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Bank Act (S.C. 1991, c. 46)

Full Document:  

Act current to 2020-09-09 and last amended on 2020-05-09. Previous Versions

PART XISelf-dealing (continued)

Interpretation and Application (continued)

Marginal note:Related party of bank

  •  (1) For the purposes of this Part, a person is a related party of a bank where the person

    • (a) is a person who has a significant interest in a class of shares or in membership shares of the bank;

    • (b) is a director or senior officer of the bank or of a body corporate that controls the bank or is acting in a similar capacity in respect of an unincorporated entity that controls the bank;

    • (c) is the spouse or common-law partner, or a child who is less than eighteen years of age, of a person described in paragraph (a) or (b);

    • (d) is an entity that is controlled by a person referred to in any of paragraphs (a) to (c);

    • (e) is an entity in which a person who controls the bank has a substantial investment;

    • (f) is an entity in which the spouse or common-law partner, or a child who is less than eighteen years of age, of a person who controls the bank has a substantial investment; or

    • (g) is a person, or forms part of a class of persons, designated under subsection (3) or (4) as, or deemed under subsection (5) to be, a related party of the bank.

    • (h) [Repealed, 1997, c. 15, s. 68]

  • Marginal note:Exception — subsidiaries and substantial investments of banks

    (2) Where an entity in which a bank has a substantial investment would, but for this subsection, be a related party of the bank only because a person who controls the bank controls the entity or has a substantial investment in the entity, and the person does not control the entity or have a substantial investment in the entity otherwise than through the person’s controlling interest in the bank, the entity is not a related party of the bank.

  • Marginal note:Designated related party

    (3) For the purposes of this Part, the Superintendent may, with respect to a particular bank, designate as a related party of the bank

    • (a) any person or class of persons whose direct or indirect interest in or relationship with the bank or a related party of the bank might reasonably be expected to affect the exercise of the best judgment of the bank in respect of a transaction; or

    • (b) any person who is a party to any agreement, commitment or understanding referred to in section 9 if the bank referred to in that section is the particular bank.

  • Marginal note:Idem

    (4) Where a person is designated as a related party of a bank pursuant to subsection (3), the Superintendent may also designate any entity in which the person has a substantial investment and any entity controlled by such an entity to be a related party of the bank.

  • Marginal note:Deemed related party

    (5) Where, in contemplation of a person becoming a related party of a bank, the bank enters into a transaction with the person, the person is deemed for the purposes of this Part to be a related party of the bank in respect of that transaction.

  • Marginal note:Holders of exempted shares

    (6) The Superintendent may, by order, designate a class of non-voting shares of a bank for the purpose of this subsection. If a class of non-voting shares of a bank is so designated, a person is deemed, notwithstanding paragraph (1)(a), not to be a related party of the bank if the person would otherwise be a related party of the bank only because the person has a significant interest in that class.

  • Marginal note:Determination of substantial investment

    (7) For the purpose of determining whether an entity or a person has a substantial investment for the purposes of paragraph (1)(e) or (f), the references to “control” and “controlled” in section 10 shall be construed as references to “control, within the meaning of section 3, determined without regard to paragraph 3(1)(d)” and “controlled, within the meaning of section 3, determined without regard to paragraph 3(1)(d)”, respectively.

  • Marginal note:Determination of control

    (8) For the purposes of paragraph (1)(d), controlled means “controlled, within the meaning of section 3, determined without regard to paragraph 3(1)(d)”.

  • 1991, c. 46, s. 486
  • 1997, c. 15, s. 68
  • 2000, c. 12, s. 7
  • 2010, c. 12, s. 2078

Marginal note:Non-application of Part

  •  (1) This Part does not apply in respect of any transaction entered into prior to the coming into force of this Part but, after the coming into force of this Part, any modification of, addition to, or renewal or extension of a prior transaction is subject to this Part.

  • Marginal note:Idem

    (2) This Part does not apply in respect of

    • (a) the issue of shares of any class of shares, or of membership shares, of a bank when fully paid for in money or when issued

      • (i) in accordance with any provisions for the conversion of other issued and outstanding membership shares or securities of the bank into shares of that class of shares, or into membership shares,

      • (ii) as a share or membership share dividend,

      • (iii) in exchange for shares, or membership shares, however designated, of a body corporate that has been continued as a bank under Part III,

      • (iv) in accordance with the terms of an amalgamation or conversion under Part VI,

      • (v) by way of consideration in accordance with the terms of a sale agreement under Part VI, or

      • (vi) with the approval in writing of the Superintendent, in exchange for shares of another body corporate;

    • (b) the payment of dividends or patronage allocations by a bank;

    • (c) transactions that consist of the payment or provision by a bank to persons who are related parties of the bank of salaries, fees, stock options, pension benefits, incentive benefits or other benefits or remuneration in their capacity as directors, officers or employees of the bank;

    • (d) transactions approved by the Minister under subsection 678(1) of this Act or subsection 715(1) of the Insurance Companies Act; or

    • (e) if a bank is controlled by a widely held bank holding company or a widely held insurance holding company, transactions approved by the Superintendent that are entered as part of, or in the course of, a restructuring of the holding company or of any entity controlled by it.

  • Marginal note:Exception

    (3) Nothing in paragraph (2)(c) exempts from the application of this Part the payment by a bank of fees or other remuneration to a person for

    • (a) the provision of services referred to in paragraph 495(1)(a); or

    • (b) duties outside the ordinary course of business of the bank.

  • Marginal note:Exception for holding body corporate

    (4) A holding body corporate of a bank is not a related party of the bank if the holding body corporate is a Canadian financial institution that is referred to in any of paragraphs (a) to (d) of the definition financial institution in section 2.

  • Marginal note:Substantial investment — related party exception

    (5) Where a holding body corporate of a bank is, because of subsection (4), not a related party of the bank, any entity in which the holding body corporate has a substantial investment is not a related party of the bank if no related party of the bank has a substantial investment in the entity otherwise than through the control of the holding body corporate.

  • 1991, c. 46, s. 487, c. 48, s. 494
  • 1997, c. 15, s. 69
  • 2001, c. 9, s. 128
  • 2010, c. 12, s. 2079
  • 2012, c. 5, s. 223

Meaning of transaction

  •  (1) For the purposes of this Part, entering into a transaction with a related party of a bank includes

    • (a) making a guarantee on behalf of the related party;

    • (b) making an investment in any securities of the related party;

    • (c) taking an assignment of or otherwise acquiring a loan made by a third party to the related party; and

    • (d) taking a security interest in the securities of the related party.

  • Marginal note:Interpretation

    (2) For the purposes of this Part, the fulfilment of an obligation under the terms of any transaction, including the payment of interest on a loan or deposit, is part of the transaction, and not a separate transaction.

  • Meaning of loan

    (3) For the purposes of this Part, loan includes a deposit, a financial lease, a conditional sales contract, a repurchase agreement and any other similar arrangement for obtaining funds or credit, but does not include investments in securities or the making of an acceptance, endorsement or other guarantee.

  • Marginal note:Security of a related party

    (4) For the purposes of this Part, security of a related party includes an option, transferable by delivery, to demand delivery of a specified number or amount of shares of the related party at a fixed price within a specified time.

  • 1991, c. 46, s. 488
  • 2007, c. 6, s. 44
 
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