C-8 1 37 49-50 Elizabeth II 2001

An Act to establish the Financial Consumer Agency of Canada and to amend certain Acts in relation to financial institutions

Financial Consumer Agency of Canada Act

Financial Institutions 2001 6 14 9 2001 90108

SUMMARY

This enactment establishes the Financial Consumer Agency of Canada responsible for the administration of the consumer provisions governing federal financial institutions. It also amends a number of Acts governing financial institutions and amends legislation related to the regulation of financial institutions. Notable among the amendments are the following:

(

a) amendments to the Bank Act , the Cooperative Credit Associations Act , the Insurance Companies Act , and the Trust and Loan Companies Act dealing with business powers and investments, regulatory and Ministerial approvals, and consumer protection provisions;

(

b) amendments to the Bank Act and the Insurance Companies Act dealing with the ownership regime and the establishment of holding company regimes;

(

c) amendments to the Office of the Superintendent of Financial Institutions Act , including the establishment of an administrative monetary penalties regime;

(

d) amendments to the Canadian Payments Association Act respecting corporate governance, eligibility for membership, and the designation of payments systems; and

(

e) technical amendments to the Bank of Canada Act and the Canada Deposit Insurance Corporation Act .

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

SHORT TITLE

Short title

This Act may be cited as the Financial Consumer Agency of Canada Act .

INTERPRETATION

Definitions

The following

definitions apply in this

section and in sections 3 to 34.

Agency

Agence

Agency means the Financial Consumer Agency of Canada established under

section 3.

bank holding company

société de portefeuille bancaire

bank holding company means a bank holding company as defined in

section 2 of the Bank Act ;

Commissioner

commissaire

Commissioner means the Commissioner of the Agency appointed under

section 4.

consumer provision

disposition visant les consomma­teurs

consumer provision means

( a )

paragraphs 157(2)(

e) and ( f ), sections 413.1, 439.1 to 459.5, subsections 540(2) and (3) and 545(4) and (5), paragraphs 545(6)(

b) and (

c) and sections 559 to 576.2 of the Bank Act together with any regulations made under or for the purposes of those provisions;

( b )

paragraphs 167(2)(

f) and (

g) and sections 385.05 to 385.28 of the Cooperative Credit Associations Act together with any regulations made under or for the purposes of those provisions;

( c )

paragraphs 165(2)(

f) and (

g) and sections 479 to 489.2 and 598 to 607.1 of the Insurance Companies Act together with any regulations made under or for the purposes of those provisions;

( d )

paragraphs 161(2)(

e) and (

f) and sections 425.1 to 444.3 of the Trust and Loan Companies Act together with any regulations made under or for the purposes of those provisions; and

(

e) the provisions referred to in paragraph 17(1)( f.1 ) of the Green Shield Canada Act as they apply to Green Shield Canada in accordance with

section 17 of that Act together with any regulations made under or for the purposes of those provisions.

Deputy Commissioner

commissaire adjoint

Deputy Commissioner means a Deputy Commissioner appointed under

section 8.

financial institution

institution financière

financial institution means

(

a) a bank as defined in

section 2 of the Bank Act ;

(

b) an authorized foreign bank as defined in

section 2 of the Bank Act ;

(

c) a company to which the Trust and Loan Companies Act applies;

(

d) a retail association as defined in

section 2 of the Cooperative Credit Associations Act ;

(

e) a company or foreign company to which the Insurance Companies Act applies; and

(

f) Green Shield Canada.

governing statute

loi d’application

governing statute means

(

a) in relation to a bank or authorized foreign bank as defined in the Bank Act , that Act;

(

b) in relation to a retail association to which the Cooperative Credit Associations Act applies, that Act;

(

c) in relation to a company or foreign company to which the Insurance Companies Act applies, that Act;

(

d) in relation to a company to which the Trust and Loan Companies Act applies, that Act; and

(

e) in relation to Green Shield Canada, the Green Shield Canada Act .

prescribed

Version anglaise seulement

prescribed means prescribed by regulation.

insurance holding company

société de portefeuille d’assurances

insurance holding company means an insurance holding company as defined in subsection 2(1) of the Insurance Companies Act .

Minister

ministre

Minister means the Minister of Finance.

penalty

pénalité

penalty means an administrative monetary penalty.

ESTABLISHMENT OF AGENCY

Establishment

(1) There is hereby established an agency of the Government of Canada called the Financial Consumer Agency of Canada over which the Minister shall preside and for which the Minister shall be responsible.

Objects

(2) The objects of the Agency are to

(

a) supervise financial institutions to determine whether they are in compliance with the consumer provisions applicable to them;

(

b) promote the adoption by financial institutions of policies and procedures designed to implement consumer provisions applicable to them;

(

c) monitor the implementation of voluntary codes of conduct that are designed to protect the interests of customers of financial institutions, that have been adopted by financial institutions and that are publicly available and to monitor any public commitments made by financial institutions that are designed to protect the interests of their customers;

(

d) promote consumer awareness about the obligations of financial institutions under consumer provisions applicable to them; and

(

e) foster, in co-operation with any department, agency or agent corporation of the Government of Canada or of a province, financial institutions and consumer and other organizations, an understanding of financial services and issues relating to financial services.

COMMISSIONER OF AGENCY

Appointment of Commissioner

(1) The Governor in Council shall appoint an officer to be called the Commissioner of the Financial Consumer Agency of Canada. The Commissioner has the rank and all the powers of a deputy head of a department.

Tenure of office and removal

(2) The Commissioner holds office during good behaviour for a term of not more than five years, but may be removed for cause by the Governor in Council.

Further terms

(3) The Commissioner, on the expiration of any term of office, is eligible to be re-appointed for a further term of office.

Absence or incapacity

(4) In the event of the absence or incapacity of the Commissioner, or if the office of Commissioner is vacant, the Minister may appoint a qualified person to exercise the powers and perform the duties and functions of the Commissioner, but no person may be so appointed for a term of more than 90 days without the approval of the Governor in Council.

Remuneration

(5) The Commissioner shall be paid the remuneration fixed by the Governor in Council.

Expenses

(6) The Commissioner and any person appointed under subsection (4) are entitled to be paid reasonable travel and living expenses incurred in the course of performing their duties while absent from their ordinary place of work.

Deemed employment

(7) The Commissioner and any person appointed under subsection (4) are deemed to be employed in the Public Service for the purposes of the Public Service Superannuation Act and to be employed in the public service of Canada for the purposes of the Government Employees Compensation Act and any regulations made under

section 9 of the Aeronautics Act .

POWERS, DUTIES AND FUNCTIONS OF THE COMMISSIONER

Powers, duties and functions of the Commissioner

(1) The Commissioner has the powers, duties and functions assigned to the Commissioner by this Act and by the Acts listed in

Schedule 1 and shall examine and inquire into, and report to the Minister from time to time on, all matters connected with the administration of this Act and of the consumer provisions of those other Acts.

Personal information

(2) The Commissioner may collect any personal information that he or she considers necessary in furtherance of the object described in paragraph 3(2)( a ).

Review re voluntary codes of conduct

(3) The Commissioner, if a financial institution has adopted a voluntary code of conduct referred to in paragraph 3(2)(

c) or made a commitment designed to protect the interests of its customers, may make or cause to be made any review that he or she considers necessary to monitor compliance with the code or the commitment, as the case may be.

Respect for other monitors

(4) When acting under subsection (3), the Commissioner shall have due regard for the role of any department, agency or agent corporation of the Government of Canada or of a province or any organization that has a role in monitoring compliance by financial institutions with voluntary codes of conduct or commitments.

Consumer awareness

(5) The Commissioner may carry on any activity that he or she considers necessary in furtherance of an object described in paragraph 3(2)(

d) or ( e ).

Duties and functions generally

(1) The Commissioner shall engage exclusively in the duties and functions of the Commissioner under

section 5 and as deputy head of the Agency.

Other duties

(2) Despite subsection (1), the Commissioner may hold any other office under Her Majesty or perform any other duties for Her Majesty, but not for reward.

AGREEMENTS

Agreements

The Agency, in order to carry out its objects, may enter into an agreement or arrangement with a department or agency of the Government of Canada or of a province or with any other person or body in the name of Her Majesty in right of Canada or in its own name. An agreement or arrangement with a department or agency of a province must be made with the approval of the Governor in Council.

DEPUTY COMMISSIONERS

Appointment of Deputy Commissioner

The Commissioner may appoint one or more officers each to be called a Deputy Commissioner of the Financial Consumer Agency of Canada who shall act under the instructions of the Commissioner.

EXERCISE OF POWERS, DUTIES AND FUNCTIONS

Exercise by personnel

Except as otherwise provided by the Commissioner and subject to any terms and conditions that may be specified by the Commissioner, a person who is an officer or employee of the Agency may exercise any of the powers and perform any of the duties and functions of the Commissioner under this Act if the person is appointed to serve in the Agency in a capacity appropriate to the exercise of the power or performance of the duty or function.

STAFF OF AGENCY

Employees

The employees that are necessary to enable the Commissioner to perform the duties of the Commissioner shall be appointed in accordance with the Public Service Employment Act .

Responsibility for personnel management

(1) In respect of persons appointed under sections 8 and 10, the Commissioner is authorized to exercise the powers and perform the duties and functions of the Treasury Board under paragraphs 7(1)(

b) and (

e) and

section 11 of the Financial Administration Act that relate to personnel management, including the determination of terms and conditions of employment and the responsibility for employer and employee relations.

Delegation of powers

(2) The Commissioner may authorize any person employed in the public service of Canada to exercise and perform, in such manner and subject to such terms and conditions as the Commissioner directs, any of the powers and functions of the Commissioner in relation to personnel management in the public service and may, from time to time as the Commissioner sees fit, revise or rescind and reinstate the authority so granted.

Sub-delegation of such powers

(3) Any person authorized under subsection (2) to exercise and perform any of the powers and functions of the Commissioner may, subject to and in accordance with the authorization, authorize one or more persons under their jurisdiction or any other person to exercise or perform any such power or function.

Official Languages Act

For greater certainty, the Official Languages Act applies to the Agency.

APPROPRIATION

Expenditures out of C.R.F.

(1) Subject to subsection (2), the Minister may, in any fiscal year on terms and conditions — including the rate of interest, if any — that are determined by the Minister, advance amounts out of the Consolidated Revenue Fund to the Agency to permit it to defray its costs of operation.

Spending authority

(2) In carrying out its responsibilities, the Agency may spend assessments and other revenues received through the conduct of its operations in the fiscal year in which they are received or, unless an appropriation Act provides otherwise, in the next fiscal year. The amount of those assessments or other revenues shall be paid out of the Consolidated Revenue Fund.

CONFLICT OF INTEREST

Ownership

No Commissioner, person appointed under subsection 4(4) or Deputy Commissioner shall beneficially own, directly or indirectly, any shares of any financial institution, bank holding company, insurance holding company or of any other body corporate, however created, carrying on any business in Canada that is substantially similar to any business carried on by any financial institution.

Borrowing

No Commissioner, person appointed under subsection 4(4) or Deputy Commissioner shall borrow money from any financial institution or from any member institution as defined in the Canada Deposit Insurance Corporation Act unless the Minister is first informed in writing of the intention of the Commissioner, person or Deputy Commissioner to do so.

No grant or gratuity to be made

(1) The Commissioner, a person appointed under subsection 4(4), a Deputy Commissioner and any person appointed under

section 10 shall not accept or receive, directly or indirectly, any grant or gratuity from a financial institution, bank holding company, insurance holding company, or from a director, officer or employee of any of them, and no such financial institution, bank holding company, insurance holding company, director, officer or employee shall make or give any such grant or gratuity.

Offence and punishment

(2) Every person, financial institution, bank holding company or insurance holding company that contravenes subsection (1) is guilty of an offence and liable

(

a) on

summary conviction, to a fine of not more than $2000 or to imprisonment for a term of not more than six months or to both; or

(

b) on conviction on indictment, to a fine of not more than $10,000 or to imprisonment for a term of not more than five years or to both.

CONFIDENTIALITY

Confidential information

(1) Subject to subsection (2) and except as otherwise provided in this Act, information regarding the business or affairs of a financial institution or regarding persons dealing with one that is obtained by the Commissioner or by any person acting under the direction of the Commissioner, in the course of the exercise or performance of powers, duties and functions referred to in subsections 5(1) and (2) and any information prepared from that information, is confidential and shall be treated accordingly.

Disclosure permitted

(2) If 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 it

(

a) to any government agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision;

(

b) to any other agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision;

(

c) to the Canada Deposit Insurance Corporation or any compensation association designated by order of the Minister pursuant to subsection 449(1) or 591(1) of the Insurance Companies Act , for purposes related to its operation; and

(

d) to 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.

ASSESSMENTS

Commissioner to ascertain expenses

(1) The Commissioner shall, before December 31 in each year, ascertain the total amount of expenses incurred during the immediately preceding fiscal year for or in connection with the administration of this Act and the consumer provisions, and the amounts of any prescribed categories of those expenses in relation to any prescribed group of financial institutions.

Amount conclusive

(2) The amounts ascertained under subsection (1) are final and conclusive for the purposes of this section.

Assessment

(3) As soon as possible after ascertaining the amounts under subsection (1), the Commissioner shall assess a portion of the total amount of expenses against each financial institution to the extent and in the manner that the Governor in Council may, by regulation, prescribe.

Interim assessment

(4) The Commissioner may, during each fiscal year, prepare an interim assessment against any financial institution.

Assessment is binding

(5) Every assessment and interim assessment is final and conclusive and binding on the financial institution against which it is made.

Recovery

(6) Every assessment and interim assessment constitutes a debt due to Her Majesty, is immediately payable and may be recovered as a debt in any court of competent jurisdiction.

Interest

(7) Interest may be charged on the unpaid amount of an assessment or interim assessment at a rate equal to the rate prescribed under the Income Tax Act for amounts payable by the Minister of National Revenue as refunds of overpayments of tax under that Act in effect from time to time plus 2 %.

ADMINISTRATIVE MONETARY PENALTIES

Violations

Regulations

(1) The Governor in Council may make regulations

(

a) designating, as a violation that may be proceeded with under sections 20 to 31, the contravention of a specified consumer provision, or the non-compliance with a compliance agreement entered into under

an Act listed in

Schedule 1;

(

b) fixing, in accordance with subsection (2), a penalty, or a range of penalties, in respect of any violation;

(

c) respecting the service of documents required or authorized to be served under sections 20 to 31, including the manner and proof of service and the circumstances under which documents are deemed to be served; and

(

d) generally, for carrying out the purposes and provisions of this

section and sections 20 to 31.

Maximum penalties

(2) The maximum penalty for a violation is $50,000 in the case of a violation that is committed by a natural person, and $100,000 in the case of a violation that is committed by a financial institution.

Criteria for penalty

Except if a penalty is fixed under paragraph 19(1)( b ), the amount of a penalty shall, in each case, be determined taking into account

(

a) the degree of intention or negligence on the part of the person who committed the violation;

(

b) the harm done by the violation;

(

c) the history of the person who committed the violation with respect to any prior violation or conviction under

an Act listed in

Schedule 1 within the five-year period immediately before the violation; and

(

d) any other criteria that may be prescribed.

How act or omission may be proceeded with

If a contravention or non-compliance that is designated under paragraph 19(1)(

a) can be proceeded with either as a violation or as an offence, proceeding in one manner precludes proceeding in the other.

Proceedings

Commission of violation

(1) Every contravention or non-compliance that is designated under paragraph 19(1)(

a) constitutes a violation and the person who commits the violation is liable to a penalty determined in accordance with sections 19 and 20.

Notice of violation

(2) If the Commissioner believes on reasonable grounds that a person has committed a violation, he or she may issue, and shall cause to be served on the person, a notice of violation.

Contents of notice

(3) A notice of violation shall name the person believed to have committed a violation, identify the violation and set out

(

a) the penalty that the Commissioner proposes to impose;

(

b) the right of the person, within 30 days after the notice is served, or within any longer period that the Commissioner specifies, to pay the penalty or to make representations to the Commissioner with respect to the violation and the proposed penalty, and the manner for doing so; and

(

c) the fact that, if the person does not pay the penalty or make representations in accordance with the notice, the person will be deemed to have committed the violation and the Commissioner may impose a penalty in respect of it.

Determination of Responsibility and Penalty

Payment of penalty

(1) If the person pays the penalty proposed in the notice of violation, the person is deemed to have committed the violation and proceedings in respect of it are ended.

Representations to Commissioner

(2) If the person makes representations in accordance with the notice, the Commissioner shall decide, on a balance of probabilities, whether the person committed the violation and, if so, may, subject to any regulations made under paragraph 19(1)( b ), impose the penalty proposed, a lesser penalty or no penalty.

Failure to pay or make representations

(3) A person who neither pays the penalty nor makes representations in accordance with the notice is deemed to have committed the violation and the Commissioner may, subject to any regulations made under paragraph 19(1)( b ), impose the penalty proposed, a lesser penalty or no penalty.

Notice of decision and right of appeal

(4) The Commissioner shall cause notice of any decision made under subsection (2) or (3) to be issued and served on the person together with notice of the right of appeal under

section 24.

Appeal to Federal Court

Right of appeal

(1) A person on whom a notice under subsection 23(4) is served may, within 30 days after the notice is served, or within any longer period that the Court allows, appeal the decision to the Federal Court.

Court to take precautions against disclosing

(2) In an appeal, the Court shall take every reasonable precaution, including, when appropriate, conducting hearings in private, to avoid the disclosure by the Court or any person of confidential information referred to in subsection 17(1).

Powers of Court

(3) On an appeal, the Court may confirm, set aside or, subject to any regulations made under paragraph 19(1)( b ), vary the decision of the Commissioner.

Enforcement

Debts to Her Majesty

(1) A penalty constitutes a debt due to Her Majesty in right of Canada that may be recovered as such in the Federal Court.

Time limit

(2) No proceedings to recover a debt referred to in subsection (1) may be commenced later than five years after the debt became payable.

Proceeds payable to Receiver General

(3) A penalty paid or recovered under sections 19 to 24, this

section and sections 26 to 31 is payable to and shall be remitted to the Receiver General.

Certificate of default

(1) The unpaid amount of any debt referred to in subsection 25(1) may be certified by the Commissioner.

Registration in Federal Court

(2) Registration in the Federal Court of a certificate made under subsection (1) has the same effect as a judgment of that Court for a debt of the amount specified in the certificate and all related registration costs.

Rules about Violations

Violations not offences

For greater certainty, a violation is not an offence and, accordingly,

section 126 of the Criminal Code does not apply in respect of one.

Due diligence available

(1) Due diligence is a defence in a proceeding in relation to a violation.

Common law principles

(2) Every rule and principle of the common law that renders any circumstance a justification or excuse in relation to a charge for an offence in relation to a consumer provision applies in respect of a violation to the extent that it is not inconsistent with this Act.

General Provisions

Evidence

In a proceeding in respect of a violation or a prosecution for an offence, a notice purporting to be issued under subsection 22(2) or 23(4) or a certificate purporting to be made under subsection 26(1) is admissible in evidence without proof of the signature or official character of the person appearing to have signed it.

Time limit

(1) No proceedings in respect of a violation may be commenced later than two years after the subject-matter of the proceedings became known to the Commissioner.

Certificate of Commissioner

(2) A document appearing to have been issued by the Commissioner, certifying the day on which the subject-matter of any proceedings became known to the Commissioner, is admissible in evidence without proof of the signature or official character of the person appearing to have signed the document and is, in the absence of evidence to the contrary, proof of the matter asserted in it.

Publication

The Commissioner may make public the nature of a violation, the name of the person who committed it, and the amount of the penalty imposed.

REGULATIONS

Regulations

The Governor in Council may make regulations prescribing

(

a) anything that is required or authorized by this Act to be prescribed; and

(

b) the way in which anything that is required or authorized by this Act to be prescribed shall be determined.

NO LIABILITY

No liability

No action lies against Her Majesty, the Minister, the Commissioner, any Deputy Commissioner, any officer or employee of the Agency or any person acting under the direction of the Commissioner for anything done or omitted to be done in good faith in the administration or discharge of any powers or duties that under any Act of Parliament are intended or authorized to be executed or performed.

ANNUAL REPORT

Annual report

The Minister shall cause to be laid before each House of Parliament, not later than the fifth sitting day of that House after September 30 next following the end of each fiscal year, a report showing the operations of the Agency for that year and describing in aggregate form its conclusions on the compliance of financial institutions with the consumer provisions applicable to them in that year.

AMENDMENTS TO ACTS IN RELATION TO FINANCIAL INSTITUTIONS

1991, c. 46

Bank Act

(1) The definition foreign bank subsidiary in

section 2 of the Bank Act is repealed.

1999, c. 28, s. 1(2)

(2) The

definitions affairs , annual statement , central securities register or securities register , head office , incorporator , recorded address , regulatory capital and subsidiary in

section 2 of the Act are replaced by the following:

affairs

affaires internes

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, 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;

annual statement

rapport 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 );

central securities register or securities register

registre central des valeurs mobilières ou registre des valeurs mobilières

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;

head office

siège

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;

incorporator

fondateur

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;

recorded address

adresse enregistrée

recorded address means

(

a) in 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, and

(

b) in 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;

regulatory capital

capital réglementaire

regulatory capital , in respect of a bank or a bank holding company, has the meaning given that expression by the regulations;

subsidiary

filiale

subsidiary means an entity that is a subsidiary of another entity as defined in

section 5;

1999, c. 28, s. 1(3)

(3) Paragraph (

c) of the definition complainant in

section 2 of the Act is replaced by the following:

(

c) any other person who, in the discretion of a court, is a proper person to make an application under

section 334, 338 or 989;

1991, c. 47, par. 756(1)( a ), c. 48, par. 494( a )

(4) Paragraphs (

c) and (

d) of the definition financial institution in

section 2 of the Act are replaced by the following:

(

c) an association to which the Cooperative Credit Associations Act applies or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act,

(

d) an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act ,

(5) The portion of the definition foreign bank in

section 2 of the Act after paragraph (

f) is replaced by the following:

(

g) is 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;

(6) Paragraph (

a) of the definition foreign institution in

section 2 of the Act is replaced by the following:

(

a) engaged 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, and

(7) Section 2 of the Act is amended by adding the following in alphabetical order:

Agency

Agence

Agency means the Financial Consumer Agency of Canada established under

section 3 of the Financial Consumer Agency of Canada Act ;

bank holding company

société de portefeuille bancaire

bank holding company means a body corporate that is incorporated or formed under

Part XV;

Commissioner

commissaire

Commissioner means the Commissioner of the Financial Consumer Agency of Canada appointed under

section 4 of the Financial Consumer Agency of Canada Act ;

consumer provision

disposition visant les consomma­teurs

consumer provision means a provision referred to in paragraph (

a) of the definition consumer provision in

section 2 of the Financial Consumer Agency of Canada Act ;

equity

capitaux propres

equity , in respect of a bank or a bank holding company, means its equity as determined in accordance with the regulations;

federal financial institution

institution financière fédérale

federal financial institution means

(

a) a bank,

(

b) a body corporate to which the Trust and Loan Companies Act applies,

(

c) an association to which the Cooperative Credit Associations Act applies or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act, or

(

d) an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act ;

insurance holding company

société de portefeuille d’assurances

insurance holding company means a body corporate that is incorporated or formed under

Part XVII of the Insurance Companies Act ;

The Act is amended by adding the following after

section 2.1:

Major shareholder

2.2

For the purposes of this Act, a person is a major shareholder of a body corporate if

(

a) the 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; or

(

b) the 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.

Widely held

2.3

For the purposes of this Act, an entity is widely held if it is

(

a) a body corporate that has no major shareholder;

(

b) an insurance company incorporated or formed under a mutual plan;

(

c) an association to which the Cooperative Credit Associations Act applies; or

(

d) a cooperative credit society incorporated or formed, and regulated, by or under

an Act of the legislature of a province.

(1) Paragraph 3(1)(

d) of the French version of the Act is replaced by the following:

d) dans tous les cas, la personne dont l’influence directe ou indirecte auprès de l’entité est telle que son exercice aurait pour résultat le contrôle de fait de celle-ci.

(2) The portion of subsection 3(3) of the Act before paragraph (

a) is replaced by the following:

Deemed control

(3) A person is deemed to control, within the meaning of paragraph (1)(

a) or ( b ), an entity if the aggregate of

(3) Section 3 of the Act is amended by adding the following after subsection (3):

Guidelines

(4) The 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.

Sections 4 and 5 of the Act are replaced by the following:

Holding body corporate

A body corporate is the holding body corporate of any entity that is its subsidiary.

Subsidiary

An entity is a subsidiary of another entity if it is controlled by the other entity.

Subsection 6(2) of the Act is replaced by the following:

Affiliated entities

(2) Despite 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.

Section 8 of the Act is replaced by the following:

Significant interest

(1) A person has a significant interest in a class of shares of a bank or a bank holding company if the aggregate of

(

a) any shares of that class beneficially owned by the person, and

(

b) any shares of that class beneficially owned by entities controlled by the person

exceeds 10 per cent of all of the outstanding shares of that class of shares of the bank or bank holding company.

Increasing significant interest

(2) A 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 person

(

a) acquires beneficial ownership of additional shares of that class, or

(

b) acquires 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.

Subsections 9(1) and (2) of the Act are replaced by the following:

Acting in concert

(1) For 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 of

(

a) shares of a bank or of a bank holding company that they beneficially own,

(

b) shares or ownership interests that they beneficially own of any entity that beneficially owns shares of a bank or of a bank holding company, or

(

c) shares 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 concert

(2) Without 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 ),

(

a) whereby any of them or their nominees may veto any proposal put before the board of directors of the bank or bank holding company, or

(

b) under 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).

Subsections 11(2) and (3) of the Act are replaced by the following:

Exemption

(2) On application by a bank or bank holding company, the Superintendent may determine that a security of the bank or bank holding company is not or was not part of a distribution to the public if the Superintendent is satisfied that the determination would not prejudice any security holder of the bank or bank holding company.

Securities deemed part of distribution

(3) For the purposes of this Act, securities of a bank or bank holding company issued on the conversion of other securities or issued in exchange for other securities are deemed to be securities that are part of a distribution to the public if those other securities were part of a distribution to the public.

42.1

Subsection 12(1) of the Act is replaced by the following:

Exemption from foreign bank status

(1) The 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.

1999, c. 28, s. 4

Sections 13 and 14 of the Act are replaced by the following:

Application of Act

This Act is the charter of and applies to each bank.

Schedule I and

Schedule II banks

(1) Subject to this Act,

(

a) there shall be set out in

Schedule I

(

i) the 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,

(ii)

the name of every bank incorporated or formed under this Act that is not a subsidiary of a foreign bank, and

(iii)

the place in Canada where the head office of the bank is situated; and

(

b) there shall be set out in

Schedule II

(

i) the 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,

(ii)

the name of every bank incorporated or formed under this Act that is a subsidiary of a foreign bank, and

(iii)

the place in Canada where the head office of the bank is situated.

Amending the schedules

(2) Where

(

a) a bank is incorporated,

(

b) a body corporate is continued as a bank,

(

c) one or more bodies corporate are amalgamated as a bank,

(

d) the name of a bank is changed,

(

e) the head office of a bank is changed,

(

f) a bank becomes, or ceases to be, a subsidiary of a foreign bank, or

(

g) a bank is dissolved,

Schedules I and II shall be amended accordingly.

Notice of amendments

(3) If 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.

43.1

The Act is amended by adding the following after

section 14.1:

Exemption of foreign banks

14.2

The Governor in Council may make regulations exempting any class of foreign banks from the application of any provision of this Act.

1997, c. 15, s. 2; 1999, c. 28, s. 9

Section 21 of the Act is replaced by the following:

Sunset provision

(1) Subject to subsection (2), banks shall not carry on business and authorized foreign banks shall not carry on business in Canada after the day that is five years after this

section comes into force, except that, if Parliament dissolves on that day or at any time within the three-month period before that day, banks may continue to carry on business, and authorized foreign banks may continue to carry on business in Canada, respectively, until the day that is one hundred and eighty days after the first day of the first session of the next Parliament.

Extension

(2) The 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.

Paragraph 23(

d) of the Act is replaced by the following:

(

d) an 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.

1999, c. 28, s. 10

Section 24 of the Act is replaced by the following:

Subsidiary of foreign bank

If 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.

Section 27 of the Act is replaced by the following:

Matters for consideration

Before issuing letters patent to incorporate a bank, the Minister 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 for the bank;

(

b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the bank;

(

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 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 on the conduct of those businesses and operations;

(

g) 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 to

(

i) the nature and extent of the proposed financial services activities to be carried out by the bank and its affiliates, and

(ii)

the nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the bank; and

(

h) the best interests of the financial system in Canada.

1991, c. 47, s. 756(2)

(1) Subsection 29(1) of the Act is replaced by the following:

Letters patent of incorporation on application of certain companies

(1) If 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.

(2) Subsection 29(9) of the Act is repealed.

1994, c. 24, par. 34(1)( b )(F)

Subsection 33(1) of the Act is replaced by the following:

Federal corporations

(1) A 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.

1997, c. 15, s. 4; 1999, c. 28, s. 11

Sections 39.1 and 39.2 of the Act are replaced by the following:

This Act ceases to apply

39.1

section 39.2 or 402.1 applies in respect of a bank, on the day specified in the letters patent continuing the bank as a company under subsection 33(1) or 234(1) of the Trust and Loan Companies Act , this Act ceases to apply to the bank and that Act applies to the company so continued under that Act.

Other transfer

39.2

A bank may apply for letters patent continuing the bank as a company under subsection 33(1) of the Trust and Loan Companies Act or amalgamating and continuing the bank as a company under

section 228 and subsection 234(1) of that Act.

1999, c. 28, s. 12

Paragraph 40(

e) of the Act is replaced by the following:

(

e) 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.

1996, c. 6, s. 1

Section 41 of the Act is replaced by the following:

Affiliated bank

Despite

section 40, a bank that is affiliated with another entity may, with the consent of that entity and the approval of the Superintendent, be incorporated with, or change its name to, substantially the same name as that of the affiliated entity.

1996, c. 6, s. 3

Subsection 44(2) of the Act is replaced by the following:

Revoking name

(2) If 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.

Subsection 46(1) of the Act is replaced by the following:

Calling shareholders’ meeting

(1) If 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

section 22 from the issue of its shares, the directors of the bank shall without delay call a meeting of the shareholders of the bank.

Subsection 48(2) of the Act is replaced by the following:

Deeming

(2) If, 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.

Paragraph 52(1)(

b) of the Act is replaced by the following:

(

b) 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);

The Act is amended by adding the following after

section 54:

Limit on assets

54.1

(1) The 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 on

(

a) the nature and extent of the financial services activities carried out by entities affiliated with the bank; and

(

b) the 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 order

(2) If 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 assets

(3) For 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 assets

(4) For the purposes of subsections (1) and (3), total assets , in respect of a bank, has the meaning given that expression by the regulations.

1997, c. 15, s. 6(1); 1999, c. 31, s. 9

Subsection 55(1) of the Act is replaced by the following:

Permission to subsidiary of foreign bank

(1) On 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 to

(

a) hold 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; and

(

b) hold 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.

Subsection 59(5) of the Act is replaced by the following:

Deemed share conditions

(5) If 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.

Subsection 61(3) of the Act is replaced by the following:

Effective date

(3) A 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).

(1) Subsection 79(1) of the Act is replaced by the following:

Declaration of dividend

(1) The directors of a bank may declare and a bank may pay a dividend by issuing fully paid shares of the bank or options or rights to acquire fully paid shares of the bank and, subject to subsections (4) and (5), the directors of a bank may declare and a bank 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.

(2) Section 79 of the Act is amended by adding the following after subsection (4):

When dividend not to be declared

(5) The directors of a bank shall not declare and a bank shall not pay a dividend in any financial year without the approval of the Superintendent if, on the day the dividend is declared, the total of all dividends declared by the bank in that year would exceed the aggregate of the bank’s net income up to that day in that year and of its retained net income for the preceding two financial years.

Subsection 93(1) of the French version of the Act is replaced by the following:

Relations avec le détenteur inscrit

(1) La banque ou le fiduciaire visé à l’article 294 peut, sous réserve des paragraphes 137(2) à (5) et des articles 138 à 141 et 145, considérer le détenteur inscrit d’une valeur mobilière comme la seule personne ayant qualité pour voter, recevoir des avis ainsi que les intérêts, dividendes ou autres paiements et exercer tous les droits et pouvoirs du propriétaire de la valeur mobilière.

Section 138 of the Act is amended by adding the following after subsection (1):

Number of eligible votes

(1.1) A bank with equity of five 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.

Subsection 142(2) of the French version of the Act is replaced by the following:

Renonciation à l’avis

(2) La présence à l’assemblée équivaut à une renonciation de l’avis de convocation, sauf lorsque la personne y assiste spécialement pour s’opposer aux délibérations au motif que l’assemblée n’est pas régulièrement convoquée.

The portion of subsection 145(1) of the Act before paragraph (

a) is replaced by the following:

Shareholder list

(1) A bank shall prepare a list, which may be in electronic form, of its shareholders entitled to receive notice of a meeting under paragraph 138(1)( a ), arranged in alphabetical order and showing the number of shares held by each shareholder, which list must be prepared

Section 148 of the Act is replaced by the following:

One share — one vote

Subject 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.

The Act is amended by adding the following after

section 156.08:

Restrictions on Voting

Meaning of eligible votes

156.09

(1) In 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).

Restriction

(2) At a meeting of shareholders of a bank with equity of five 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.

Proxyholders

(3) No 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).

Exception

(4) If 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.

Exception

(5) Subsections (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.

Exception

(6) Subsection (2) does not apply in respect of a vote held under

section 218.

Validity of vote

(7) A vote in respect of a particular matter is not invalid merely because a person voted contrary to subsection (2) or (3).

Disposition of shareholdings

(8) If, 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 rights

(9) If 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 apply

(10) Subsection (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 notice

(11) For 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 persons

(12) For 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.

Paragraph 157(2)(

f) of the French version of the Act is replaced by the following:

f) désigner l’un des comités du conseil d’administration pour surveiller l’application des mécanismes et procédures visés à l’alinéa e ) et s’assurer que ces mécanismes et procédures soient respectés par la banque;

Subsection 159(2) of the Act is replaced by the following:

Residency requirement

(2) At least one half of the directors of a bank that is a subsidiary of a foreign bank and at least two thirds of the directors of any other bank must be, at the time of each director’s election or appointment, resident Canadians.

1997, c. 15, s. 12

Paragraphs 160(

e) and (

f) of the Act are replaced by the following:

(

e) a person who is prohibited by

section 392 or 401.3 or subsection 156.09(9) from exercising voting rights attached to shares of the bank;

(

f) a person who is an officer, director or full time employee of an entity that is prohibited by

section 392 or 401.3 or subsection 156.09(9) from exercising voting rights attached to shares of the bank;

The Act is amended by adding the following after

section 160:

Exception

160.1

Paragraph 160(

g) does not apply to a person if

(

a) the person is employed in a department or agency of the Government of Canada that is not involved in the regulation or supervision of financial institutions;

(

b) the person’s duties do not involve financial institutions; and

(

c) the bank is controlled by a local cooperative credit society, as defined in

section 2 of the Cooperative Credit Associations Act , in which the following persons, in aggregate, hold more than 50 per cent or, if a percentage has been prescribed for the purpose of this paragraph, the prescribed percentage, of the ownership interests in the local cooperative credit society, namely,

(

i) employees of Her Majesty in right of Canada or of a province,

(ii)

former employees of Her Majesty in right of Canada or of a province,

(iii)

the spouse or common-law partner of a person referred to in subparagraph (

i) or (ii), and

(iv)

a child who is less than eighteen years of age of a person referred to in subparagraph (

i) or (ii).

Subsection 163(2) of the Act, as amended by

section 13 of

An Act to amend certain laws relating to financial institutions , being

chapter 15 of the Statutes of Canada, 1997, is repealed.

Section 168 of the Act is amended by adding the following after subsection (3):

Exception

(3.1) Subsection (2) does not apply to a widely held bank with equity of five billion dollars or more or to a bank in respect of which subsection 378(1) applies.

Subsection 172(1) of the Act is amended by striking out the word “or” at the end of paragraph ( c ), by adding the word “or” at the end of paragraph (

d) and by adding the following after paragraph ( d ):

(

e) when the director is removed from office under

section 647 or 647.1.

Paragraph 183(1)(

a) of the Act is replaced by the following:

(

a) in the case of a bank that is a subsidiary of a foreign bank, at least one half of the directors present are resident Canadians; or

The Act is amended by adding the following after

section 183:

Presence of unaffiliated director

183.1

(1) The 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.

Exception

(2) Despite 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.

Exception

(3) Subsection (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.

1997, c. 15, s. 23(1)

Paragraph 195(3)(

b) of the Act is replaced by the following:

(

b) review those procedures and their effectiveness in ensuring that the bank is complying with

Part XI;

( b.1 )

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,

(

i) establish policies for entering into transactions referred to in subsection 495.1(1), and

(ii)

review transactions referred to in subsection 495.3(1); and

77.1

Section 204 of the French version of the Act is replaced by the following:

Déclaration suffisante d’intérêt

Pour l’application du paragraphe 202(1), quiconque donne au conseil un avis général lui faisant savoir qu’il est administrateur ou dirigeant d’une entité ou possède un intérêt important dans une personne, et doit être considéré comme ayant un intérêt dans tout contrat conclu avec cette entité ou personne, s’acquitte de son obligation de déclaration d’intérêt.

The portion of

section 211 of the Act before paragraph (

a) is replaced by the following:

Reliance on statement

A director, an officer or an employee of a bank is not liable under subsection 158(1) or (2),

section 207 or 210 or subsection 506(1) if the director, officer or employee relies in good faith on

The portion of subsection 212(1) of the French version of the Act before paragraph (

a) is replaced by the following:

Indemnisation

(1) La banque peut indemniser ses administrateurs ou ses dirigeants — ou leurs prédécesseurs —, ainsi que les personnes qui, à sa demande, agissent ou ont agi en cette qualité pour une entité dont elle est ou a été actionnaire ou créancière, de tous leurs frais, y compris les montants versés en règlement d’une action ou pour satisfaire à un jugement, entraînés par des procédures civiles, pénales ou administratives auxquelles ils étaient parties en cette qualité, sauf à l’occasion d’actions intentées par la banque ou pour son compte en vue d’obtenir un jugement favorable, si :

Section 215 of the Act is replaced by the following:

Incorporating instrument

On 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.

Subsection 216(1) of the Act is replaced by the following:

Letters patent to amend

(1) On receipt of an application referred to in

section 215, the Minister may issue letters patent to effect the proposal.

(1) Subsection 217(1) of the Act is amended by striking out the word “or” at the end of paragraph (

i) and by adding the following after paragraph ( i ):

( i.1 )

change the name of the bank; or

(2) Subsection 217(3) of the Act is replaced by the following:

Effective date of by-law

(3) A 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 referred to in paragraph (1)( i.1 ), approved by the Superintendent.

Subsection 221(1) of the Act is replaced by the following:

Proposal to amend

(1) Subject 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.

Section 223 of the Act is replaced by the following:

Application to amalgamate

(1) On the joint application of two or more bodies corporate incorporated by or under

an Act of Parliament, including banks and bank holding companies, the Minister may issue letters patent amalgamating and continuing the applicants as one bank.

Restriction

(2) Despite 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) unless

(

a) the amalgamated bank would be a widely held bank; or

(

b) the amalgamated bank would be controlled by a widely held bank holding company that, at the time the application was made, controlled

(

i) the applicant, or

(ii)

any 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.

Restriction

(3) Despite subsection (1), if the amalgamated bank would be a bank with equity of five billion dollars or more, the Minister shall not issue letters patent referred to in that subsection unless the amalgamated bank is

(

a) widely held;

(

b) 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; or

(

c) controlled, 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.

Subsection 228(3) of the Act is replaced by the following:

Application of sections 23 to 26

(3) If 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 consideration

(4) Before 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, including

(

a) the sources of continuing financial support for the amalgamated bank;

(

b) the soundness and feasibility of the plans of the applicants for the future conduct and development of the business of the amalgamated bank;

(

c) the business record and experience of the applicants;

(

d) the reputation of the applicants for being operated in a manner that is consistent with the standards of good character and integrity;

(

e) 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;

(

f) the impact of any integration of the operations and businesses of the applicants on the conduct of those operations and businesses;

(

g) 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 to

(

i) the nature and extent of the proposed financial services activities to be carried out by the amalgamated bank and its affiliates, and

(ii)

the 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; and

(

h) the best interests of the financial system in Canada.

The Act is amended by adding the following after

section 229:

Court enforcement

229.1

(1) If 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.

Appeal

(2) An 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.

1999, c. 28, s. 14

Subsection 230(1) of the Act is amended by adding the word “and” at the end of paragraph (

g) and by repealing paragraph ( h ).

(1) Section 239 of the Act is amended by adding the following after subsection (5):

Electronic access

(5.1) A 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.

(2) Subsection 239(6) of the French version of the Act is replaced by the following:

Exemplaires

(6) Les actionnaires peuvent sur demande et sans frais, une fois par année civile, obtenir un exemplaire des règlements administratifs de la banque.

Subsection 245(1) of the Act is replaced by the following:

Location and processing of information

(1) Subject to subsection (3), a bank shall maintain and process in Canada any information or data relating to the preparation and maintenance of the records referred to in

section 238 unless the Superintendent has, subject to any terms and conditions that the Superintendent considers appropriate, exempted the bank from the application of this section.

Subsection 248(3) of the Act is replaced by the following:

Application of certain provisions

(3) Subsections 239(5) and (5.1) and sections 240 and 242 to 245 apply, with any modifications that the circumstances require, in respect of a central securities register.

Section 307 of the Act is replaced by the following:

Financial year

(1) The 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 year

(2) If 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.

Exception

(3) Despite 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.

(1) The portion of paragraph 308(3)(

a) of the Act before subparagraph (

i) is replaced by the following:

(

a) a 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,

(2) Section 308 of the Act is amended by adding the following after subsection (4):

Regulations

(5) The Governor in Council may make regulations respecting subsidiaries that are not required to be listed for the purposes of paragraph (3)( a ).

1997, c. 15, s. 35

Section 312 of the Act is replaced by the following:

Copy to Superintendent

(1) Subject to subsection (2), a bank shall send to the Superintendent a copy of the documents referred to in subsections 308(1) and (3) not later than twenty-one days before the date of each annual meeting of shareholders of the bank.

Later filing

(2) If a bank’s shareholders sign a resolution under paragraph 152(1)(

b) in lieu of an annual meeting, the bank shall send a copy of the documents referred to in subsections 308(1) and (3) to the Superintendent not later than thirty days after the signing of the resolution.

(1) Subsection 315(3) of the Act is replaced by the following:

Notice of designation

(3) Within 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.

(2) Subsection 315(4) of the French version of the Act is replaced by the following:

Remplacement d’un membre désigné

(4) Si, pour une raison quelconque, le membre désigné cesse de remplir ses fonctions, la banque et le cabinet de comptables peuvent désigner conjointement un autre membre qui remplit les conditions du paragraphe (1); la banque en avise sans délai par écrit le surintendant.

Subsection 369(2) of the Act is replaced by the following:

Priority not affected

(2) Nothing in subsection (1) prejudices or affects the priority of any holder of any security interest in any property of a bank.

(1) The

definitions eligible Canadian financial institution and eligible foreign institution in subsection 370(1) of the Act are replaced by the following:

eligible Canadian financial institution

institution financière canadienne admissible

eligible Canadian financial institution means a Canadian financial institution that is a body corporate and that is widely held;

eligible foreign institution

institution étrangère admissible

eligible foreign institution means

(

a) a 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, or

(

b) a foreign institution that, in the opinion of the Minister,

(

i) 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, and

(ii)

is widely held;

1991, c. 48, par. 494( b )

(2) Subsections 370(2) to (4) of the Act are repealed.

Subsection 371(1) of the Act is replaced by the following:

Associates

(1) For the purpose of determining ownership of a bank, where two persons who each beneficially own 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 of the bank beneficially owned by them.

1991, c. 46, s. 578; 1991, c. 48, par. 494( c ); 1994, c. 47, ss. 17 to 21; 1997, c. 15, ss. 36 to 41; 1999, c. 28, ss. 18 to 20

Sections 372 to 400 of the Act are replaced by the following:

Constraints on Ownership

Significant interest

Except as permitted by this Part, no person shall have a significant interest in any class of shares of a bank.

Acquisition of significant interest

(1) Subject to this Part, no person, or entity controlled by a person, shall, without the approval of the Minister, purchase or otherwise acquire any share of a bank or purchase or otherwise acquire control of any entity that holds any share of a bank if

(

a) the acquisition would cause the person to have a significant interest in any class of shares of the bank; or

(

b) where the person has a significant interest in a class of shares of the bank, the acquisition would increase the significant interest of the person in that class of shares.

Amalgamation, etc., constitutes acquisition

(2) If, as a result of an amalgamation, merger or reorganization, the entity that results would have a significant interest in a class of shares of a bank, that entity is deemed to be acquiring a significant interest in that class of shares of the bank through an acquisition for which the approval of the Minister is required.

Limitations on share holdings

(1) No person may be a major shareholder of a bank with equity of five billion dollars or more.

Exception — widely held bank

(2) Subsection (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 five billion dollars or more if it controlled, within the meaning of those paragraphs, the bank on the day the bank’s equity reached five billion dollars and it has controlled, within the meaning of those paragraphs, the bank since that day.

Exception — widely held bank holding company

(3) Subsection (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 five billion dollars or more if

(

a) the bank holding company controlled, within the meaning of those paragraphs, the bank on the day the bank’s equity reached five billion dollars and it has controlled, within the meaning of those paragraphs, the bank since that day;

(

b) 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; or

(

c) the 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 institutions

(4) Subsection (1) does not apply to any of the following that controls, within the meaning of paragraph 3(1)( d ), the bank with equity of five billion dollars or more if it controlled, within the meaning of that paragraph, the bank on the day the bank’s equity reached five billion dollars and it has controlled, within the meaning of that paragraph, the bank since that day:

(

a) a widely held insurance holding company;

(

b) an eligible Canadian financial institution, other than a bank; or

(

c) an eligible foreign institution.

Exception — other entities

(5) Subsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(

a) and ( d ), the bank with equity of five 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 entities

(6) Subsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)( d ), the bank with equity of five billion dollars or more if the entity is controlled, within the meaning of that paragraph, by

(

a) a widely held insurance holding company to which subsection (4) applies that controls the bank;

(

b) an eligible Canadian financial institution to which subsection (4) applies, other than a bank, that controls the bank; or

(

c) an eligible foreign institution to which subsection (4) applies that controls the bank.

Exception

374.1

(1) Despite

section 374, if a bank with equity of five 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 — widely held banks and bank holding companies

(2) Subsection (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 institutions

(3) Subsection (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) a widely held insurance holding company;

(

b) an eligible Canadian financial institution, other than a bank; or

(

c) an eligible foreign institution.

Exception — other entities

(4) Subsection (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 entities

(5) Subsection (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) a widely held insurance holding company to which subsection (3) applies that controls the amalgamated bank;

(

b) an eligible Canadian financial institution to which subsection (3) applies, other than a bank, that controls the amalgamated bank; or

(

c) an eligible foreign institution to which subsection (3) applies that controls the amalgamated bank.

Extension

(6) If 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.

Limitation on share holdings

(1) If a person is a major shareholder of a bank with equity of less than five billion dollars and the bank’s equity reaches five 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 five billion dollars.

Exception

(2) Subsection (1) does not apply if any of subsections 374(2) to (6) applies to the person in respect of the bank.

Extension

(3) If 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.

Obligation of widely held bank

(1) If a widely held bank with equity of five 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,

(

a) the widely held bank no longer controls the other bank; or

(

b) the 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

(2) Subsection (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.

Extension

(3) If 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.

Obligation of widely held bank

376.01

(1) Despite subsection 376(1), if a widely held bank with equity of five 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,

(

a) the widely held bank no longer controls the other bank; or

(

b) the 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.

Extension

(2) If 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.

Prohibition against significant interest

376.1

No person who has a significant interest in any class of shares of a widely held bank with equity of five 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.

Prohibition against significant interest

376.2

No 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 five billion dollars or more, or of any widely held bank holding company with equity of five billion dollars or more, that controls the bank.

Prohibition against control

(1) No person shall control, within the meaning of paragraph 3(1)( d ), a bank with equity of five billion dollars or more.

Exception

(2) Subsection (1) does not apply if any of subsections 374(2) to (6) applies to the person in respect of the bank.

Restriction on control

377.1

No person shall, without the prior approval of the Minister, acquire control, within the meaning of paragraph 3(1)( d ), of a bank with equity of less than five billion dollars.

Former

Schedule I banks with equity of less than five billion dollars

(1) A bank that was 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 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 five billion dollars or more.

Non-application of subsection (1)

(2) Subsection (1) ceases to apply to a bank that continues to have equity of less than five billion dollars if the Minister specifies that it no longer applies to the bank.

Prohibition

378.1

No person may control or be a major shareholder of a bank if the person or an entity affiliated with the person

(

a) has 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; or

(

b) 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.

Prohibition

378.2

No person who controls a bank or who is a major shareholder of a bank, and no entity affiliated with that person, may

(

a) control 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; or

(

b) engage in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.

Constraint on registration

No bank 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 to any person or to any entity controlled by a person if

(

a) the transfer or issue of the share would cause the person to have a significant interest in any class of shares of the bank; or

(

b) where the person has a significant interest in a class of shares of the bank, the transfer or issue of the share would increase the significant interest of the person in that class of shares.

Exemption

On application by a bank, other than a bank with equity of five 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 for small holdings

Despite

section 379, if, as a result of a transfer or issue of shares of a class of shares of a bank to a person, the total number of shares of that class registered in the securities register of the bank in the name of that person would not exceed five thousand and would not exceed 0.1 per cent of the outstanding shares of that class, the bank is entitled to assume that no person is acquiring or increasing a significant interest in that class of shares of the bank as a result of that issue or transfer of shares.

When approval not required

(1) Despite sections 373 and 379, the approval of the Minister is not required in respect of a bank with equity of less than five 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.

Percentage

(2) Subject 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.

Percentage

(3) If 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 of

( a )

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 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, and

( b )

10 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

(4) Subsection (1) does not apply if the purchase or other acquisition of shares or the acquisition of control referred to in that subsection would

(

a) result in the acquisition of control of the bank by the person referred to in that subsection;

(

b) 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;

(

c) 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; or

(

d) result 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.

Regulations

(5) The Governor in Council may make regulations

(

a) exempting 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; and

(

b) exempting 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.

When approval not required

(1) Despite sections 373 and 379, the approval of the Minister is not required if

(

a) the Superintendent has, by order, directed the bank to increase its capital and shares of the bank are issued and acquired in accordance with the terms and conditions, if any, that may be specified in the order; or

(

b) a person who controls, within the meaning of paragraph 3(1)( a ), the bank acquires additional shares of the bank.

Exception

(2) Paragraph (1)(

a) does not apply in respect of a bank with equity of five billion dollars or more.

Pre-approval

For the purposes of sections 373 and 379, the Minister may approve

(

a) the purchase or other acquisition of any number or percentage of shares of a bank that may be required in a particular transaction or series of transactions; or

(

b) the purchase or other acquisition of up to a specified number or percentage of shares of a bank within a specified period.

Public holding requirement

(1) Every bank with equity of one billion dollars or more but less than five 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 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 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.

Determination of day

(2) The day referred to in subsection (1) is

(

a) if the bank had equity of one billion dollars or more but less than five billion dollars on the day the bank came into existence, the day that is three years after that day; and

(

b) in 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 one billion dollars.

Extension

(3) If 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).

Public holding requirement

385.1

If a bank to which

section 385 applies becomes a bank with equity of five 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.

Limit on assets

(1) Unless 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 assets

(2) For 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 assets

(3) For the purposes of subsections (1) and (2), total assets , in respect of a bank, has the meaning given that expression by the regulations.

Increase of capital

If the Superintendent has, by order, directed a bank with equity of one billion dollars or more but less than five 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.

Exemption by order of the Minister

(1) On 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 385

(2) If 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 assets

(3) If 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)

(4) Subsections 386(2) and (3) apply for the purposes of subsection (3).

Exception

(1) If 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) a distribution to the public of voting shares of the bank;

(

b) a redemption or purchase of voting shares of the bank;

(

c) the exercise of any option to acquire voting shares of the bank; or

(

d) the conversion of any convertible securities into voting shares of the bank.

Shares acquiring voting rights

(2) If, 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.

Acquisition of control permitted

(1) Subject 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 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 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 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 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.

Application of

section 385

At 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.

Restriction on voting rights

(1) If, 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 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 or by proxy, exercise any voting rights

(

a) that are attached to shares of the bank 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.

Subsection (1) ceases to apply

(2) Subsection (1) ceases 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 within the meaning of paragraph 3(1)( d );

(

c) if the person failed to comply with an undertaking referred to in subsection 390(2), the bank complies with

section 385; or

(

d) if the person failed to comply with a term or condition imposed under

section 397, the person complies with the term or condition.

Saving

(3) Despite 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.

Loss of control — banks and bank holding companies

(1) Despite 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 five 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.

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.

Loss of control — other entities

393.1

(1) Despite 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 five 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.

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.

Change in status

(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 with equity of five 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; and

(

b) it is not a major shareholder of the bank.

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

Application for approval

(1) An 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.

Applicant

(2) If, 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.

Matters for consideration

(1) Subject 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, including

(

a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the bank;

(

b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the bank;

(

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 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 on the conduct of those businesses and operations;

(

g) 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 to

(

i) the nature and extent of the proposed financial services activities to be carried out by the bank and its affiliates, and

(ii)

the nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the bank; and

(

h) the best interests of the financial system in Canada.

Exception

(2) 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 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 with equity of five 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.

Favourable treatment

(3) The 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.

Terms and conditions

The 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.

Certifying receipt of application

(1) If, 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 application

(2) If, 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.

Notice of decision

(1) Subject 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 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.

Notice of decision

(2) Subject to subsections (4) and 400(2), if an application involves the acquisition of control of a bank, the Minister shall, within a period of forty-five days after the certified date referred to in subsection 398(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.

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.

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.

Reasonable opportunity to make representations

(1) If, 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 representations

(2) If, after receipt of the notice referred to in paragraph 399(2)( 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 forty-five 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.

Notice of decision

(1) Within 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 decision

(2) Within 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 re