Canada Deposit Insurance Corporation Application for Deposit Insurance By-law (SOR/2006-236)

• 5 (1) The application must include a business plan that covers the three-year period beginning on the day on which the applicant proposes to begin carrying on its deposit-taking business and that contains the following information:

  • (a) the reasons why it wants to establish a deposit-taking business;

  • (b) an analysis of target markets together with its business objectives for those markets, the short- and long-term strategy it will employ to achieve those objectives and the reasons why it believes that it will be successful in achieving those objectives;

  • (c) an overview of each line of business to be conducted and a description of the products and services it will offer in each target market, together with the expected levels of business for those products and services;

  • (d) an analysis of the competitive threats it will face in each target market, together with a description of how it plans to respond to those threats and the reasons why it believes that the response will be successful;

  • (e) a detailed forecast that includes pro forma financial statements covering that three-year period and identifying the assumptions made in the preparation of the forecast;

  • (f) a list of the assumptions that it made for the purposes of paragraphs (b) to (e) and the reasons why it considers those assumptions to be reasonable;

  • (g) a description of the off-balance sheet activities that it proposes to carry on;

  • (h) a description of its proposed outsourcing arrangements and its contingency plans respecting those arrangements;

  • (i) a sensitivity analysis of its projected financial results under various assumptions or scenarios;

  • (j) its projected staff complement during that three-year period; and

  • (k) an explanation of the correlation between the business background and expertise of each director and officer and the applicant’s business objectives.

• (2) The application must also include any other business plan that was prepared by, or for, the applicant within the 24-month period preceding the date of the business plan referred to in subsection (1) and an explanation of any significant differences between those business plans.

6 The application must include the following information in respect of the applicant’s capital:

• (a) its authorized capital level;

• (b) the sources of its initial and future capital;

• (c) the amount of its issued and outstanding capital;

• (d) the amount of its paid-in or stated capital; and

• (e) a description of any other forms of its capital that are accepted as, or considered to be, capital in the jurisdiction in which the applicant was incorporated.

7 The application must include detailed information in respect of the following:

• (a) any material pending litigation to which the applicant is a party;

• (b) any material contingent liabilities, including guarantees, suretyships and indemnity obligations issued by the applicant to its shareholders, directors, officers, affiliates or associates; and

• (c) any material transaction, in which the applicant has an interest, that is pending or is scheduled to occur within the 24-month period preceding the day referred to in subsection 2(2) and that confers or may confer a benefit on any of

  • (i) its directors or officers,

  • (ii) its affiliates, associates or promoter, or

  • (iii) the directors or officers of an affiliate, associate or promoter referred to in subparagraph (ii).

• 8 (1) The application must include evidence that the applicant has established appropriate, effective and prudent practices with respect to corporate governance, risk management and liquidity and capital management, as well as appropriate, effective and prudent controls in respect of its operations, that will enable it to comply with the Canada Deposit Insurance Corporation Deposit Insurance Policy By-law.

• (2) The evidence must provide a detailed description of those practices and controls, including

  • (a) the composition, mandate, roles and responsibilities of board committees and of the internal audit and compliance functions;

  • (b) the policies relating to and the procedures for monitoring risk tolerance and risk management for major risk areas such as credit, market, liquidity, operational (inclusive of business continuity planning), technology, legal, regulatory, reputational and strategic risks; and

  • (c) any procedures that are or will be integrated with those of the entity that controls the applicant, if any, or any of the applicant’s subsidiaries, associates or affiliates, if any.

Other Information About the Applicant

9 The application must include detailed information in respect of the following, if applicable:

• (a) any agreement or understanding that has or could have a significant effect on the management or control of the applicant;

• (b) the refusal of an application for deposit insurance made by the applicant under the Act or under similar legislation in any other jurisdiction within or outside Canada;

• (c) the suspension or revocation of the applicant’s policy of deposit insurance under the Act or under similar legislation in any other jurisdiction within or outside Canada;

• (d) the refusal, under the laws of any jurisdiction within or outside Canada, of an application made by the applicant for licensing or registration as a financial institution;

• (e) the suspension or revocation, under the laws of any jurisdiction within or outside Canada, of the applicant’s licence to carry on business as a financial institution;

• (f) the suspension or cancellation, under the laws of any jurisdiction within or outside Canada, of the applicant’s registration as a financial institution;

• (g) any investigation that was or is being conducted in relation to a licence referred to in paragraph (e) or a registration referred to in paragraph (f);

• (h) the refusal, under the laws of any jurisdiction within or outside Canada, of an application made by the applicant for any licence or registration related to the business or affairs of the applicant;

• (i) the suspension or revocation, under the laws of any jurisdiction within or outside Canada, of any licence referred to in paragraph (h) and held by the applicant or the cancellation of any registration referred to in paragraph (h) in the applicant’s name;

• (j) any investigation that was or is being conducted in relation to a licence or registration referred to in paragraph (h);

• (k) the refusal, under the laws of any jurisdiction within or outside Canada, of an application made by the applicant for membership in any self-regulatory organization;

• (l) the suspension or revocation, under the laws of any jurisdiction within or outside Canada, of the applicant’s membership in any self-regulatory organization and any investigation that was or is being conducted in relation to that membership;

• (m) the refusal of an application made by the applicant for bonding or suretyship or insurance coverage in relation to its business;

• (n) the suspension or revocation of any bonding or suretyship or insurance coverage held by the applicant in relation to its business and any investigation that was or is being conducted in relation to such coverage; and

• (o) the conviction of the applicant, under the laws of any jurisdiction within or outside Canada, for a material criminal offence or a finding, made by a court of law, tribunal or other quasi-judicial body or by a regulatory body that the applicant violated the laws of any jurisdiction within or outside Canada in respect of the carrying on of a business, and any proceedings relating to such an offence or violation that have been commenced in any jurisdiction within or outside Canada against the applicant by a competent authority.

10 The applicant shall, at the request of the Corporation, provide any additional information or documents relating to the application that the Corporation considers necessary, having regard to its objects as set out in section 7 of the Act, in order to enable it to make a decision on the application.

Information About Promoters, Affiliates, Associates and Controlling Entities of the Applicant

11 The application must include an organization chart that shows

• (a) the entity that controls the applicant, if any, and the extent of the ownership interest in the applicant held by that entity; and

• (b) all existing or proposed affiliates and associates of the applicant and the extent of the ownership interest held or proposed to be held by each of them in the applicant or in the entity that controls the applicant, as applicable, including the class of securities owned or controlled, the number and percentage of each issued and outstanding class of securities held and the nature of the ownership interest (that is, whether the interest is direct or indirect and whether it is registered, beneficial or exercised through direction).

• 12 (1) If the entity that controls the applicant is not a member institution, the application must include the information and documentation set out in sections 3, 4 and 9 in respect of that entity and the name, address, telephone number, e-mail address and facsimile number of each person who is the ultimate beneficial owner of, directly or indirectly, or who exercises direction over, 20 per cent or more of any class of voting securities of that entity.

• (2) If the entity that controls the applicant carries on business in a foreign jurisdiction, the application must also indicate whether that entity is subject to supervision or regulation in the foreign jurisdiction and, if so, the nature and extent of the supervision or regulation.

13 The application must include the following information in respect of any promoter of the applicant and each of the applicant’s existing and proposed affiliates and associates that is not an individual:

• (a) their legal name, including the form of that name in the other official language of Canada, if any;

• (b) the address, telephone number, e-mail address and facsimile number of their head office and their principal place of business, if that place of business is located somewhere other than at the head office;

• (c) the date of their incorporation, the jurisdiction of their incorporation and the date on which they began to carry on business or propose to do so;

• (d) a summary of the business activities carried on or proposed to be carried on by them, including a list of the jurisdictions where those activities are carried on or are proposed to be carried on;

• (e) the name, title or office, and address of each of their current and proposed directors and officers and a copy of their curriculum vitae or resumé;

• (f) whether any director or officer referred to in paragraph (e) is an associate or a relative of any other director or officer referred to in that paragraph;

• (g) the information referred to in paragraphs 3(f) and (g) in respect of each of their current and proposed directors and officers;

• (h) the information described in section 9 in respect of that promoter or those affiliates and associates; and

• (i) the name, address, telephone number, e-mail address and facsimile number of each person who is the ultimate beneficial owner of, directly or indirectly, or who exercises direction over, 10 per cent or more of any class of voting securities of that promoter or those affiliates and associates.

14 The application must include the following information in respect of any promoter or associate of the applicant that is an individual:

• (a) their name, address, telephone number, e-mail address and occupation;

• (b) a copy of their curriculum vitae or resumé;

• (c) whether that promoter is an associate or a relative of any associate of the applicant or of any director or officer referred to in paragraph 13(e);

• (d) the information described in section 9 in respect of that promoter or associate; and

• (e) a detailed summary of their assets and liabilities.

Other Required Documentation

15 The application must include the following documents:

• (a) a certified copy of the incorporating instrument of the applicant and any amendments made to it;

• (b) a certified copy of all of the by-laws of the applicant and any amendments made to them;

• (c) a legal opinion attesting to the due incorporation, organization and capacity of the applicant;

• (d) a copy of any application, made by the applicant or any promoter of the applicant during the 12-month period preceding the day referred to in subsection 2(2), for incorporation, registration or licensing under any federal or provincial legislation that regulates financial institutions;

• (e) a copy of an agreement or understanding referred to in paragraph 9(a) if that agreement or understanding is in writing;

• (f) a detailed organization chart that lists all of the current and proposed officers of the applicant and all of the applicant’s current and proposed employees;

• (g) a copy of the following bonds or insurance policies, if any, that relate to the business of the applicant, or of any suretyships similar to those bonds, namely,

  • (i) a fidelity bond or a fidelity insurance policy,

  • (ii) a banker’s blanket bond or a banker’s blanket insurance policy,

  • (iii) an extortion bond or an extortion insurance policy,

  • (iv) a safe depository bond or a safe depository insurance policy,

  • (v) a director’s or officer’s insurance policy, or

  • (vi) any other bonds or insurance policies similar to those referred to in subparagraphs (i) to (v);

• (h) a certified copy of the resolution of the board of directors of the applicant consenting to the making of the application and approving its contents;

• (i) a certified copy of the resolution of the board of directors of the entity that controls the applicant, if applicable, consenting to the making of the application and approving its contents; and

• (j) a certificate or other evidence confirming that the applicant is authorized by the province of its incorporation to apply for deposit insurance.