Bank Act (S.C. 1991, c. 46)

Marginal note:Approval for indirect investments

• 931 (1) If a bank holding company obtains the approval of the Minister under subsection 930(5) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase, the bank holding company indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Minister under subsection 930(5) or the Superintendent under subsection 930(6) and that indirect acquisition or increase is disclosed to the Minister in writing before the approval is obtained, the bank holding company is deemed to have obtained the approval of the Minister or the Superintendent for that indirect acquisition or increase.

• Marginal note:Approval for indirect investments

  (2) If a bank holding company obtains the approval of the Superintendent under subsection 930(6) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase the bank holding company indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Superintendent under that subsection and that indirect acquisition or increase is disclosed to the Superintendent in writing before the approval is obtained, the bank holding company is deemed to have obtained the approval of the Superintendent for that indirect acquisition or increase.

Marginal note:Undertakings

• 932 (1) If a bank holding company controls a permitted entity, other than an entity referred to in any of paragraphs 930(1)(a) to (f), the bank holding company shall provide the Superintendent with any undertakings that the Superintendent may require regarding

  • (a) the activities of the entity; and

  • (b) access to information about the entity.

• Marginal note:Undertakings

  (2) If a bank holding company acquires control of an entity referred to in any of paragraphs 930(1)(g) to (j), the bank holding company shall provide the Superintendent with any undertakings concerning the entity that the Superintendent may require.

• Marginal note:Agreements with other jurisdictions

  (3) The Superintendent may enter into an agreement with the appropriate official or public body responsible for the supervision of any entity referred to in any of paragraphs 930(1)(g) to (j) in each province or in any other jurisdiction concerning any matters referred to in paragraphs (1)(a) and (b) or any other matter the Superintendent considers appropriate.

• Marginal note:Access to records

  (4) Despite any other provision of this Division, a bank holding company shall not control a permitted entity, other than an entity referred to in any of paragraphs 930(1)(a) to (f), unless, in the course of the acquisition of control or within a reasonable time after the control is acquired, the bank holding company obtains from the permitted entity an undertaking to provide the Superintendent with reasonable access to the records of the permitted entity.

Exceptions and Exclusions

Marginal note:Temporary investments in entity

• 933 (1) Subject to subsection (3), a bank holding company may, by way of a temporary investment, acquire control of, or acquire or increase a substantial investment in, an entity but, within two years, or any other period that may be specified or approved by the Superintendent, after acquiring control or after acquiring or increasing the substantial investment, as the case may be, it shall do all things necessary to ensure that it no longer controls the entity or has a substantial investment in the entity.

• Marginal note:Extension

  (2) The Superintendent may, in the case of any particular bank holding company that makes an application under this subsection, extend the period of two years, or the other period specified or approved by the Superintendent, that is referred to in subsection (1) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Temporary investment

  (3) If a bank holding company, by way of temporary investment, acquires control of, or acquires or increases a substantial investment in, an entity for which the approval of the Minister would have been required under subsection 930(5) if the bank holding company had acquired the control, or acquired or increased the substantial investment, under section 930, the bank holding company must, within 90 days after acquiring control or after acquiring or increasing the substantial investment,

  • (a) apply to the Minister for approval to retain control of the entity or to continue to hold the substantial investment in the entity for a period specified by the Minister or for an indeterminate period on any terms and conditions that the Minister considers appropriate; or

  • (b) do all things necessary to ensure that, on the expiry of the 90 days, it no longer controls the entity or does not have a substantial investment in the entity.

• Marginal note:Indeterminate extension

  (4) If a bank holding company, by way of temporary investment, acquires control of, or acquires or increases a substantial investment in, an entity for which the approval of the Superintendent would have been required under subsection 930(6) if the bank holding company had acquired the control, or acquired or increased the substantial investment, under section 930, the Superintendent may, on application, permit the bank holding company to retain control of the entity or to continue to hold the substantial investment in the entity for an indeterminate period, on any terms and conditions that the Superintendent considers appropriate.

Marginal note:Loan workouts

• 934 (1) Despite anything in this Division, if any subsidiary of a bank holding company has made a loan to an entity and, under the terms of the agreement between the subsidiary and the entity with respect to the loan and any other documents governing the terms of the loan, a default has occurred, the bank holding company may acquire, through the subsidiary,

  • (a) a substantial investment in the entity to which the loan was made;

  • (b) a substantial investment in any entity that is an affiliate of the entity; or

  • (c) a substantial investment in an entity that is primarily engaged in holding shares of, ownership interests in or assets acquired from the entity to which the loan was made or any of the affiliates of that entity.

• Marginal note:Obligation of bank holding company

  (2) If a bank holding company acquires a substantial investment in an entity under subsection (1), the bank holding company shall, within five years after acquiring the substantial investment, cause the subsidiary that made the loan to do all things necessary to ensure that the bank holding company does not control the entity or have a substantial investment in the entity.

• Marginal note:Extension

  (3) The Superintendent may, in the case of any particular bank holding company that makes an application under this subsection, extend the period of five years referred to in subsection (2) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Exception — entities controlled by foreign governments

  (4) Despite anything in this Division, if a subsidiary of a bank holding company has made a loan to, or holds a debt obligation of, the government of a foreign country or an entity controlled by the government of a foreign country and, under the terms of the agreement between the subsidiary and that government or the entity, as the case may be, and any other documents governing the terms of the loan or debt obligation, a default has occurred, the bank holding company may acquire, through the subsidiary, a substantial investment in that entity or in any other entity designated by that government if the acquisition is part of a debt restructuring program of that government.

• Marginal note:Time for holding substantial investment

  (5) If a bank holding company acquires a substantial investment in any entity under subsection (4), the bank holding company may, on any terms and conditions that the Superintendent considers appropriate, continue to hold the substantial investment for an indeterminate period or for any other period that the Superintendent may specify.

• Marginal note:Exception

  (6) If, under subsection (1), a bank holding company acquires control of, or acquires or increases a substantial investment in, an entity that it would otherwise be permitted to acquire or increase under section 930, the bank holding company may retain control of the entity or continue to hold the substantial investment for an indeterminate period, if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (2), including any extension of it granted under subsection (3).

Marginal note:Realizations

• 935 (1) Despite anything in this Part, a bank holding company may acquire control of, or a substantial investment in, an entity if the control or the substantial investment is acquired through the realization of a security interest held by a subsidiary of the bank holding company.

• Marginal note:Disposition

  (2) Subject to subsection 717(2), if a bank holding company acquires control of, or a substantial investment in, an entity by way of the realization of a security interest held by any of its subsidiaries, the bank holding company shall, within five years after the day on which control or the substantial investment is acquired, cause the subsidiary to do all things necessary to ensure that the bank holding company no longer controls the entity or has a substantial investment in the entity.

• Marginal note:Extension

  (3) The Superintendent may, in the case of any particular bank holding company that makes an application under this subsection, extend the period of five years referred to in subsection (2) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Exception

  (4) If, under subsection (1), a bank holding company acquires control of, or acquires or increases a substantial investment in, an entity that it would otherwise be permitted to acquire or increase under section 930, the bank holding company may retain control of the entity or continue to hold the substantial investment for an indeterminate period if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (2), including any extension of it granted under subsection (3).

Marginal note:Regulations restricting ownership

936 The Governor in Council may make regulations

• (a) for the purposes of subsection 930(4), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which that subsection does not apply or the bank holding companies or other entities in respect of which that subsection does not apply, including prescribing bank holding companies or other entities on the basis of the activities they engage in;

• (b) for the purposes of subsection 930(5) or (6), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which either of those subsections does not apply or the bank holding companies or other entities in respect of which either of those subsections does not apply, including prescribing bank holding companies or other entities on the basis of the activities they engage in;

• (c) for the purposes of subsection 930(11), permitting a bank holding company to give up control of an entity; and

• (d) restricting the ownership by a bank holding company of shares of a body corporate or of ownership interests in an unincorporated entity under sections 930 to 935 and imposing terms and conditions applicable to bank holding companies that own such shares or interests.

Portfolio Limits

Marginal note:Exclusion from portfolio limits

• 937 (1) Subject to subsection (3), the value of all loans, investments and interests acquired by a bank holding company and any of its prescribed subsidiaries under section 934 or as a result of a realization of a security interest is not to be included in calculating the value of loans, investments and interests of the bank holding company and its prescribed subsidiaries under sections 938 to 940

  • (a) for a period of twelve years following the day on which the interest was acquired, in the case of an interest in real property; and

  • (b) for a period of five years after the day on which the loan, investment or interest was acquired, in the case of a loan, investment or interest, other than an interest in real property.

• Marginal note:Extension

  (2) The Superintendent may, in the case of any particular bank holding company, extend any period referred to in subsection (1) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Exception

  (3) Subsection (1) does not apply to an investment or interest described in that subsection if the investment or interest is defined by a regulation made under section 941 to be an interest in real property and

  • (a) the bank holding company or the subsidiary acquired the investment or interest as a result of the realization of a security interest securing a loan that was defined by a regulation made under section 941 to be an interest in real property; or

  • (b) the bank holding company or the subsidiary acquired the investment or interest under section 934 as a result of a default referred to in that section in respect of a loan that was defined by a regulation made under section 941 to be an interest in real property.

Real Property

Marginal note:Limit on total property interest

938 A bank holding company shall not, and shall not permit its prescribed subsidiaries to, purchase or otherwise acquire an interest in real property or make an improvement to any real property in which the bank holding company or any of its prescribed subsidiaries has an interest if the aggregate value of all interests of the bank holding company in real property exceeds, or the acquisition of the interest or the making of the improvement would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank holding company.

Equities

Marginal note:Limits on equity acquisitions

939 A bank holding company shall not, and shall not permit its prescribed subsidiaries to,

• (a) purchase or otherwise acquire any participating shares of any body corporate or any ownership interests in any unincorporated entity, other than those of a permitted entity in which the bank holding company has, or by virtue of the acquisition would have, a substantial investment, or

• (b) acquire control of an entity that holds shares or ownership interests referred to in paragraph (a),

if the aggregate value of

• (c) all participating shares, excluding participating shares of permitted entities in which the bank holding company has a substantial investment, and

• (d) all ownership interests in unincorporated entities, other than ownership interests in permitted entities in which the bank holding company has a substantial investment,

beneficially owned by the bank holding company and its prescribed subsidiaries exceeds, or the purchase or acquisition would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank holding company.

Aggregate Limit

Marginal note:Aggregate limit

940 A bank holding company shall not, and shall not permit its prescribed subsidiaries to,

• (a) purchase or otherwise acquire

  • (i) participating shares of a body corporate, other than those of a permitted entity in which the bank holding company has, or by virtue of the acquisition would have, a substantial investment,

  • (ii) ownership interests in an unincorporated entity, other than ownership interests in a permitted entity in which the bank holding company has, or by virtue of the acquisition would have, a substantial investment, or

  • (iii) interests in real property, or

• (b) make an improvement to real property in which the bank holding company or any of its prescribed subsidiaries has an interest

if the aggregate value of

• (c) all participating shares and ownership interests referred to in subparagraphs (a)(i) and (ii) that are beneficially owned by the bank holding company and its prescribed subsidiaries, and

• (d) all interests of the bank holding company in real property referred to in subparagraph (a)(iii)

exceeds, or the acquisition or the making of the improvement would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank holding company.