SOR/96-27719965

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20196

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TRUST AND LOAN COMPANIES ACTRelated Party Transactions (Trust and Loan Companies) RegulationsP.C.1996-759 19965

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His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 488 and 531 of the Trust and Loan Companies Act*, is pleased hereby to make the annexed Regulations prescribing transactions that a company may enter into with a related party of the company.*S.C. 1991, c. 45Interpretation

1The definitions in this section apply in these Regulations.Act means the Trust and Loan Companies Act. (Loi)foreign bank has the same meaning as in section 2 of the Bank Act. (banque étrangère)SOR/99-82, s. 2

Prescribed Related Party Transactions

2For the purposes of section 488 of the Act, a company may, directly or indirectly, enter into any of the following transactions with a related party of the company:(a)an allocation of an amount by or to the company made pursuant to subsection 18(2.3), 125(3), 127(10.3), 181.5(2), 190.15(2) or 191.1(3) of the Income Tax Act;(b)an agreement or amended agreement described in subsection 191.3(1) of the Income Tax Act under which(i)the company agrees to pay all or a portion of the tax of the related party, and(ii)the related party agrees to pay the company an amount at least equal to the additional costs incurred by the company, including additional taxes payable under the Income Tax Act, as a result of the company entering into the agreement or amended agreement;(c)an agreement or amended agreement described in subsection 191.3(1) of the Income Tax Act under which the related party agrees to pay all or a portion of the tax of the company;(d)the issue by or to the company of conversion privileges, options or rights to acquire securities the issuance of which is not otherwise provided for in the terms and conditions pursuant to which a security is being or has been issued;(e)the purchase, for the purpose of cancellation, of any shares or debt obligations issued by or to the company the purchase of which is not otherwise provided for in the terms and conditions pursuant to which the shares or debt obligations were issued;(f)the redemption of any redeemable shares or debt obligations issued by or to the company the redemption of which is not otherwise provided for in the terms and conditions pursuant to which the shares or debt obligations were issued; or(g)the payment or delivery of money or property by or to the company as a consequence of a reduction of the stated capital of the company or related party.SOR/99-82, s. 3

3(1)For the purposes of section 488 of the Act, a company that is controlled by a foreign bank may enter into the following transactions with the foreign bank that controls it, or with a financial institution controlled by that foreign bank:(a)a transaction that forms an integral part of financial services provided to customers of the company, of the foreign bank or of the financial institution; and(b)a deposit by the company with the foreign bank or the financial institution(i)for a term not longer than 30 days,(ii)for short-term liquidity management purposes, and(iii)in an amount that, added to the aggregate of the amounts of all other deposits of the company with its related parties, does not exceed 50 per cent of the regulatory capital of the company.(2)The class of transactions referred to in paragraph (1)(a) includes(a)interest rate, currency, equity and commodity swaps;(b)foreign exchange forwards, options and spot transactions;(c)forward rate agreements;(d)options on interest rates, futures, commodities, equity indices, shares and ownership interests;(e)futures on interest rates, currencies and commodities;(f)transactions involving money market instruments;(g)loan syndications and asset sales;(h)transactions involving commodity forwards;(i)repurchase agreements and other transactions in respect of securities; and(j)derivative transactions of transactions referred to in any of paragraphs (a) to (i).SOR/99-82, s. 4