maximum amount of subordinated debt that may be taken into account in
determining capital for the purposes of this section is the total issue value
of subordinated debt issued by ATB, adjusted in accordance with the following
Adjustment Table:
|
ADJUSTMENT TABLE
|
|
Remaining term to date of
repurchase, maturity or other acquisition*
|
Adjustment (deduction)
|
Proportion to be included in capital
|
|
5
years or more, or no specified date of repurchase, maturity or other
acquisition
|
**R%
|
**100‑R%
|
|
4
or more but less than 5 years
|
20%
|
80%
|
|
3
or more but less than 4 years
|
40%
|
60%
|
|
2
or more but less than 3 years
|
60%
|
40%
|
|
1
or more but less than 2 years
|
80%
|
20%
|
|
less
than 1 year
|
100%
|
0%
|
NOTES TO THE TABLE
* Only subordinated
debt with an original term of 5 years or more may be considered as subordinated
debt for the purposes of this section.
* For the purposes of
this Table, the “term to date” is the least of the number of years until the
date of repurchase, maturity or other acquisition.
* Any subordinated
debt instruments with maximum redemption rates in excess of 20% per year are
deemed to have a remaining term to repurchase or maturity equal to 100% divided
by the redemption rate.
** “R” is the maximum
percentage of subordinated debt of the series that may be redeemed during the
year under the terms of the debt instrument.
(4) The
maximum amount of general allowances against loan losses that may be taken into
account in determining capital for the purposes of this section is an amount
equal to the lesser of
(a) .875%
of the risk weighted assets of ATB, and
(b) an
amount prescribed by the Minister.
(5) Section
11(5) applies with respect to a notice under subsection (2)(c).
AR 187/97
s24;54/98;110/2004
Risk weighting
25(1) Subject
to sections 26 to 28, the risk weighted assets of ATB are the sum of
(a) for
on‑balance sheet items, the sum of the products of $A x R for each asset category set
out in Table 1, where A is the book value of the asset held by ATB in each such
asset category and R is the risk weighting factor set out in Table 1 for that
asset category,
(b) for
off‑balance sheet items excluding derivative contracts, the sum of the
products of
$F x V x R for each financial instrument set out in
Table 2, where F is the face amount of the financial instrument, V is the
credit conversion factor for that financial instrument set out in Table 2 and R
is the risk weighting factor set out in Table 1 for the asset category
underlying the financial instrument, and
(c) for
derivative contracts not subjected to netting under subsection (2), the sum of
the products of the following formula, computed for each derivative contract,
namely
[(P x A) + PRC] x C
where
P is the notional principal amount of
the contract
A is the add‑on factor set out in
Table 4
PRC is the replacement cost, obtained by “marking to market”, of the
contract if it has a positive value, and
C is the risk weighting factor set out in Table 3 for the
counter‑party.
(2) ATB
may, in accordance with those guidelines issued by the federal Office of the
Superintendent of Financial Institutions and currently in place whose subject‑matter
is capital adequacy requirements, net derivative contracts that are subject to
novation or any other lawful form of netting within the meaning of those
guidelines and, if it does so, shall calculate the credit equivalent amount of
netted derivative contracts in accordance with those guidelines.
AR 187/97 s25;110/2004
Partial guarantees
26 Where a loan or security is partially
guaranteed, only that part of it that is guaranteed may be risk weighted as
guaranteed.
Privately issued
mortgage backed securities
27(1) The privately issued mortgage backed securities
of a mortgage pooling fund are to be risk weighted according to the underlying
assets if the following conditions are met:
(a) there
are in place mortgage pooling agreements that require or that relate to a
special purpose vehicle and a trustee and that provide that the following
conditions are to be observed:
(i) the trustee is to monitor the performance of the mortgage pooling
fund administrator, unless they are the same person;
(ii) the investors are to receive information, at least annually, on
the structure and performance of the fund;
(iii) the special purpose vehicle and the trustee are to be legally
separate from the person who initiated the mortgages included in the mortgage
pooling fund;
(iv) the special purpose vehicle and the trustee are to be responsible
for any damage or loss to investors created by the negligent management of the
assets in the fund;
(b) the
mortgage pooling fund contains only mortgages that were fully performing when
the mortgage backed securities were created;
(c) the
mortgage backed securities are not required to absorb any more than their
prorated share of any losses incurred on the underlying assets;
(d) the
securitization and administration of the mortgages are effected in the special
purpose vehicle;
(e) the
underlying mortgages are assigned to a third party who is independent of the
person who initiated the mortgages included in the mortgage pooling fund, for
the benefit of the investors in the mortgage backed securities;
(f) the
trustee has a first charge over the underlying assets of the special purpose
vehicle on behalf of the holders of the mortgage backed securities;
(g) the
agreement provides for the trustee to take clearly specified steps where the
mortgagor defaults;
(h) either
the holders of the mortgage backed securities have a prorated share in the
underlying assets or the special purpose vehicle that issues the mortgage
backed securities has no liabilities other than liabilities related to the
issuing of the mortgage backed securities;
(i) the
cash flows of the underlying assets meet the cash flow requirements of the
mortgage backed securities without undue reliance on any reinvestment income;
(j) the
special purpose vehicle or the trustee is allowed to invest cash flows, pending
distribution to investors, only in short‑term money market instruments
without any material investment risk, or in new mortgage loans.
(2) Where
privately issued mortgage backed securities do not meet the conditions in
subsection (1) they are to be risk weighted according to item 21, “All other
assets”, in Table 1.
(3) Where
the pool of assets underlying the mortgage backed securities consists of assets
that would attract different risk weights, the risk weight to be used for the
mortgage backed securities is to be the highest risk weight associated with the
underlying assets.
(4) In
subsection (1), “special purpose vehicle” means a legal entity or a
specifically designated mortgage pooling fund whose only assets are related to
the underlying mortgages and to any cash or short‑term investments
associated with the administration of those mortgages.
Investments in mutual
fund units
28 Investments in mutual fund units are to
be risk weighted at the highest risk weight associated with the underlying
assets of the mutual fund.
Liquidity investments
29 ATB shall have and keep
available unencumbered liquid assets in accordance with the guidelines whose
primary subject-matter is liquidity.
AR 187/97
s29;54/98;164/2002;110/2004
Transitional
30(1) Where, on the coming into force of this
Regulation, there is a loan or mortgage between ATB and another person that
would be in contravention of section 9 or 16, as the case may be, if it had
been made, purchased or granted after the coming into force of this Regulation,
ATB may retain the loan or mortgage but may not after that date
(a) increase
the amount owing in respect of the loan or mortgage, or
(b) increase
the amortization period of the loan or mortgage.
(1.1) Subject
to subsection (1.2), where on the coming into force of section 9.1, there is a
loan between ATB and another person that would be in contravention of section
9.1 if it had been made after the coming into force of section 9.1, ATB may
retain the loan but may not after that date
(a) increase
the amount owing in respect of the loan, or
(b) increase
the amortization period of the loan.
(1.2) ATB
may, by means of a loan workout procedure, increase the amount owing in respect
of a loan referred to in subsection (1.1) or increase the amortization period
of the loan.
(2) Where,
on the coming into force of this Regulation, ATB has loans or investments that
would contravene the limit prescribed in section 8(4) if they had been made
after the coming into force of this Regulation, ATB may retain the loans or
investments but shall bring itself into compliance with section 8(4) within 15
years after the coming into force of this Regulation.
