Regulatory Capital (Banks) Regulations

3 (1) Subject to subsection (2) and section 4, the regulatory capital of a bank, at a particular time, is the aggregate of the amounts of

• (a) shareholders equity,

• (a.1) members’ equity, if the bank is a federal credit union,

• (b) minority interests, and

• (c) subordinated indebtedness

that would be reported in the financial statements of the bank prepared as at that time in accordance with the accounting principles and specifications of the Superintendent referred to in subsection 308(4) of the Act, less the amount of goodwill that would be included in those financial statements.

(2) In calculating the amount of regulatory capital under subsection (1), an amount may be included in respect of a security or membership share only if

• (a) the security or membership share is, by its terms, subordinate in right of payment to all deposit liabilities and all other liabilities of the entity that issued the security or membership share other than liabilities that, by their terms, rank equally with, or are subordinate to, that security or membership share;

• (b) the security or membership share is issued and fully paid-up; and

• (c) in respect of subordinated indebtedness or a preferred share, the security

  • (i) has an initial minimum term of five years or more or has no term, and

  • (ii) cannot be redeemed or purchased for cancellation in the first five years after it is issued.