Bank Act (S.C. 1991, c. 46)

Marginal note:Notice to Superintendent

505 Where a bank has entered into a transaction that the bank is prohibited by this Part from entering into or where a bank has entered into a transaction for which approval is required under subsection 497(1) without having obtained the approval, the bank shall, on becoming aware of that fact, notify the Superintendent without delay.

Remedial Actions

Marginal note:Order to void contract or to grant other remedy

• 506 (1) If a bank enters into a transaction that it is prohibited from entering into by this Part, the bank or the Superintendent may apply to a court for an order setting aside the transaction or for any other appropriate remedy, including an order directing that the related party of the bank involved in the transaction account to the bank for any profit or gain realized or that any director or senior officer of the bank who authorized the transaction compensate the bank for any loss or damage incurred by the bank.

• Marginal note:Time limit

  (2) An application under subsection (1) in respect of a particular transaction may only be made within the period of three months following the day the notice referred to in section 505 in respect of the transaction is given to the Superintendent or, if no such notice is given, the day the Superintendent becomes aware of the transaction.

• Marginal note:Certificate

  (3) For the purposes of subsection (2), a document purporting to have been issued by the Superintendent, certifying the day on which the Superintendent became aware of the transaction, shall, in the absence of evidence to the contrary, be received in evidence as conclusive proof of that fact without proof of the signature or of the official character of the person appearing to have signed the document and without further proof.

PART XIIForeign Banks

DIVISION 1Interpretation and Application

Marginal note:Definitions

• 507 (1) The following definitions apply in this Part.

  business growth fund

  business growth fund means Canadian Business Growth Fund (GP) Inc., a corporation incorporated under the Canada Business Corporations Act. (fonds de croissance des entreprises)

  designated foreign bank

  designated foreign bank[Repealed, 2007, c. 6, s. 48]

  designation order

  designation order[Repealed, 2007, c. 6, s. 48]

  exemption order

  exemption order[Repealed, 2007, c. 6, s. 48]

  finance entity

  finance entity means a Canadian entity that is a finance entity as defined in the regulations. (entité s’occupant de financement)

  financial leasing entity

  financial leasing entity means a Canadian entity that is a financial leasing entity as defined in subsection 464(1). (entité s’occupant de crédit-bail)

  financial services entity

  financial services entity means an entity, other than an entity referred to in any of paragraphs 468(1)(a) to (i) or a leasing entity, that engages in activities at least the prescribed portion — or if no portion is prescribed, 10 per cent — of which, determined in the prescribed manner, consists of one or more of the following activities:

  • (a) providing any financial service;

  • (b) acting as a financial agent;

  • (c) providing investment counselling and portfolio management services;

  • (d) issuing payment, credit or charge cards and, in cooperation with others, including other financial institutions, operating a payment, credit or charge card plan;

  • (e) engaging in the activities referred to in the definition closed-end fund, mutual fund distribution entity or mutual fund entity in subsection 464(1);

  • (f) engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed;

  • (g) engaging in any activity referred to in paragraphs (a) to (f) as an agent for another entity referred to in any of those paragraphs or in any of paragraphs 468(1)(a) to (j); or

  • (h) acquiring or holding control of, or becoming a major owner of, an entity referred to in any of paragraphs (a) to (g) or any of paragraphs 468(1)(a) to (j). (entité s’occupant de services financiers)

  foreign cooperative credit society

  foreign cooperative credit society means an entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province, and that, outside Canada, engages in or carries on the business of a cooperative credit society. (société coopérative de crédit étrangère)

  foreign insurance company

  foreign insurance company means a foreign company as defined in subsection 2(1) of the Insurance Companies Act. (société d’assurances étrangère)

  foreign securities dealer

  foreign securities dealer means an entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province, and that, outside Canada, engages in or carries on the business of dealing in securities. (courtier de valeurs mobilières étranger)

  leasing activities

  leasing activities means

  • (a) the financial leasing of personal property and the related activities that a financial leasing entity may engage in; and

  • (b) all other leasing of personal property. (activités de location)

  leasing entity

  leasing entity means an entity that engages in only

  • (a) leasing activities; or

  • (b) leasing activities and activities other than those described in paragraphs (a) to (h) of the definition financial services entity. (entité s’occupant de location)

  limited commercial entity

  limited commercial entity means a Canadian entity that a foreign bank or an entity associated with a foreign bank may control in accordance with subsection 522.09(1) or (2), or in which a foreign bank or an entity associated with a foreign bank is permitted to acquire a substantial investment in accordance with that subsection. (entité à activités commerciales restreintes)

  non-bank affiliate of a foreign bank

  non-bank affiliate of a foreign bank means a Canadian entity, other than a bank,

  • (a) in which a foreign bank or an entity associated with a foreign bank holds a substantial investment, or

  • (b) that is controlled by a foreign bank or an entity associated with a foreign bank,

  but a Canadian entity is not a non-bank affiliate of a foreign bank by reason only that a bank that is a subsidiary of the foreign bank or of the entity associated with a foreign bank controls, or holds a substantial investment in, the Canadian entity. (établissement affilié à une banque étrangère)

  permitted Canadian entity

  permitted Canadian entity means a Canadian entity that a foreign bank or an entity associated with a foreign bank may control in accordance with section 522.08, or in which a foreign bank or an entity associated with a foreign bank is permitted to acquire a substantial investment in accordance with that section. (entité canadienne admissible)

  representative office

  representative office means an office established to represent a foreign bank in Canada that is not subject to the direction of, or management by, an entity incorporated or formed by or under an Act of Parliament or of the legislature of a province, and the personnel of which are employed directly or indirectly by the foreign bank. (bureau de représentation)

  specialized financing entity

  specialized financing entity means a Canadian entity that is a specialized financing entity as defined in the regulations. (entité s’occupant de financement spécial)

• Marginal note:Entity associated with foreign bank

  (2) For the purposes of this Part,

  • (a) an entity is associated with a foreign bank if

    • (i) the entity controls, or is controlled by, the foreign bank, or

    • (ii) the entity and the foreign bank are controlled by the same person;

  • (b) an entity may be associated with more than one foreign bank; and

  • (c) a foreign bank may be associated with another foreign bank.

• Marginal note:Entity deemed to be associated with a foreign bank

  (3) For the purposes of this Part, the Minister may deem an entity to be associated with a foreign bank if, in the opinion of the Minister, it is reasonable to conclude that under any agreement, commitment or understanding, whether formal or informal, verbal or written,

  • (a) the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the entity, with one or more other persons such that, if they were one person, they would control the entity;

  • (b) the entity is acting, jointly or in concert, in relation to the shares or ownership interests of the foreign bank, with one or more other persons such that, if they were one person, they would control the foreign bank;

  • (c) another entity that is associated with the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the entity, with one or more other persons such that, if they were one person, they would control the entity;

  • (d) a person who controls the entity is acting, jointly or in concert, in relation to the shares or ownership interests of the foreign bank, with one or more other persons, such that, if they were one person, they would control the foreign bank;

  • (e) a person who controls the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the entity, with one or more other persons, such that, if they were one person, they would control the entity; or

  • (f) two or more persons are acting, jointly or in concert, in relation to the shares or ownership interests of the entity and the foreign bank such that, if they were one person, they would control the entity and the foreign bank.

• Marginal note:Deemed substantial investment by foreign bank

  (4) For the purposes of this Part, a foreign bank is deemed to hold a substantial investment in a Canadian entity if

  • (a) the foreign bank and one or more entities associated with the foreign bank, or

  • (b) two or more entities associated with the foreign bank

  would, if they were one person, hold a substantial investment in the Canadian entity.

• Marginal note:Deemed substantial investment by entity associated

  (5) For the purposes of this Part, an entity associated with a foreign bank is deemed to hold a substantial investment in a Canadian entity if

  • (a) the entity and the foreign bank, or

  • (b) the entity and one or more other entities associated with the foreign bank

  would, if they were one person, hold a substantial investment in the Canadian entity.

• Marginal note:Deemed control by foreign bank

  (6) For the purposes of this Part, a foreign bank is deemed to control a Canadian entity if

  • (a) the foreign bank and one or more entities associated with the foreign bank, or

  • (b) two or more entities associated with the foreign bank

  would, if they were one person, control the Canadian entity.

• Marginal note:Deemed control by entity associated

  (7) For the purposes of this Part, an entity associated with a foreign bank is deemed to control a Canadian entity if

  • (a) the entity and the foreign bank, or

  • (b) the entity and one or more other entities associated with the foreign bank

  would, if they were one person, control the Canadian entity.

• Marginal note:Person is a major owner

  (8) For the purposes of this Part, a person, other than a foreign bank or an entity associated with a foreign bank,

  • (a) is a major owner of an unincorporated Canadian entity if the aggregate of any ownership interests, however designated, into which the unincorporated Canadian entity is divided that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 35 per cent of all of the ownership interests into which the unincorporated Canadian entity is divided; and

  • (b) is a major owner of a Canadian entity that is a body corporate if

    • (i) the aggregate of the shares of any class of voting shares of the Canadian entity 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 Canadian entity, or

    • (ii) the aggregate of the shares of any class of non-voting shares of the Canadian entity 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 Canadian entity.

• Marginal note:Foreign bank a major owner

  (9) For the purposes of this Part, a foreign bank

  • (a) is a major owner of an unincorporated Canadian entity if the aggregate of any ownership interests, however designated, into which the unincorporated Canadian entity is divided that are beneficially owned by the foreign bank and that are beneficially owned by any entities associated with the foreign bank is more than 35 per cent of all of the ownership interests into which the unincorporated Canadian entity is divided; and

  • (b) is a major owner of a Canadian entity that is a body corporate if

    • (i) the aggregate of the shares of any class of voting shares of the Canadian entity that are beneficially owned by the foreign bank and that are beneficially owned by any entities associated with the foreign bank is more than 20 per cent of the outstanding shares of that class of voting shares of the Canadian entity, or

    • (ii) the aggregate of the shares of any class of non-voting shares of the Canadian entity that are beneficially owned by the foreign bank and that are beneficially owned by any entities associated with the foreign bank is more than 30 per cent of the outstanding shares of that class of non-voting shares of the Canadian entity.

• Marginal note:Associated entity a major owner

  (10) For the purposes of this Part, an entity associated with a foreign bank

  • (a) is a major owner of an unincorporated Canadian entity if the aggregate of any ownership interests, however designated, into which the unincorporated Canadian entity is divided that are beneficially owned by the entity associated with the foreign bank, that are beneficially owned by the foreign bank and that are beneficially owned by any other entities associated with the foreign bank is more than 35 per cent of all of the ownership interests into which the unincorporated Canadian entity is divided; and

  • (b) is a major owner of a Canadian entity that is a body corporate if

    • (i) the aggregate of the shares of any class of voting shares of the Canadian entity that are beneficially owned by the entity associated with the foreign bank, that are beneficially owned by the foreign bank and that are beneficially owned by any other entities associated with the foreign bank is more than 20 per cent of the outstanding shares of that class of voting shares of the Canadian entity, or

    • (ii) the aggregate of the shares of any class of non-voting shares of the Canadian entity that are beneficially owned by the entity associated with the foreign bank, that are beneficially owned by the foreign bank and that are beneficially owned by any other entities associated with the foreign bank is more than 30 per cent of the outstanding shares of that class of non-voting shares of the Canadian entity.

• Marginal note:Deemed major owner — person

  (11) For the purposes of this Part, the Minister may deem a person to be a major owner of a Canadian entity if, in the opinion of the Minister, it is reasonable to conclude that under any agreement, commitment or understanding, whether formal or informal, verbal or written, the person is acting, jointly or in concert, in relation to the shares or ownership interests of the Canadian entity, with one or more other persons such that, if they were one person, they would be a major owner of the Canadian entity.

• Marginal note:Deemed major owner — foreign bank

  (12) For the purposes of this Part, the Minister may deem a foreign bank to be a major owner of a Canadian entity if, in the opinion of the Minister, it is reasonable to conclude that under any agreement, commitment or understanding, whether formal or informal, verbal or written,

  • (a) the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the Canadian entity, with one or more other persons such that, if they were one person, they would be a major owner of the Canadian entity; or

  • (b) two or more persons are acting, jointly or in concert in relation to the shares or ownership interests of the Canadian entity and in relation to the shares or ownership interests of the foreign bank such that, if they were one person, they would control the foreign bank and be a major owner of the Canadian entity.

• Marginal note:Deemed major owner — entity associated with a foreign bank

  (13) For the purposes of this Part, the Minister may deem an entity associated with a foreign bank to be a major owner of a Canadian entity if, in the opinion of the Minister, it is reasonable to conclude that under any agreement, commitment or understanding, whether formal or informal, verbal or written, the entity associated with the foreign bank is acting, jointly or in concert, in relation to the shares and ownership interests of the Canadian entity with one or more other persons, such that, if they were one person, they would be a major owner of the Canadian entity.

• Marginal note:Member of foreign bank’s group

  (14) For the purposes of this Part, a member of a foreign bank’s group is any of the following:

  • (a) an entity associated with the foreign bank;

  • (b) an entity in which the foreign bank or an entity associated with the foreign bank holds a substantial investment; and

  • (c) a prescribed entity, in relation to the foreign bank.

• Marginal note:Foreign bank that has a financial establishment in Canada

  (15) For the purposes of this Part, a foreign bank has, or is deemed to have, a financial establishment in Canada if the foreign bank or any entity associated with the foreign bank

  • (a) is an authorized foreign bank;

  • (b) is a foreign insurance company;

  • (c) has received the approval of the Minister under paragraph 522.22(1)(f); or

  • (d) controls, or is a major owner of,

    • (i) a Canadian entity referred to in any of paragraphs 468(1)(a) to (i), or

    • (ii) a Canadian entity that is a financial services entity.

• Marginal note:Associated entity that has a financial establishment in Canada

  (16) For the purposes of this Part, an entity associated with a foreign bank has, or is deemed to have, a financial establishment in Canada if the entity, the foreign bank or any other entity associated with the foreign bank

  • (a) is an authorized foreign bank;

  • (b) is a foreign insurance company;

  • (c) has received the approval of the Minister under paragraph 522.22(1)(f); or

  • (d) controls, or is a major owner of,

    • (i) a Canadian entity referred to in any of paragraphs 468(1)(a) to (i), or

    • (ii) a Canadian entity that is a financial services entity.

• Marginal note:Regulations concerning exemption from associated status

  (17) The Governor in Council may make regulations

  • (a) respecting the exemption, from the application of any provision of this Act, of any class or classes of entities associated with a foreign bank from the status of being associated with a foreign bank; and

  • (b) authorizing the Minister, by order, and subject to any terms and conditions that the Minister considers appropriate, to deem, for the purposes of any provision of this Act, any entity not to be an entity associated with a foreign bank.

• Marginal note:Revocation or variation of order

  (18) The Minister may, by further order, revoke or vary any order referred to in paragraph (17)(b) and any such revocation or variation comes into effect three months after the date the further order is made unless the Minister and the entity to which the order relates agree that the revocation or variation is to take effect at some other time agreed to by them.

• Marginal note:Publication

  (19) If the Minister makes an order referred to in paragraph (17)(b) or subsection (18), the Minister shall publish in the Canada Gazette a notice of the making of the order.