Payment Clearing and Settlement Act (S.C. 1996, c. 6, Sch.)

Marginal note:Stay

• 11.07 (1) Despite subsection 8(3), a declaration of non-viability shall have the effect of a stay and, during the period of the stay,

  • (a) no person or entity shall terminate or amend any contract with the clearing house or the central counter-party or claim an accelerated payment, or forfeiture of the term, under such a contract by reason only of the making of a declaration of non-viability;

  • (b) no action or other civil proceeding before a judicial or quasi-judicial body and no arbitration may be commenced or continued against the clearing house or in respect of its assets other than a proceeding under the Winding-up and Restructuring Act commenced by the Bank or the Attorney General of Canada;

  • (c) no attachment, garnishment, execution, seizure or other method of enforcement of a judgment or order against the clearing house or its assets may take place or continue;

  • (d) no creditor of the clearing house has any remedy against the clearing house or its assets;

  • (e) except in the normal course of clearing and settlement processes, including the consolidation of accounts in respect of those processes, no creditor has any right of set-off or compensation against the clearing house; and

  • (f) no early termination right or right to amend a contract in respect of a service that is provided to the clearing house and that is critical to the operation of the clearing and settlement system or of the clearing house may be exercised by a service provider.

• Marginal note:Period of stay

  (2) The period of the stay begins at the time a declaration of non-viability is made and ends on the day specified in the notice referred to in section 11.24.

• Marginal note:No force or effect

  (3) During the period of the stay, any notice given that a person or entity proposes to take an action referred to in paragraph (1)(a) is of no force or effect.

Marginal note:Eligible financial contracts

• 11.08 (1) Nothing in subsection 11.07(1) prevents the following actions from being taken in accordance with the provisions of an eligible financial contract, as defined in subsection 39.15(9) of the Canada Deposit Insurance Corporation Act:

  • (a) the termination or amendment of the contract;

  • (b) the accelerated payment or forfeiture of the term under the contract;

  • (c) the exercise of remedies for a failure to satisfy an obligation under or in connection with the contract, including the payment of an amount payable — or the delivery of property deliverable — under or in connection with the contract;

  • (d) the netting or setting off or compensation of an amount payable under or in connection with the contract;

  • (e) any dealing with financial collateral

    • (i) to satisfy an amount payable — or the delivery of property deliverable — under or in connection with the contract,

    • (ii) for the purpose of calculating an amount payable under or in connection with the contract by way of netting, setting off or compensation of the financial collateral or application of the proceeds or value of the financial collateral, or

    • (iii) as a remedy for a failure described in paragraph (c); or

  • (f) any dealing with financial collateral, other than a dealing set out in paragraph (e).

• Marginal note:Interpretation

  (2) For the purposes of paragraphs (1)(e) and (f), dealings with financial collateral include

  • (a) the sale or foreclosure or, in Quebec, the surrender of financial collateral; and

  • (b) the netting, setting off or compensation of financial collateral or the application of the proceeds or value of financial collateral.

• Marginal note:Stay — eligible financial contracts

  (3) During the period that begins at the time a declaration of non-viability is made and ends on the expiration of the second day following the day on which the declaration is made, the actions referred to in paragraphs (1)(a), (b) and (f) are not to be taken by reason only of the making of a declaration of non-viability.

• Marginal note:Agreements overridden

  (4) Any provision in an eligible financial contract is of no force or effect if the provision has the effect of providing for or permitting anything that, in substance, is contrary to subsection (3).

• Marginal note:Definition of financial collateral

  (5) In this section, financial collateral has the same meaning as in subsection 13(2).

Vesting and Receivership

Marginal note:Order

• 11.09 (1) The Governor of the Bank may, after having made a declaration of non-viability for a clearing and settlement system or a clearing house, by order,

  • (a) if the declaration is for the Canadian Payments Association or a clearing and settlement system that it operates, appoint the Bank as receiver in respect of the Association; or

  • (b) in any other case,

    • (i) appoint the Bank as receiver in respect of the clearing house, or

    • (ii) vest in the Bank the shares of the clearing house that are specified in the order.

• Marginal note:Effect of receivership order

  (2) An order made under paragraph (1)(a) or subparagraph (1)(b)(i) constitutes the Bank as the exclusive receiver of the assets and undertaking of the clearing house and gives the Bank the power to

  • (a) take possession and control of the assets and undertaking and require any person or entity to account for and deliver up to the Bank possession and control of the assets;

  • (b) subject to paragraph (c), sell or otherwise alienate the assets in the manner and on the terms and conditions that the Bank considers appropriate;

  • (c) sell or otherwise alienate any asset that is subject to an agreement creating a security to any person or entity who agrees to assume the obligation secured by the security;

  • (d) arrange for the assumption by any person or entity of all or any part of the clearing house’s liabilities;

  • (e) carry on the business of the clearing house;

  • (f) sue for, defend, compromise and settle, in the name of the clearing house, any claim made by or against it;

  • (g) do all acts and execute or, in Quebec, sign any documents in the name of the clearing house; and

  • (h) do all other things necessary or incidental to the exercise of the Bank’s rights, powers, privileges and immunities as receiver.

• Marginal note:Effect of vesting order

  (3) An order made under subparagraph (1)(b)(ii)

  • (a) vests in the Bank the shares that are subject to the order, free from any adverse claim, including any claim that a transfer was wrongful or that a particular adverse person or entity was the owner of or had an interest or right in the shares, even though the clearing house knows of the adverse claim;

  • (b) extinguishes any such adverse claim to the extent that the claim is a claim that a person or entity other than the Bank is the owner of or has an interest or right in the shares; and

  • (c) does not extinguish any such adverse claim to the extent that the claim is a personal claim against a person or entity other than the Bank or an assignee or successor of the Bank.

• Marginal note:For greater certainty — bankruptcy

  (4) For greater certainty, shares that are subject to an order made under subparagraph (1)(b)(ii) and that, immediately before the making of the order, are vested in a trustee in bankruptcy under the Bankruptcy and Insolvency Act are vested in the Bank.

• Marginal note:For greater certainty — not a Crown corporation

  (5) For greater certainty, the vesting in the Bank of the clearing house’s shares does not cause the clearing house to be a Crown corporation, as defined in subsection 83(1) of the Financial Administration Act.

• Marginal note:For greater certainty — exercising rights

  (6) For greater certainty, an order made under subsection (1) prevents any person or entity, other than the Bank, who is the holder of shares, debts or other liabilities of the clearing house or who is a party to or a beneficiary of a contract with the clearing house, and any secured creditor or assignee or successor of such a person or entity, from exercising any voting or other rights arising from the person’s or entity’s status in any manner that could defeat or interfere with the rights, powers, privileges and immunities of the Bank as holder of shares or as receiver, as the case may be.

• Marginal note:Receiver’s powers

  (7) If an order is made under paragraph (1)(a) or subparagraph (1)(b)(i),

  • (a) the Bank, as receiver, may exercise its powers, rights, privileges and immunities without leave of a court, but may seek the assistance of a superior court in exercising those powers, rights, privileges and immunities, including by applying to a superior court for an order requesting assistance from a Canadian or foreign court, tribunal, government authority or regulatory body;

  • (b) an asset of the clearing house that is acquired from the Bank, as receiver, shall, except to the extent that it is an asset referred to in paragraph (2)(c), be acquired free of any adverse claim of the clearing house or any other person or entity; and

  • (c) the Bank, as receiver, may cause or refrain from causing any obligation of the clearing house to be performed and may cause the clearing house to incur an obligation or do so on its behalf.

• Marginal note:Effect of appointment as receiver

  (8) The Bank shall not, by reason of its appointment as receiver or any action taken by it as receiver, be held to have assumed or incurred any obligation or liability of the clearing house for its own account.

• Marginal note:Non-liability — employees

  (9) Despite anything in federal or provincial law, the Bank, as receiver, is not liable in respect of an obligation or liability, including one as a successor employer,

  • (a) that is in respect of the employees or former employees of the clearing house or a predecessor of the clearing house or in respect of a pension plan for the benefit of those employees or former employees; and

  • (b) that existed before the Bank’s appointment as receiver or that is calculated by reference to a period before that appointment.

• Marginal note:Liability of other successor employers

  (10) Subsection (9) does not affect the liability of a successor employer other than the Bank, as receiver.

• Marginal note:Order and action final

  (11) An order made under subsection (1) and any action taken or decision made in furtherance of the order are for all purposes final.

• Marginal note:Notice

  (12) After an order is made under subsection (1), the Governor of the Bank shall, without delay, notify

  • (a) the Minister;

  • (b) the committee established under subsection 11.04(1);

  • (c) the clearing house; and

  • (d) any government authority or regulatory body that has entered into an agreement or arrangement with the Bank under section 13.3 related to the clearing and settlement system whose clearing house is the subject of the order.

• Marginal note:Publication

  (13) The Governor of the Bank shall cause a copy of the order to be published in the Canada Gazette.

Marginal note:Transfer of powers to Bank

• 11.1 (1) If an order is made under subsection 11.09(1), the powers, duties, functions, rights and privileges of the directors of the clearing house and those of its officers who are responsible for its management are suspended except to the extent that is specified in writing by the Bank. The Bank may exercise those powers, rights and privileges and perform those duties and functions.

• Marginal note:Suspension of members’ rights

  (2) If an order is made under paragraph 11.09(1)(a), the rights of the members of the Canadian Payments Association to vote or give approvals are suspended and the Bank may exercise those rights.

• Marginal note:Suspension of shareholders’ rights

  (3) If an order is made under subparagraph 11.09(1)(b)(ii) in respect of a clearing house, the powers, rights and privileges of its shareholders to vote or give approvals are suspended and the Bank may exercise those powers, rights and privileges.

• Marginal note:Assistance

  (4) The Bank may appoint one or more persons or entities to assist it in managing the clearing house or in carrying out the Bank’s functions as shareholder or as receiver and may delegate to those persons any of the powers, duties or functions of the directors and officers of the clearing house.

• Marginal note:Power to appoint and remove

  (5) If an order is made under subsection 11.09(1), the Bank may appoint or remove any director of the clearing house.

• Marginal note:Bank’s directions

  (6) If an order is made under subsection 11.09(1), the Bank may give directions to the board of directors of the clearing house, including directions to make, amend or repeal any by-law, agreement, rule, procedure, guide or other documentation governing the designated clearing and settlement system or the clearing house.

• Marginal note:Implementation

  (7) The board of directors of the clearing house shall ensure that a direction given under subsection (6) is implemented in a prompt and efficient manner and shall, after implementing a direction, notify the Bank without delay that it has been implemented.

• Marginal note:By-laws — board of directors

  (8) The board of directors of the clearing house may, with the prior approval of the Bank, make, amend or repeal any by-law of the clearing house.