Federal Credit Union Conversion Regulations (SOR/2012-268)

Superintendent’s Powers

7 The Superintendent may, prior to approving the conversion proposal, including an amended conversion proposal,

• (a) specify the day as of which the value of the converting credit union, the market value of its membership shares and the market value of its shares, if any, must be estimated for the purposes of subparagraph 6(k)(ii);

• (b) require a converting credit union to hold one or more information sessions for its members and shareholders, if any, and set the rules under which the information sessions must be held;

• (c) direct the converting credit union to take other measures to assist its members and shareholders, if any, in forming a reasoned judgment on the conversion proposal, including by providing additional valuations, fairness opinions and other information further to that required elsewhere in these Regulations; and

• (d) exempt a converting credit union, on any terms and conditions that the Superintendent considers appropriate, from any of the requirements of subparagraphs 6(k)(iv) and (v).

Restrictions on Benefits

• 8 (1) Beginning on the day on which the board authorization occurs and ending on the day on which the conversion occurs, the converting credit union must not pay any fee, compensation or other consideration to

  • (a) its related parties or employees, except for

    • (i) regular fees and compensation on market terms and conditions, and

    • (ii) the member and shareholder benefits referred to in paragraph (b); or

  • (b) its members or shareholders, if any, except for

    • (i) interest on deposits and securities on market terms and conditions,

    • (ii) dividends on shares and membership shares on market terms and conditions, in accordance with the converting credit union’s by-laws and section 12.1 of the Act,

    • (iii) patronage allocations and rebates of interest on loans on market terms and conditions, and

    • (iv) any member or shareholder benefits specifically provided for in the conversion proposal.

• (2) Beginning on the day on which the board authorization occurs and ending one year following the day on which the conversion occurs, the converting credit union must not issue or provide shares, share options or rights to acquire shares, other than those issued as a result of implementing the conversion proposal, to

  • (a) any director, officer or employee of the converted credit union; or

  • (b) any person who was a director, officer or employee of the converting credit union during the year preceding the day on which the conversion occurs.

Restriction on Issuance of Membership Shares and Securities

• 9 (1) Unless the converting credit union is subject to an order to increase its capital under subsection 485(3) of the Act, it must not issue membership shares or securities beginning on the day on which the board authorization occurs.

• (2) Subsection (1) does not apply to the issuance

  • (a) to a person applying for membership in the converting credit union of the minimum number of membership shares required for membership under the by-laws;

  • (b) of membership shares in payment of a patronage allocation to the converting credit union’s members; or

  • (c) of securities other than shares on market terms and conditions.

• (3) A converting credit union must not accept any new applications for membership or issue any new membership shares beginning on the thirtieth day before the date of the valuation report referred to in paragraph 6(k).

Notice of Restrictions

10 As soon as feasible following the board authorization, the converting credit union must publish an announcement at least once a week for a period of four consecutive weeks in the Canada Gazette and in a newspaper of general circulation in each location in which its members normally reside, and continuously for four consecutive weeks on its website, advising members of

• (a) the proposed conversion;

• (b) the restrictions set out in sections 8 and 9; and

• (c) its policy on accepting new members beginning on the day on which the board authorization occurs and ending once the acceptance of new members is prohibited under subsection 9(2).

Application to Minister

11 An application made under section 216.08 of the Act must include

• (a) the information referred to in paragraphs 6(a) and (b);

• (b) the conversion proposal;

• (c) a statement indicating that the Superintendent has approved the conversion proposal and the date on which it was approved;

• (d) the special resolutions of the converting credit union’s members and shareholders, if any, accompanied by a certificate from the converting credit union’s board of directors indicating the results of the votes held in respect of the resolutions;

• (e) the material referred to in paragraphs 6(k) to (m);

• (f) the converting credit union’s response to any requirement imposed by the Superintendent under section 7;

• (g) an explanation of how the conversion is in the best interests of the Canadian financial system, including the cooperative financial system;

• (h) any by-laws necessary to implement the conversion proposal; and

• (i) the proposed letters patent of conversion.

Converting Credit Unions Subject to the Canada Deposit Insurance Corporation Act

12 A converting credit union that is a bridge institution within the meaning of section 2 of the Canada Deposit Insurance Corporation Act or is subject to an order under paragraph 39.13(1)(a) of that Act

• (a) need not include the information referred to in paragraphs 3(1)(d) to (f), (h) to (r), (w) and (x) in its conversion proposal;

• (b) need not supply to the Superintendent the information referred to in paragraphs 6(c) to (o);

• (c) need not include the information referred to in paragraphs 11(c) to (h) in an application under section 216.08 of the Act; and

• (d) is not subject to sections 4, 5 and 7 to 10.

Coming into Force

Footnote ^*13 These Regulations come into force on the day on which section 1995 of the Jobs and Economic Growth Act, chapter 12 of the Statutes of Canada, 2010, comes into force.

• Return to footnote ^*[Note: Regulations in force December 19, 2012, see SI/2012-99.]