Investments in Associations and Cooperatively-owned Entities Regulations (SOR/2003-301)

Marginal note:Non-application

• 3. (1) Subsection 390(4) of the Act does not apply with respect to an association’s acquisition or increase of a substantial investment in an entity referred to in paragraph 390(1)(a) of the Act if the entity is, or would as a result of the investment be, controlled by a group of associations.

• Marginal note:Loss of group control — rights and obligations

  (2) If the entity referred to in paragraph 390(1)(a) of the Act ceases to be controlled by a group of associations, the association that has acquired or increased a substantial investment in the entity

  • (a) may, if the total value of the following does not exceed 50% of its regulatory capital, continue to hold the substantial investment, namely,

    • (i) all shares and ownership interests beneficially owned by the association, and all shares and ownership interests beneficially owned by entities controlled by the association, in designated entities in which the association has a substantial investment but over which it does not exercise control,

    • (ii) all loans held by the association, and all loans held by entities controlled by the association, that were made to designated entities in which the association has a substantial investment but over which it does not exercise control, other than loans to designated entities that are not foreign institutions and that are deemed to be controlled by a group of associations, and

    • (iii) all outstanding guarantees given by the association, and all outstanding guarantees given by entities controlled by the association, on behalf of designated entities in which the association has a substantial investment but over which it does not exercise control; and

  • (b) shall, if the total value referred to in paragraph (a) exceeds 50% of its regulatory capital,

    • (i) without delay notify the Superintendent that the entity has ceased to be controlled by a group of associations, and that the total value referred to in paragraph (a) exceeds 50% of the association’s regulatory capital, and

    • (ii) within two years after the loss of control referred to in subparagraph (i), do all things necessary to ensure that the association no longer has a substantial investment in the entity.

Marginal note:Meaning of “control”

• 4. (1) For the purposes of subparagraphs 2(2)(a)(ii) and 3(2)(a)(ii), a designated entity is deemed to be controlled by a group of associations if the association mentioned in either of those subparagraphs and other associations beneficially own securities of the designated entity in such a number that, if the association and the other associations were one association, that association would control the designated entity.

• (2) For the purpose of section 3, an entity referred to in paragraph 390(1)(a) of the Act is deemed to be controlled by a group of associations if

  • (a) it is controlled by another association; or

  • (b) if the association mentioned in that section and other associations beneficially own, or would own as a result of the investment, securities of the entity in such a number that, if the association and the other associations were one association, that association would control the entity.