Cooperative Credit Associations Act (S.C. 1991, c. 48)

Marginal note:Restriction — liquidity support

379.1 An association shall not provide any prescribed form of liquidity support for central cooperative credit societies or local cooperative credit societies except in accordance with prescribed terms and conditions.

Marginal note:Restriction on securities activities

380 An association shall not deal in Canada in securities to the extent prohibited or restricted by such regulations as the Governor in Council may make for the purposes of this section.

Marginal note:Prohibition

• 380.1 (1) It is prohibited for an association to issue a debt obligation in relation to which the amounts of principal and interest owing are guaranteed to be paid from loans or other assets held by an entity that is created and organized for the principal purpose of holding those loans or other assets and with the intention of legally isolating those loans or other assets from the association, unless

  • (a) the debt obligation is a covered bond as defined in section 21.5 of the National Housing Act;

  • (b) the association is a registered issuer as defined in section 21.5 of that Act other than one whose right to issue covered bonds has been suspended; and

  • (c) the debt obligation is issued under a registered program as defined in section 21.5 of that Act.

• Marginal note:Exception

  (2) The Governor in Council may make regulations exempting any type of debt obligation from the application of subsection (1).

Marginal note:Restriction on insurance business

• 381 (1) An association shall not undertake the business of insurance except to the extent permitted by this Act or the regulations.

• Marginal note:Restriction on acting as agent

  (2) An association shall not act in Canada as agent for any person in the placing of insurance and shall not lease or provide space in its offices in Canada to any person engaged in the placing of insurance.

• Marginal note:Regulations

  (3) The Governor in Council may make regulations respecting the matters referred to in subsection (1) and regulations respecting relations between associations and

  • (a) entities that undertake the business of insurance; or

  • (b) insurance agents or insurance brokers.

• Marginal note:Saving

  (4) Nothing in this section precludes an association from

  • (a) requiring insurance to be placed by a borrower for the security of the association; or

  • (b) obtaining group insurance for its employees or the employees of its members or of any bodies corporate in which it has a substantial investment pursuant to section 390.

• Marginal note:No pressure

  (5) No association shall exercise pressure on a borrower to place insurance for the security of the association with any particular insurance company, but an association may require that an insurance company chosen by a borrower meet with its approval, which shall not be unreasonably withheld.

• Definition of business of insurance

  (6) In this section, business of insurance includes

  • (a) the issuance of any annuity if the liability in respect of the annuity is contingent on the death of a person; and

  • (b) the issuance of any debt obligation, any of whose terms and conditions are established on the basis of mortality considerations, under which the issuer is obliged to make periodic payments.

Marginal note:Restriction on leasing

382 An association shall not engage in Canada in any personal property leasing activity in which a financial leasing entity, within the meaning of subsection 386(1), is not permitted to engage.

Marginal note:Restriction on residential mortgages

• 382.1 (1) A retail association shall not make a loan in Canada on the security of residential property in Canada for the purpose of purchasing, renovating or improving that property, or refinance such a loan, if the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, would exceed 80 per cent of the value of the property at the time of the loan.

• Marginal note:Exception

  (2) Subsection (1) does not apply in respect of

  • (a) a loan made or guaranteed under the National Housing Act or any other Act of Parliament by or under which a different limit on the value of property on the security of which the association may make a loan is established;

  • (b) a loan if repayment of the amount of the loan that exceeds the maximum amount set out in subsection (1) is guaranteed or insured by a government agency or a private insurer approved by the Superintendent;

  • (c) the acquisition by the association from an entity of securities issued or guaranteed by the entity that are secured on any residential property, whether in favour of a trustee or otherwise, or the making of a loan by the association to the entity against the issue of such securities; or

  • (d) a loan secured by a mortgage where

    • (i) the mortgage is taken back by the association on a property disposed of by the association, including where the disposition is by way of a realization of a security interest, and

    • (ii) the mortgage secures payment of an amount payable to the association for the property.

Marginal note:Restriction on charges to borrowers

• 382.2 (1) Subject to any regulations made under subsection (2), a retail association that has obtained insurance or a guarantee against default on a loan made in Canada on the security of residential property shall not charge a borrower an amount for the insurance or guarantee that exceeds the actual cost to the retail association of the insurance or guarantee.

• Marginal note:Regulations

  (2) The Governor in Council may make regulations

  • (a) respecting the determination of the actual cost to a retail association for the purposes of subsection (1);

  • (b) respecting the circumstances in which a retail association is exempt from the application of subsection (1);

  • (c) respecting, in relation to insurance or a guarantee against default on a loan made by a retail association in Canada on the security of residential property,

    • (i) the arrangements into which the retail association, its representatives and its employees may or may not enter, and

    • (ii) the payments or benefits that the retail association, its representatives and its employees may or may not accept from an insurer or the insurer’s affiliates; and

  • (d) respecting any other matters necessary to carry out the purposes of subsection (1).

• Marginal note:Regulations — disclosure

  (3) The Governor in Council may make regulations respecting the disclosure by a retail association of information relating to insurance or a guarantee against default on a loan made by the retail association in Canada on the security of residential property, including regulations respecting

  • (a) the information that must be disclosed, including information relating to

    • (i) the person who benefits from the insurance or guarantee,

    • (ii) the arrangements between the retail association, its representatives or its employees and the insurer or the insurer’s affiliates, and

    • (iii) the payments and benefits that the retail association, its representatives and its employees accept from an insurer or the insurer’s affiliates;

  • (b) the time and place at which, the form and manner in which and the persons to whom information is to be disclosed; and

  • (c) the circumstances under which a retail association is not required to disclose information.

Marginal note:Policies re security interests

• 383 (1) The directors of an association shall establish and the association shall adhere to policies regarding the creation of security interests in property of the association to secure obligations of the association and the acquisition by the association of beneficial interests in property that is subject to security interests.

• Marginal note:Order to amend policies

  (2) The Superintendent may, by order, direct an association to amend its policies as specified in the order.

• Marginal note:Compliance

  (3) An association shall comply with an order made under subsection (2) within the time specified in the order.

Marginal note:Regulations and guidelines

383.1 The Governor in Council may make regulations and the Superintendent may make guidelines respecting the creation by an association of security interests in its property to secure obligations of the association and the acquisition by the association of beneficial interests in property that is subject to security interests.

Marginal note:Exception

383.2 Sections 383 and 383.1 do not apply in respect of a security interest created by an association to secure an obligation of the association to the Bank of Canada or the Canada Deposit Insurance Corporation.

Marginal note:Restriction on receivers

384 An association shall not grant to a person the right to appoint a receiver or a receiver and manager of the property or business of the association.

Marginal note:Restriction on partnerships

• 385 (1) Except with the approval of the Superintendent, an association may not be a general partner in a limited partnership or a partner in a general partnership.

• Meaning of general partnership

  (2) For the purposes of subsection (1), general partnership means any partnership other than a limited partnership.

Deposit Acceptance

Marginal note:Deposit acceptance

• 385.01 (1) A retail association may, without the intervention of any other person,

  • (a) accept a deposit from any person whether or not the person is qualified by law to enter into contracts; and

  • (b) pay all or part of the principal of the deposit and all or part of the interest on that principal to or to the order of that person.

• Marginal note:Exception

  (2) Paragraph (1)(b) does not apply if, before payment, the money deposited in the association pursuant to paragraph (1)(a) is claimed by some other person

  • (a) in any action or proceeding to which the association is a party and in respect of which service of a writ or other process originating that action or proceeding has been made on the association; or

  • (b) in any other action or proceeding pursuant to which an injunction or order made by the court requiring the association not to make payment of that money or to make payment thereof to some person other than the depositor has been served on the association.

  If such a claim is made, the money so deposited may be paid to the depositor with the consent of the claimant or to the claimant with the consent of the depositor.

Marginal note:Execution of trust

• 385.02 (1) An association is not bound to see to the execution of any trust to which any deposit made under the authority of this Act is subject.

• Marginal note:Payment when association has notice of trust

  (2) Subsection (1) applies regardless of whether the trust is express or arises by the operation of law, and it applies even when the association has notice of the trust if it acts on the order of or under the authority of the holder or holders of the account into which the deposit is made.

Unclaimed Balances

Marginal note:Unclaimed balances

• 385.03 (1) Where

  • (a) a deposit has been made in Canada that is payable in Canada in Canadian currency and in respect of which no transaction has taken place and no statement of account has been requested or acknowledged by the creditor during a period of ten years

    • (i) in the case of a deposit made for a fixed period, from the day on which the fixed period terminated, and

    • (ii) in the case of any other deposit, from the day on which the last transaction took place or a statement of account was last requested or acknowledged by the creditor, whichever is later, or

  • (b) a cheque, draft or bill of exchange (including any such instrument drawn by one branch of a retail association on another branch of the association but not including such an instrument issued in payment of a dividend on the capital of an association) payable in Canada in Canadian currency has been issued, certified or accepted by an association in Canada and no payment has been made in respect of the instrument for a period of ten years after the date of issue, certification, acceptance or maturity, whichever is later,

  the retail association shall pay to the Bank of Canada not later than December 31 in each year an amount equal to the principal amount of the deposit or instrument, plus interest, if any, calculated in accordance with the terms of the deposit or instrument, and payment accordingly discharges the association from all liability in respect of the deposit or instrument.

• Marginal note:Provision of information

  (2) A retail association shall, on making a payment under subsection (1), provide the Bank of Canada, for each deposit or instrument in respect of which the payment is made, with the following information current as of the day the payment is made, in so far as it is known to the retail association:

  • (a) in the case of a deposit,

    • (i) the name of the depositor in whose name the deposit is held,

    • (ii) the recorded address of the depositor,

    • (iii) the outstanding amount of the deposit, and

    • (iv) the branch of the association at which the last transaction took place in respect of the deposit, and the date of that last transaction; and

  • (b) in the case of an instrument,

    • (i) the name of the person to whom or at whose request the instrument was issued, certified or accepted;

    • (ii) the recorded address of that person;

    • (iii) the name of the payee of the instrument;

    • (iv) the amount and date of the instrument;

    • (v) the name of the place where the instrument was payable; and

    • (vi) the branch of the association at which the instrument was issued, certified or accepted.

• Marginal note:Copies of signature cards and signing authorities

  (2.1) A retail association shall, on written request by the Bank of Canada, provide the Bank of Canada with copies of any signature cards and signing authorities relating to any deposit or instrument in respect of which it has made a payment under subsection (1). If it does not have any with respect to a deposit or instrument to which the request relates, it shall so inform the Bank of Canada.

• Marginal note:Payment to claimant

  (3) Subject to section 22 of the Bank of Canada Act, if a payment has been made to the Bank of Canada under subsection (1) in respect of any deposit or instrument, and if payment is demanded or the instrument is presented at the Bank of Canada by the person who, but for that section, would be entitled to receive payment of the deposit or instrument, the Bank of Canada is liable to pay, at its agency in the province in which the deposit or instrument was payable, an amount equal to the amount so paid to it together with interest, if interest was payable under the terms of the deposit or instrument,

  • (a) for a period not exceeding ten years from the day on which the payment was received by the Bank of Canada until the date of payment to the claimant; and

  • (b) at the rate and computed in the manner that the Minister determines.

• Marginal note:Enforcing liability

  (4) The liability of the Bank of Canada under subsection (3) may be enforced by action against the Bank of Canada in the court in the province in which the deposit or instrument was payable.

• Marginal note:Application of subsection (1)

  (5) Subsection (1) applies only in respect of deposits made, and cheques, drafts and bills of exchange issued, certified or accepted, after the day that subsection comes into force.