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

Marginal note:Transitional

407 Nothing in this Part requires

• (a) the termination of a loan made before February 7, 2001;

• (b) the termination of a loan made after that date as a result of a commitment made before that date;

• (c) the disposal of an investment made before that date; or

• (d) the disposal of an investment made after that date as a result of a commitment made before that date.

But if the loan or investment would be precluded or limited by this Part, the amount of the loan or investment may not, except as provided in subsections 393(2), 394(3) and 395(3), be increased after that date.

Marginal note:Saving

408 A loan or investment referred to in section 407 is deemed not to be prohibited by the provisions of this Part.

PART XIAdequacy of Capital and Liquidity

Marginal note:Adequacy of capital and liquidity

• 409 (1) An association shall, in relation to its operations, maintain

  • (a) adequate capital, and

  • (b) adequate and appropriate forms of liquidity,

  and shall comply with any regulations in relation thereto.

• Marginal note:Regulations and guidelines

  (2) The Governor in Council may make regulations and the Superintendent may make guidelines respecting the maintenance by associations of adequate capital and adequate and appropriate forms of liquidity.

• Marginal note:Directives

  (3) Notwithstanding that an association is complying with regulations or guidelines made under subsection (2), the Superintendent may, by order, direct the association

  • (a) to increase its capital; or

  • (b) to provide additional liquidity in such forms and amounts as the Superintendent may require.

• Marginal note:Compliance

  (4) An association shall comply with an order made under subsection (3) within such time as the Superintendent specifies therein.

• Marginal note:Notice of value

  (5) Where an appraisal of any asset held by an association or any of its subsidiaries has been made by the Superintendent and the value determined by the Superintendent to be the appropriate value of the asset varies materially from the value placed by the association or subsidiary on the asset, the Superintendent shall send to the association, the auditor of the association and the audit committee of the association a written notice of the appropriate value of the asset as determined by the Superintendent.

PART XIISelf-dealing

Interpretation and Application

Definition of senior officer

409.1 For the purposes of this Part, a senior officer of a body corporate is a person who is

• (a) a director of the body corporate who is a full-time employee of the body corporate;

• (b) the chief executive officer, chief operating officer, president, secretary, treasurer, controller, chief financial officer, chief accountant, chief auditor or chief actuary of the body corporate;

• (c) a natural person who performs functions for the body corporate similar to those performed by a person referred to in paragraph (b);

• (d) the head of the strategic planning unit of the body corporate;

• (e) the head of the unit of the body corporate that provides legal services or human resources services to the body corporate; or

• (f) any other officer reporting directly to the body corporate’s board of directors, chief executive officer or chief operating officer.

Marginal note:Related party of association

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

  • (a) is a person, other than a member, who has a significant interest in a class of shares of the association;

  • (b) is a director or senior officer of the association or of a body corporate that controls the association;

  • (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);

  • (d.1) is an entity in which a person who controls the association has a substantial investment; or

  • (e) is a person, or a member of a class of persons, designated under subsection (2) or (3) as, or deemed under subsection (4) to be, a related party of the association.

  • (f) and (g) [Repealed, 1997, c. 15, s. 151]

• Marginal note:Related party of retail association

  (1.1) Subject to the regulations, for the purposes of this Part, a person is a related party of a retail association if the person is

  • (a) a member of the association or of an association that controls, or has a significant interest in, the association;

  • (b) a director or senior officer of the association or of a body corporate that controls the association;

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

  • (d) an entity that is controlled, within the meaning of section 3, determined without regard to paragraph 3(1)(e), by a person referred to in any of paragraphs (a) to (c); or

  • (e) a person, or a member of a class of persons, designated under subsection (2) or (3) as, or deemed under subsection (4) to be, a related party of the association.

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

  (1.2) If an entity in which an association has a substantial investment would, but for this subsection, be a related party of the association only because a person who controls the association 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 association, the entity is not a related party of the association.

• Marginal note:Designated related party

  (2) For the purposes of this Part, the Superintendent may, with respect to a particular association, designate as a related party of the association any person or class of persons whose direct or indirect interest in or relationship with the association or a related party of the association might reasonably be expected to affect the exercise of the best judgment of the association in respect of a transaction.

• Marginal note:Idem

  (3) Where a person is designated as a related party of an association pursuant to subsection (2), 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 association.

• Marginal note:Deemed related party

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

• Marginal note:Exemption

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

• Marginal note:Determination of control

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

• (7) [Repealed, 1997, c. 15, s. 151]

Marginal note:Non-application of Part

• 411 (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 of an association when fully paid for in money or when issued

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

    • (ii) as a share dividend,

    • (ii.1) in exchange for shares of a body corporate that has been continued as an association under Part III,

    • (iii) in accordance with the terms of an amalgamation under Part VII,

    • (iii.1) by way of consideration in accordance with the terms of a sale agreement under Part VII, or

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

  • (b) the payment of dividends by an association; or

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

• Marginal note:Exception

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

  • (a) the provision of services referred to in paragraph 419(1)(a); or

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

• Marginal note:Exception for holding body corporate

  (4) Subject to subsection (5), a holding body corporate of an association is not a related party of the association.

• Marginal note:Holding body corporate of a retail association

  (5) Unless the regulations provide otherwise, a holding body corporate of a retail association is a related party of the retail association.

• Marginal note:Substantial investment — related party exception

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

Meaning of transaction

• 412 (1) For the purposes of this Part, entering into a transaction with a related party of an association 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.