Specialized Financing (Retail Associations) Regulations

Marginal note:Limit of 25% of regulatory capital — investment in a specialized financing entity

• 7 (1) A retail association shall not, by way of specialized financing activities, acquire control of, or hold, acquire or increase a substantial investment in, an entity controlled by a specialized financing entity of the retail association or an entity in which the specialized financing entity of the retail association holds a substantial investment, if the sum of the following exceeds or would exceed 25% of the retail association’s regulatory capital:

  • (a) the aggregate book value of the shares and ownership interests held by the retail association and its subsidiaries, whether individually or jointly, in the specialized financing entity of the retail association, in the entities controlled by the specialized financing entity of the retail association and in the entities in which that specialized financing entity holds a substantial investment, and

  • (b) the aggregate value of outstanding loans that the retail association and its subsidiaries, whether individually or jointly, have made to the specialized financing entity of the retail association, to the entities controlled by the specialized financing entity of the retail association and to the entities in which that specialized financing entity holds a substantial investment.

• Marginal note:Limit of 25% of regulatory capital — investment in an entity

  (2) A retail association shall not, by way of specialized financing activities, acquire control of, or hold, acquire or increase a substantial investment in, an entity, other than by way of an investment of a specialized financing entity controlled by the retail association, if the sum of the following exceeds 25% of the retail association’s regulatory capital:

  • (a) the aggregate book value of the shares and ownership interests that the retail association and its subsidiaries, whether individually or jointly, would acquire in the entity,

  • (b) the aggregate book value of the shares and ownership interests held by the retail association and its subsidiaries, whether individually or jointly, in the entities controlled by the retail association by way of specialized financing activities and in the entities in which the retail association holds a substantial investment by way of specialized financing activities, other than entities that the retail association has acquired control of, or a substantial investment in, by way of an investment of a specialized financing entity of the retail association, and

  • (c) the aggregate value of outstanding loans that the retail association and its subsidiaries, whether individually or jointly, have made to the entities controlled by the retail association by way of specialized financing activities and to the entities in which the retail association holds a substantial investment by way of specialized financing activities, other than entities that the retail association has acquired control of, or a substantial investment in, by way of an investment of a specialized financing entity of the retail association.