Payment Clearing and Settlement Regulations (SOR/2019-257)

Marginal note:Resolution and liquidation values

• 9 (1) For the purposes of determining the amount of compensation to which a prescribed person or entity referred to in paragraph 6(1)(c) or (d) is entitled, the Bank must estimate the applicable resolution and liquidation values referred to in this section.

• Marginal note:Resolution value in respect of a share

  (2) The resolution value in respect of a share is the total of the estimated value of

  • (a) the share on the day specified in the notice published under section 11.24 of the Act,

  • (b) any dividend paid after the declaration of non-viability was made with respect to the share, and

  • (c) any other cash, securities or other rights or interests that are received or are to be received with respect to the share as a direct or indirect result of the making of an order under paragraph 11.09(1)(b) of the Act and any actions taken in furtherance of the order.

• Marginal note:Resolution value in respect of an ownership interest

  (3) The resolution value in respect of an ownership interest in a clearing house is the total of the estimated value of

  • (a) the ownership interest on the day specified in the notice published under section 11.24 of the Act,

  • (b) any amount received after the declaration of non-viability was made with respect to the ownership interest, and

  • (c) any cash, securities or other rights or interests that are received or are to be received with respect to the ownership interest as a direct or indirect result of the making of an order under paragraph 11.09(1)(b) of the Act and any actions taken in furtherance of the order.

• Marginal note:Liquidation value in respect of a share or ownership interest

  (4) The liquidation value in respect of a share or ownership interest in a clearing house is the estimated value that the shareholder or holder of the ownership interest would have received in respect of the share or ownership interest if

  • (a) the clearing house had become bankrupt and been liquidated at the time a declaration of non-viability was made; and

  • (b) the measures to address financial losses, or shortfalls in liquidity or capital adequacy, that were specified in its by-laws or rules, or in an arrangement that relates to the clearing and settlement system, were exhausted.

• Marginal note:Assumptions

  (5) The liquidation value referred to in subsection (4) must be estimated

  • (a) as if no declaration of non-viability was made; and

  • (b) without taking into consideration any assistance, financial or other, that is or may be provided to the clearing house, directly or indirectly, by the Bank or by Her Majesty in right of Canada or a province after the declaration of non-viability was made.

Marginal note:Compensation — shareholders

• 10 (1) The amount of compensation to which a shareholder referred to in paragraph 6(1)(c) is entitled is determined by the formula

  A – B

  where

  A

  is the estimated liquidation value in respect of their shares; and

  B

  is the estimated resolution value in respect of their shares.

• Marginal note:Compensation — holders of ownership interests

  (2) The amount of compensation to which a holder of an ownership interest referred to in paragraph 6(1)(d) is entitled is determined by the formula

  A – B

  where

  A

  is the estimated liquidation value in respect of the ownership interest; and

  B

  is the estimated resolution value in respect of the ownership interest.

• Marginal note:Negative value

  (3) For greater certainty, if the amount of compensation determined under this section is a negative value, the amount of compensation is zero.

Marginal note:Notice — offer of compensation

• 11 (1) Within a reasonable period of time after the day specified in the notice published under section 11.24 of the Act, the Bank must give each person or entity that was prescribed in respect of the clearing and settlement system or clearing house a notice containing an offer of compensation in an amount equal to, or of a value estimated by the Bank to be equal to, the compensation to which that person or entity is entitled.

• Marginal note:Contents of notice

  (2) The notice must

  • (a) state that an order has been made under paragraph 11.09(1)(b) or subsection 11.11(1) of the Act;

  • (b) describe the order’s effects;

  • (c) state that the prescribed person or entity has 45 days beginning on the day on which a summary of the notice is published in the Canada Gazette to notify the Bank of their decision to accept or object to the offer, or to object to the absence of an offer;

  • (d) state that if the offer or the absence of an offer is objected to by the prescribed person or entity, the compensation to be paid will be determined by an assessor; and

  • (e) state that if the prescribed person or entity does not notify the Bank of their objection within the period set out in paragraph (c), the person or entity will receive the compensation offered or no compensation, as the case may be, and will not be permitted to contest its amount or value or the fact that no compensation is offered.

Marginal note:Publication

12 A summary of the notice given under subsection 11(1) must be published in the Canada Gazette and on the website of the clearing house.

Marginal note:Payment of compensation

13 The Bank must pay a prescribed person or entity referred to in section 6 any compensation offered under subsection 11(1) if

• (a) the person or entity notifies the Bank of its acceptance of the offer within the period set out in paragraph 11(2)(c); or

• (b) the person or entity does not notify the Bank of its acceptance of, or objection to, the offer within that period.

Marginal note:Appointment of assessor

14 An assessor must be appointed under section 11.28 of the Act if the person or entity notifies the Bank that it objects to the offer, or the absence of an offer, within the period set out in paragraph 11(2)(c).

Marginal note:Notice of appointment

15 Within 45 days after the day on which an assessor is appointed, the Bank must provide, to each person and entity whose compensation is to be determined by the assessor, a notice of the appointment that states that the person or entity is bound by the assessor’s determination of the amount of compensation to be paid which may be lower or higher than that contained in the offer.

Marginal note:Assessor’s determination

16 The assessor must determine the amount of compensation to be paid in accordance with sections 7 to 10.

Marginal note:Assessor’s notice

• 17 (1) The assessor must provide, to every prescribed person or entity whose compensation is determined by the assessor, a notice

  • (a) setting out the assessor’s determination of the amount of compensation to which the person or entity is entitled;

  • (b) stating that the person or entity is bound by the assessor’s determination as to the amount of compensation to be paid; and

  • (c) stating that the Bank must pay the compensation within 90 days after the date of the notice.

• Marginal note:Copy to Bank

  (2) The assessor must provide a copy of each notice to the Bank.

Marginal note:Payment of compensation

18 The Bank must pay a prescribed person or entity the compensation that it is entitled to receive within

• (a) if a notice referred to in subsection 17(1) is provided to the person or entity, 90 days after the date of that notice; or

• (b) in any other case, 135 days after the day on which a summary of the notice given under subsection 11(1) is published in the Canada Gazette.

Marginal note:Oversight information

19 For the purposes of section 2 of the Act, oversight information means any information contained in the following documents:

• (a) directives issued by the Governor of the Bank under subsection 6(1) or (2) of the Act to a clearing house or a participant and any correspondence to or from the directors or officers of the clearing house or the participant that is related to the directive;

• (b) reports prepared by or at the request of the Bank, including any written recommendations prepared by the Bank, as a result of an audit, inspection or other oversight review of a clearing and settlement system;

• (c) any correspondence to or from the directors or officers of a clearing house that is related to a report or recommendation referred to in paragraph (b);

• (d) resolution plans referred to in subsection 11.05(1) of the Act;

• (e) documents that are prepared by or at the request of the Bank for the purpose of advising the Governor of the Bank on whether to make a declaration of non-viability under section 11.06 of the Act.

Marginal note:Disclosure to affiliates

20 A clearing house may disclose oversight information in respect of its clearing and settlement system to its affiliates, its directors, officers, employees, auditors, securities underwriters and legal advisors and those of its affiliates, if the clearing house ensures that the information remains confidential.

Marginal note:Disclosure to government or regulatory body

21 A clearing house may disclose oversight information in respect of its clearing and settlement system to any government authority or regulatory body that

• (a) regulates the system; and

• (b) has entered into an agreement or arrangement with the Bank under section 13.3 of the Act in respect of the system and oversight information.

Marginal note:Coming into force

Footnote ^*22 These Regulations come into force on the first day on which both sections 237 and 242 of the Budget Implementation Act, 2018, No. 1, chapter 12 of the Statutes of Canada, 2018, come into force, but if they are registered after that day, they come into force on the day on which they are registered.

• Return to footnote ^*[Note: Regulations in force June 25, 2019.]