Canada Deposit Insurance Corporation Act

Contents

1Short title#

This Act may be cited as the Canada Deposit Insurance Corporation Act.^note

2Definitions#

In this Act,

affairs, with respect to a member institution, means its business and the relationships among the member institution and its affiliates and the shareholders, directors and officers of the member institution and its affiliates; (affaires internes)

affiliate, in respect of a member institution that is

(a)a bank, means an entity that is affiliated with the bank within the meaning of the Bank Act, or

(b)other than a bank, means an entity that would be affiliated with the member institution within the meaning of the Bank Act if the member institution were a bank to which that Act applies; (groupe)

appropriate provincial minister, in relation to a provincial institution, means the minister of the Crown of the province of incorporation of the institution responsible for the supervision of the provincial institution; (ministre provincial compétent)

bank means a bank listed in Schedule I or II to the Bank Act; (banque)

Board means the Board of Directors of the Corporation; (conseil)

bridge institution means a federal institution that is designated as a bridge institution by an order made under paragraph 39.13(1)(c); (institution-relais)

by-laws means the by-laws of the Corporation; (règlements administratifs)

Chairman [Repealed, 1996, c. 6, s. 21]

Chairperson means the Chairperson of the Board; (président)

Corporation means the Canada Deposit Insurance Corporation established by section 3; (Société)

deposit and depositor mean respectively a deposit and a depositor as defined in the schedule; (dépôt et déposant)

deposit insurance means the insurance referred to in paragraph 7(a); (assurance-dépôts)

domestic systemically important bank has the same meaning as in section 2 of the Bank Act; (banque d’importance systémique nationale)

federal credit union has the same meaning as in section 2 of the Bank Act; (coopérative de crédit fédérale)

federal institution means a bank, company or association referred to in section 8; (institution fédérale)

federal member institution means a federal institution that is a member institution; (institution fédérale membre)

local cooperative credit society has the same meaning as in section 2 of the Bank Act; (société coopérative de crédit locale)

member institution means a corporation that has deposit insurance under this Act; (institution membre)

Minister means the Minister of Finance; (ministre)

nominee broker means a person who is a party to an agreement or arrangement with a member institution in order to make deposits as a nominee on behalf of another person; (courtier-fiduciaire)

nominee broker deposit means a deposit made at a member institution by a nominee broker acting as a nominee on behalf of another person; (dépôt de courtier-fiduciaire)

policy of deposit insurance or policy means the instrument evidencing the deposit insurance of a member institution; (police d’assurance-dépôts ou police)

premium year means, in relation to the calculation and payment of premiums pursuant to this Act, the period beginning on May 1 in one year and ending on April 30 in the next year; (exercice comptable des primes)

professional trustee means any of the following who is not a nominee broker:

(a)the public trustee of a province or a similar public official whose duties involve holding moneys in trust for others;

(b)a federal, provincial or municipal government, or a department or agency of such a government;

(c)a lawyer or partnership of lawyers, a law corporation, or a notary or partnership of notaries in the province of Quebec, when they act in that capacity as a trustee of moneys for others;

(d)a person who is acting as a trustee of moneys for others in the course of business and is required by or under a statute to hold the deposit in trust;

(e)a person who is acting as a trustee of moneys for others in the course of business and is subject to the rules of a securities commission, stock exchange or other regulatory or self-regulating organization that audits compliance with those rules;

(f)a regulated federal or provincial trust company acting in the capacity of a depositor; or

(g)a payment service provider that is registered as those expressions are defined in section 2 of the Retail Payment Activities Act; (fiduciaire professionnel)

provincial institution means a company referred to in section 9; (institution provinciale)

provincial member institution means a provincial institution that is a member institution; (institution provinciale membre)

provincial supervisor, in relation to a provincial institution, means the official of the province of incorporation of the provincial institution who supervises the affairs of the provincial institution; (contrôleur provincial)

receiver includes a receiver-manager and a sequestrator; (séquestre)

representation means any oral or written statement and includes any advertisement and any mark, sign, trade name or other device; (déclaration)

returned payment means any portion of a payment made by the Corporation under subsection 14(2) or (2.1) that is either returned to the Corporation or that otherwise remains under its control; (paiement retourné)

share includes

(a)a conversion or exchange privilege, issued by a member institution, that is convertible at any time into a share,

(b)an option or a right, issued by a member institution, to acquire a share or a privilege referred to in paragraph (a), and

(c)a membership share within the meaning of section 2 of the Bank Act; (action)

shareholder includes the holder of a membership share of a federal credit union; (actionnaire)

subordinated debt means debt of a member institution that, by the terms of any instrument evidencing the debt, will, in the event of the insolvency or winding-up of the member institution, be subordinate in right of payment to all deposit liabilities of the member institution and all other liabilities of the member institution except those that, by their terms, rank equally with or are subordinate to that debt and includes

(a)a conversion or exchange privilege that is convertible at any time into subordinated debt, and

(b)an option or a right to acquire subordinated debt or a privilege referred to in paragraph (a)

issued by a member institution; (dette subordonnée)

Superintendent means the Superintendent of Financial Institutions appointed pursuant to subsection 5(1) of the Office of the Superintendent of Financial Institutions Act. (surintendant)

^note

Her Majesty

2.1Binding on Her Majesty#

This Act is binding on Her Majesty in right of Canada or a province.^note

Powers, Etc., of Minister

2.2Delegation#

The Minister may delegate any of the Minister’s powers, duties and functions under this Act to any Minister of State appointed pursuant to the Ministries and Ministers of State Act to assist the Minister.^note

Constitution of the Corporation

3Corporation established#

(1)There is hereby established a corporation, to be called the Canada Deposit Insurance Corporation.

(2)The Corporation is, for all purposes of this Act, an agent of Her Majesty in right of Canada.

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4Head office#

(1)The head office of the Corporation shall be at the city of Ottawa.

(2)The Corporation may establish offices or employ agents in any part of Canada.

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5Board of Directors#

(1)There shall be a Board of Directors of the Corporation consisting of

(a)the person appointed as the Chairperson under subsection 6(1);

(a.1)the person appointed as the President and Chief Executive Officer of the Corporation under subsection 105(5) of the Financial Administration Act;

(b)the persons who for the time being hold the offices of the Governor of the Bank of Canada, the Deputy Minister of Finance, the Superintendent of Financial Institutions and the Commissioner of the Financial Consumer Agency of Canada;

(b.1)a Deputy Superintendent of Financial Institutions, or an officer of the Office of the Superintendent of Financial Institutions, appointed by the Minister; and

(c)not more than six other members appointed by the Minister with the approval of the Governor in Council.

(1.1)A person is not eligible to be appointed under paragraph (1)(c) or, having been appointed under that paragraph, to continue as a member of the Board, if the person is

(a)employed in any capacity in the federal public administration or holds any office or position for which any salary or other remuneration is payable out of public moneys;

(b)a member of the Senate or House of Commons of Canada or a member of a provincial legislature; or

(c)a director, officer or employee of a federal institution, a provincial institution or a local cooperative credit society.

(2)A director referred to in paragraph (1)(b) may, from time to time with the approval of the Minister, designate in writing an alternate to attend in the director’s absence at any meeting of the Board of Directors, and the alternate shall be deemed to be a member of the Board while so attending a meeting of the Board.

(3)A vacancy on the Board does not impair the right of the remaining directors to act.

(4)Where the office of Chairperson is vacant, the Minister may appoint, for a period not exceeding ninety days, an acting Chairperson who shall, while so acting, be a member of the Board and have all the powers of the Chairperson.

(5)A director shall be paid by the Corporation reasonable travel and living expenses incurred by the director while absent from his or her ordinary place of residence in the course of his or her duties as a director but no director referred to in paragraph (1)(b) shall receive any other remuneration for his or her services on the Board.

(5.1)A director referred to in paragraph (1)(c) shall be paid by the Corporation for attendance at meetings of the Board such remuneration as may be fixed by the Governor in Council.

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6Chairperson#

(1)The Governor in Council shall appoint a person of proven financial ability to be Chairperson of the Board.

(2)Notwithstanding subsection 105(5) of the Financial Administration Act, the Chairperson shall be appointed to hold office during good behaviour for such term as the Governor in Council deems appropriate but may be reappointed on the expiration of his or her term of office and may be removed at any time by the Governor in Council for cause.

(3)No person is eligible to be appointed or to continue as Chairperson who

(a)is not a Canadian citizen ordinarily resident in Canada;

(b)is a member of the Senate or House of Commons or a member of a provincial legislature; or

(c)is a director, officer or employee of a federal institution, a provincial institution or a local cooperative credit society.

(d)[Repealed, 2007, c. 6, s. 402] (repealed)

(4)The Chairperson shall preside at all meetings of the Board but where at any meeting the Chairperson is absent, one of the directors present thereat who is chosen so to act by the directors present shall preside and have all the powers of the Chairperson.

(5)The Chairperson shall be paid by the Corporation such remuneration as may be fixed by the Governor in Council.

^note

Objects, Powers and Duties

7Objects#

The objects of the Corporation are

(a)to provide insurance against the loss of part or all of deposits;

(b)to promote and otherwise contribute to the stability of the financial system in Canada;

(c)to pursue the objects set out in paragraphs (a) and (b) for the benefit of persons having deposits with member institutions and in such manner as will minimize the exposure of the Corporation to loss; and

(d)to act as the resolution authority for its members.

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7.1Power of Governor in Council#

(1)The Governor in Council may, by order, exempt the Corporation from the requirement that it pursue its objects in a manner that will minimize its exposure to loss when it takes any action to address a situation that is specified in the order.

(2)The Governor in Council may make the order only if the Minister is of the opinion, after consultation with the Board, the Governor of the Bank of Canada and the Superintendent, that the requirement that the Corporation pursue its objects in a manner that will minimize its exposure to loss, in respect of a situation that will be specified in the order, might have an adverse effect on the stability of the financial system in Canada or public confidence in that stability.

(3)The Governor in Council may repeal the order only if the Minister is of the opinion that the requirement that the Corporation pursue its objects in a manner that will minimize its exposure to loss, in respect of the situation specified in the order, will no longer have an adverse effect on the stability of the financial system in Canada or public confidence in that stability.

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7.2Coming into force#

(1)An order made under subsection 7.1(1) has effect from the time that it is made.

(2)The Statutory Instruments Act does not apply to the order.

(3)The Minister shall cause a notice to be published in the Canada Gazette that the order has been made or repealed as soon as the Minister is of the opinion that the publication of the notice will not have an adverse effect on the stability of the financial system in Canada or public confidence in that stability.

^note

7.3Recovery of loss#

After the publication of a notice in the Canada Gazette that an order was made under subsection 7.1(1), the Corporation shall, in accordance with its by-laws, collect a special premium from member institutions or any class of member institutions in order to recover the loss that the Corporation determines it incurred as a result of pursuing its objects without regard to the requirement that it do so in a manner that minimizes its exposure to loss.^note

8Federal institutions#

For the purposes of this Act, the following are federal institutions:

(a)a bank;

(b)a company to which the Trust and Loan Companies Act applies; and

(c)a retail association within the meaning of regulations made under the Cooperative Credit Associations Act.

^note

9Provincial institutions#

For the purposes of this Act, an incorporated company that carries on, under an Act of the legislature of a province or a constating instrument under provincial jurisdiction, a business substantially similar to the business of a company to which the Trust and Loan Companies Act applies and that is authorized by or under an Act of the legislature of a province to accept deposits from the public is a provincial institution.^note

10Powers of Corporation#

(1)The Corporation may do all things necessary or incidental to the objects of the Corporation and in particular, but without limiting the generality of the foregoing, the Corporation may, in furtherance of its objects,

(a)acquire assets from a member institution;

(a.1)make or guarantee loans or advances, with or without security, to a member institution;

(a.11)make or guarantee a deposit with a member institution;

(a.12)assume liabilities of a member institution;

(a.2)enter into an agreement with the government of a province, or an agent of the government of a province, respecting any matter relating to the insurance of deposits with provincial institutions in that province;

(b)make any investment and enter into any transaction necessary or desirable for the financial management of the Corporation;

(c)act as liquidator, receiver or inspector of a member institution or a subsidiary thereof, when duly appointed as such and appoint qualified and competent persons, whether employees of the Corporation or not, to carry out any or all of the functions of the Corporation under the appointment of the Corporation;

(d)assume the costs of a winding-up of a member institution when the Corporation is appointed to act as a liquidator in the winding-up, or assume the costs of the receiver when the Corporation is appointed to act as such;

(e)guarantee the payment of the fees of, and the costs incurred by any person as, the liquidator or receiver of a member institution when that person is appointed as such;

(f)acquire assets and assume liabilities of a member institution from its liquidator or receiver;

(f.1)acquire, by way of security or otherwise, shares and subordinated debt of a member institution and to hold and dispose of those shares and subordinated debt;

(g)make an advance for the purpose of paying a claim, against a member institution for which the Corporation is acting as receiver or liquidator, in respect of any insured deposit and of becoming subrogated as an unsecured creditor for the amount of the advance;

(h)make or cause to be made such inspections of a member institution as may be authorized under this Act or a policy of deposit insurance;

(i)acquire, hold and alienate real and personal property;

(i.1)settle or compromise any claim by or against the Corporation; and

(j)do all such other things as may be necessary for the exercising of any power of the Corporation.

(2)For the purposes of facilitating the acquisition, management or disposal of real property or other assets of a member institution that the Corporation may acquire as the result of its operations, the Corporation may, when authorized by order of the Governor in Council,

(a)procure the incorporation of a corporation, all the shares of which, on incorporation, would be held by, on behalf of or in trust for the Corporation; or

(b)acquire all of the shares of a corporation that, on acquisition, would be held by, on behalf of or in trust for the Corporation.

(3)A corporation described in paragraph (2)(a) or (b) is deemed not to be an agent of the Corporation or of Her Majesty in right of Canada.

(3.1)A corporation described in paragraph (2)(a) or (b) may acquire assets and assume liabilities of a member institution from that institution or from its liquidator or receiver.

(4)The Corporation shall, in exercising its powers under paragraph (1)(b), comply with such directions of general application as the Minister may, in writing, give to the Corporation.

^note

10.001For greater certainty — deposit insurance contracts#

For greater certainty, the Corporation may administer any contract related to deposit insurance that the Minister enters into with any entity under section 60.2 of the Financial Administration Act.^note

10.01Exemption — shares of member institution#

(1)To enable the Corporation to acquire, hold or dispose of shares under paragraph 10(1)(f.1), the Minister may, by order, exempt any person or share specified in the order from any of the following provisions:

(a)sections 47.03, 47.04, 47.06, 47.09, 47.11, 47.15, 47.17, 47.18 and 60.1, subsection 79.2(1) and sections 372, 373, 374, 375, 376, 376.1, 376.2, 377, 377.1, 377.2 379, 382.1, 385, 401.11, 401.2 and 401.3 of the Bank Act;

(b)sections 407, 407.01, 407.02, 407.03, 407.1, 407.2, 408, 411, 428 and 430 of the Insurance Companies Act; and

(c)sections 375, 375.1, 376, 379, 396 and 399 of the Trust and Loan Companies Act.

(2)The exemption may be subject to conditions.

(3)The exemption ceases to have effect five years after the day on which it comes into force.

(4)The Minister may, by order, extend the duration of the exemption if general market conditions so warrant.

(5)The Statutory Instruments Act does not apply to an order made under this section.

^note

10.1Loans to Corporation#

(1)At the request of the Corporation, the Minister may, out of the Consolidated Revenue Fund, lend money to the Corporation on such terms and conditions as the Minister may establish.

(2)The Corporation may borrow money otherwise than under subsection (1) and may borrow by any means, including the issuance and sale of bonds, debentures, notes or any other evidence of indebtedness.

(3)The total principal indebtedness outstanding at any time in respect of borrowings by the Corporation under subsections (1) and (2), excluding the borrowings under paragraph 60.2(2)(c) of the Financial Administration Act and under subparagraph 60.2(2)(a)(iii) of that Act as it read on September 30, 2020, shall not exceed

(a)$15,000,000,000 or, if it is greater, the amount determined in accordance with subsections (3.1) to (3.5); or

(b)such greater amount as may be authorized for the purposes of this subsection by Parliament under an appropriation Act.

(3.1)Subject to subsections (3.3) and (3.4), the amount that the total principal indebtedness outstanding at any time in respect of borrowings under subsections (1) and (2) shall not exceed is increased each year to the amount determined by the formula

(3.2)The rate referred to in the description of B in subsection (3.1) is determined by the formula

(3.3)The amount determined under subsection (3.1) shall be rounded to the nearest billion dollars or, if the amount is equidistant from two consecutive multiples of one billion dollars, it shall be rounded to the higher of those two multiples.

(3.4)The amount that the total principal indebtedness outstanding at any time in respect of borrowings under subsections (1) and (2) shall not exceed does not change if the amount determined under subsection (3.1) for the current year is less than the amount published under subsection (3.6) for the previous year.

(3.5)The new amount that the total principal indebtedness outstanding at any time in respect of borrowings under subsections (1) and (2) shall not exceed comes into effect on December 31 of the current year.

(3.6)The Corporation shall publish the new amount that the total principal indebtedness outstanding at any time in respect of borrowings under subsections (1) and (2) shall not exceed in its annual report following the day on which the new amount comes into effect.

(4)The Minister may fix a fee to be paid by the Corporation to the Receiver General in respect of any borrowings by the Corporation and the Minister shall notify the Corporation in writing of any such fee.

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11Powers of directors#

(1)The Board shall administer the affairs of the Corporation in all things and make, or cause to be made, for the Corporation any description of contract that the Corporation may by law enter into.

(2)The Board may make by-laws,

(a)for the administration, management and control of the property and affairs of the Corporation;

(b)governing the functions, duties and remuneration of all officers, agents and employees of the Corporation;

(b.1)concerning conflicts of interest and post-employment matters relating to conflicts of interest in respect of directors, officers and employees of the Corporation;

(c)governing the appointment and activities of any special committees created for the purposes of the Corporation;

(d)governing the time and place for the holding of meetings of the directors, and the quorum and procedure in all things at those meetings;

(e)respecting the development, submission and maintenance of resolution plans by domestic systemically important banks, including specifying the contents of those plans;

(f)respecting representations by member institutions and other persons with respect to

(i)what constitutes, or does not constitute, a deposit,

(ii)what constitutes, or does not constitute, a deposit that is insured by the Corporation, and

(iii)who is a member institution;

(f.1)for the purpose of facilitating the Corporation’s exercise of its functions either under section 14 or in the event that an order is made under subsection 39.13(1), respecting the information that the Corporation can require from member institutions with respect to their deposit liabilities and the time within and manner in which it is to be provided to the Corporation;

(f.2)respecting the capabilities that the Corporation can require member institutions to have to facilitate the Corporation’s exercise of its functions either under section 14 or in the event that an order is made under subsection 39.13(1), including the capability to

(i)identify their deposit liabilities, and

(ii)temporarily prevent withdrawals of deposit liabilities;

(g)prescribing anything that, by virtue of any provision of this Act, is to be prescribed by the by-laws;

(h)prescribing the form and manner in which payments under this Act are to be made by the Corporation; and

(i)governing the conduct in all other particulars of the affairs of the Corporation.

(2.01)A by-law made under paragraph (2)(e) is not effective unless it has been approved in writing by the Minister.

(2.1)For the purposes of paragraphs (2)(f.1) and (f.2), deposit liabilities include deposits referred to in paragraphs 12(a) to (c) and liabilities referred to in subsections 2(2), (5) and (6) of the schedule.

(2.2)If a by-law requires approval in writing by the Minister under this Act in order to be effective, then, for the purposes of subsection 5(1) of the Statutory Instruments Act, the by-law is deemed to be made on the day on which the Corporation receives that approval.

(3)In carrying out any inspection authorized by this Act or by a policy of deposit insurance, the directors of the Corporation have all the powers conferred on commissioners appointed under Part II of the Inquiries Act for the purpose of obtaining evidence under oath, and the directors may delegate those powers as occasion requires.

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11.1Minister’s direction#

(1)The Minister may, after consultation with the Board, the Governor of the Bank of Canada and the Superintendent, give a written direction to the Corporation if the Minister is of the opinion that not giving the direction might have an adverse effect on the stability of the financial system in Canada or public confidence in that stability.

(2)The Corporation shall comply with the direction without regard to the requirement referred to in paragraph 7(c) that it pursue its objects in a manner that will minimize its exposure to loss.

(3)The Corporation’s directors shall ensure that the direction is implemented in a prompt and efficient manner and, if in so doing they act in accordance with section 115 of the Financial Administration Act, they are not accountable for any consequences arising from the implementation of the direction.

(4)After implementing the direction, the Corporation shall notify the Minister without delay that the direction has been implemented.

(5)The Corporation’s compliance with a direction is deemed to be in its best interests.

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11.2Statutory Instruments Act#

(1)The Statutory Instruments Act does not apply to a direction given under subsection 11.1(1).

(2)The Minister shall cause a notice to be published in the Canada Gazette that a direction was given under subsection 11.1(1) as soon as the Minister is of the opinion that the publication of the notice will not have an adverse effect on the stability of the financial system in Canada or public confidence in that stability.

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11.3Recovery of loss#

After the publication of a notice in the Canada Gazette that a direction was given under subsection 11.1(1), the Corporation shall, in accordance with its by-laws, collect a special premium from member institutions or any class of member institutions in order to recover the loss that the Corporation determines it incurred as a result of complying with the direction.^note

Deposit Insurance

12Duty to insure#

The Corporation shall insure each deposit with a member institution except

(a)a deposit that is not payable in Canada;

(b)a deposit in respect of which Her Majesty in right of Canada would be a preferred claimant; and

(c)so much of any one deposit as exceeds one hundred thousand dollars.

^note

12.01 #

[Repealed, 2023, c. 26, s. 628] (repealed)

12.1Definitions#

(1)The following definitions apply in this section.

continuation day, in respect of a local cooperative credit society continued as a federal credit union, means the day set out in the federal credit union’s letters patent continuing the local cooperative credit society as a federal credit union. (date de prorogation)

pre-existing deposit means a deposit that was made with a local cooperative credit society before it is continued as a federal credit union and that remains outstanding on the continuation day. (dépôt préexistant)

transition period, in respect of a pre-existing deposit, means

(a)in the case of a pre-existing deposit that is to be repaid on a fixed day, the period that begins on the continuation day and ends on that fixed day; and

(b)in the case of any other pre-existing deposit, the period that begins on the continuation day and ends on the day that is 180 days after the continuation day. (période transitoire)

(2)Despite paragraph 12(c) and subsection 4(2) of the schedule, but subject to the other provisions of this Act, if a pre-existing deposit is held by a federal credit union that is a member institution and all or a portion of the pre-existing deposit would have been guaranteed or insured under the law of a province if the local cooperative credit society had not been continued as a federal credit union, the Corporation must insure the pre-existing deposit during the transition period up to the amount that would have been guaranteed or insured under the law of that province.

(3)[Repealed, 2026, c. 3, s. 337] (repealed)

(4)During the transition period, a pre-existing deposit, less any withdrawals from the pre-existing deposit, is deemed, for the purposes of deposit insurance with the Corporation, to be a deposit separate from any deposit made on or after the continuation day.

(5)During the transition period, any withdrawal — up to the amount of the pre-existing deposit — is deemed, for the purposes of deposit insurance with the Corporation, to be withdrawn from the pre-existing deposit.

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13Deposits with amalgamating institutions#

(1)If a person has deposits with two or more member institutions — including member institutions insured under section 12.1 — that amalgamate and continue in operation as one member institution, in this section referred to as the “amalgamated institution”, a deposit of that person with an amalgamating institution on the day on which the amalgamated institution is formed, less any withdrawals from the deposit, shall, for the purposes of deposit insurance with the Corporation, be deemed to be and continue to be separate from any deposit of that person on that day with the other amalgamating institution or institutions that become part of the amalgamated institution for a period of two years or, in the case of a term deposit with a remaining term exceeding two years, to the maturity of the term deposit.

(2)A deposit made by a person referred to in subsection (1) with an amalgamated institution after the day on which the amalgamated institution is formed shall be insured by the Corporation only to the extent that the aggregate of that person’s deposits with the amalgamated institution, exclusive of the deposit in respect of which the calculation is made, is less than one hundred thousand dollars.

(2.1)A deposit that is insured under subsection 12.1(2) is not to be taken into account when calculating the aggregate of a person’s deposits under subsection (2).

(3)For the purpose of deposit insurance with the Corporation, if a member institution assumes deposit liabilities of another member institution, those member institutions are deemed to be amalgamating institutions and subsections (1) to (2.1) apply if a person has deposits with both institutions.

(4)Where a member institution assumes deposit liabilities of another member institution, the deposits in respect of those liabilities are, for the purposes of sections 21, 23 and 25.1, deemed to be deposited with the member institution that assumes them as of the day on which they are assumed.

(5)During the period referred to in subsection (1), any withdrawal by a person — up to the total amount, on the day on which the amalgamated institution is formed, of that person’s deposits with the two or more member institutions that amalgamate — shall, for the purposes of deposit insurance with the Corporation, be deemed to be withdrawn from those deposits.

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14Obligation regarding insured amount#

(1)As soon as possible after the Corporation is obliged to make payment in respect of a deposit insured by deposit insurance, it shall make available to the person that in its opinion appears to be entitled to be paid in respect of the deposit an amount of money equal to so much of the person’s deposit as is insured by the Corporation.

(1.01)The Corporation shall not make any money available under subsection (1) to a nominee broker or a professional trustee in relation to a trust deposit if information that the Corporation has requested under paragraph 7(1)(b) of the schedule or paragraph 11(b) of the schedule, as the case may be, has not been provided in relation to that deposit.

(1.1)The amount is to be made available by making a monetary payment to the person or a deposit to the credit of the person at another member institution, whether or not the person has an account at that institution. The Corporation may make the amount available in more than one instalment if, in its opinion, it is appropriate to do so.

(2)The Corporation shall, in the manner described in subsection (1.1), make payment in respect of any deposit insured by deposit insurance if a winding-up order has been made in respect of the member institution that holds the deposit.

(2.1)The Corporation may, in the manner described in subsection (1.1), make payment in respect of any deposit insured by deposit insurance if

(a)the member institution that holds the deposit is unable, by reason of an order of a court or of any action taken by a supervisory or regulatory body, to make any payment in respect of the deposit;

(b)the policy of deposit insurance of the member institution that holds the deposit is terminated or cancelled; or

(c)an order is made in respect of the federal member institution under subsection 39.13(1).

(2.2)[Repealed, 1996, c. 6, s. 26] (repealed)

(2.3)For the purpose of calculating the payment of the Corporation in respect of any deposit insured by deposit insurance where a winding-up order has been made in respect of the member institution that holds the deposit, the interest accruing and payable in relation to the deposit shall be included only to the date of the commencement of the winding-up.

(2.4)Where the Corporation makes a payment pursuant to subsection (2), the Corporation may pay, in addition to the amount the Corporation is obliged to pay, interest on that amount at a rate determined in accordance with rules prescribed by the by-laws for the period commencing on the date of the commencement of the winding-up in respect of the member institution that holds the deposit and ending on the date of the making of the payment in respect of the deposit, but the aggregate of the payments made under this subsection and subsection (2) in relation to the deposit shall in no case exceed one hundred thousand dollars.

(2.5)For the purpose of calculating the payment of the Corporation in respect of any deposit insured by deposit insurance where the Corporation makes a payment pursuant to subsection (2.1),

(a)subject to paragraph (b), the interest accruing and payable in relation to the deposit shall be included only to the date of the payment by the Corporation; or

(b)if a proceeding for the winding-up of the member institution that holds the deposit has been commenced before the date of the payment by the Corporation but a winding-up order has not yet been made, the interest accruing and payable in relation to the deposit shall be included only to the date of the commencement of the winding-up.

(2.51)The interest referred to in subsection (2.3) or (2.5) in relation to a deposit held by a member institution shall be determined in accordance with rules prescribed by the by-laws if a payment to be made by the member institution in respect of the deposit is to be determined, in whole or in part, by reference in any way to

(a)the market price of a security, commodity or financial instrument;

(b)the exchange rate between any two currencies;

(c)a reference rate determined by reference to any one or more of those prices or rates; or

(d)any other kind of variable index or reference point that may be described in rules prescribed by the by-laws.

(2.6)Where a winding-up order is made in respect of a member institution, subsection (2) does not apply to any deposit in respect of which payment was made pursuant to subsection (2.1).

(2.7)If the Corporation believes that it would be in the best interests of both the depositors with the member institution and the Corporation that preparations be made to make a payment under this Act in respect of a deposit held by a member institution, the Corporation may make or cause to be made by any person designated by the Corporation, an examination of the books, records and accounts of the member institution relating to its deposit liabilities. For the purposes of the examination, the Corporation and the person designated by it have a right of access to those books, records and accounts and are entitled to require the member institution’s directors, officers, auditors and any receiver or liquidator of the member institution to furnish any information and explanations regarding the deposits held by the member institution that the Corporation or person may require.

(2.8)The costs incurred by the Corporation in carrying out an examination in respect of a member institution under subsection (2.7) shall be paid by the member institution and may be recovered by the Corporation as a debt due and payable to the Corporation.

(2.9)For the purposes of calculating the payment to be made by the Corporation in respect of any deposit insured by deposit insurance, the amount of the deposit shall be determined, where the Corporation makes a payment pursuant to

(a)subsection (2), as of the date of the commencement of the winding-up;

(b)subsection (2.1) in the winding-up circumstances described in paragraph (2.5)(b), as of the date of the commencement of the winding-up; or

(c)subsection (2.1), otherwise than in the winding-up circumstances described in paragraph (2.5)(b), as of the date on which any of the circumstances described in subsection (2.1) first occurs in respect of the member institution concerned.

(2.91)For the purposes of calculating the payment to be made by the Corporation in respect of any deposit insured by deposit insurance, the deposit, other than accrued interest, must be posted in the member institution’s records in accordance with the member institution’s regular transaction posting process as of the applicable date referred to in subsection (2.9).

(2.92)For the purposes of calculating the payment to be made by the Corporation in respect of any deposit payable in a foreign currency that is insured by deposit insurance, the amount of the deposit must be determined in Canadian currency in accordance with the Bank of Canada’s published exchange rate on the applicable date referred to in subsection (2.9) or, if there is no such published rate, the last exchange rate published by the member institution before that applicable date.

(3)Payment under this section by the Corporation in respect of any deposit insured by deposit insurance discharges the Corporation from all liability to the extent of the amount of the payment made in respect of that deposit, and in no case is the Corporation under any obligation to see to the proper application in any way of the payment so made.

(4)Where the Corporation makes a payment under this section in respect of any deposit with a member institution, the Corporation is subrogated, to the extent of the amount of the payment made, to all the rights and interests of the depositor and may maintain an action in respect of those rights and interests in the name of the depositor or in the name of the Corporation.

(4.01)In the case of a returned payment, at the expiry of one year from the applicable date referred to in subsection (2.9), the Corporation is subrogated, to the extent of the amount of the returned payment, to all the rights and interests of the depositor and may maintain an action in respect of those rights and interests in the name of the depositor or in the name of the Corporation.

(4.1)If the Corporation is subrogated to the rights and interests of a depositor under subsection (4) or (4.01) in respect of any deposit with a member institution that is being wound up, the Corporation ranks,

(a)to the extent that the payment was made under subsection (2) or (2.1), including in the case of a returned payment, equally with the depositor in respect of their deposit; and

(b)to the extent that the payment includes any interest paid under subsection (2.4), equally with the depositor in respect of interest accruing and payable on their deposit after the date of the making of the winding-up order.

(4.2)Despite section 73 of the Winding-up and Restructuring Act, if the Corporation makes a payment under this section in respect of any deposit with a member institution, the law of set-off or compensation does not apply to a claim by the Corporation on the estate of the member institution in respect of that payment.

(5)Where the Corporation deems it advisable, it may withhold payment in respect of any deposit with a member institution until it has received an assignment in writing of all the rights and interests of the depositor in relation to the deposit.

(6)No action may be taken against the Corporation in respect of the obligation of the Corporation to make a payment in relation to a deposit held by a member institution that is being wound up unless the action is commenced within ten years after the date of the commencement of the winding-up.

(7)In this section, commencement of the winding-up means the time a winding-up is deemed to commence pursuant to section 5 of the Winding-up and Restructuring Act.

^note

14.01Payment to the Bank of Canada#

(1)The Corporation shall pay to the Bank of Canada an amount equal to a returned payment within three months after the expiry of a 10-year period from the applicable date referred to in subsection 14(2.9), and payment to the Bank of Canada accordingly discharges the Corporation from all liability in respect of the returned payment.

(2)The Corporation shall mail to each person to whom a returned payment remains payable, at the person’s address in so far as the address is known to the Corporation, a notice that the returned payment remains unpaid and that payment of an amount equal to the returned payment will be paid by the Corporation to the Bank of Canada. The notice must be sent at least six months before the date by which payment is to be made by the Corporation to the Bank of Canada and must also include the mailing address and websites where information can be obtained on how to claim the returned payment from the Corporation before payment is made by the Corporation to the Bank of Canada.

(3)The Corporation shall, on making a payment under subsection (1), provide to the Bank of Canada the amount of the returned payment and, in so far as it is known to the Corporation, any information that the Bank of Canada determines is necessary to verify the identity of the depositor who is entitled to the returned payment, including

(a)the depositor’s name;

(b)the depositor’s address;

(c)information relating to the depositor’s pieces of identification; and

(d)information relating to another person’s authority to act on behalf of the depositor.

(4)Subject to section 22 of the Bank of Canada Act, if payment has been made to the Bank of Canada under subsection (1) in respect of any returned payment, and if payment is demanded from the Bank of Canada by the person who, but for that subsection, would be entitled to receive the returned payment, the Bank of Canada is liable to pay an amount equal to the amount so paid to it to the claimant.

(5)The liability of the Bank of Canada under subsection (4) may be enforced by action or other civil proceeding against the Bank of Canada in any court of competent jurisdiction.

^note

14.1Sale of information to liquidator#

(1)The Corporation may sell to the liquidator of a member institution appointed under the Winding-up and Restructuring Act any information that was gathered or produced at the expense of the Corporation, if that expense is not one that may be recovered by the Corporation from the member institution under subsection 14(2.8).

(2)Any amount paid by the liquidator for that information is deemed for the purpose of section 94 of the Winding-up and Restructuring Act to be a cost incurred in the winding-up of the member institution.

^note

15Premiums recoverable#

A premium assessed by the Corporation against a member institution for the purposes of this Act constitutes a debt owing to Her Majesty in right of Canada and the amount thereof together with any interest levied by the Corporation as an overdue charge is recoverable by action in any court of competent jurisdiction.^note

16 #

[Repealed, R.S., 1985, c. 18 (3rd Supp.), s. 53] (repealed)

17Insurance of federal institutions#

(1)The Corporation shall, in the manner and to the extent provided in this Act and the by-laws, insure the deposits held by a federal institution in respect of which an order approving the commencement and carrying on of business has been made by the Superintendent unless

(a)that order prohibits the institution from accepting deposits in Canada;

(b)that order authorizes the institution to accept deposits in Canada solely in accordance with subsection 413(3) of the Bank Act, subsection 378.1(2) of the Cooperative Credit Associations Act or subsection 413(2) of the Trust and Loan Companies Act;

(c)the institution has been authorized under section 26.03 to accept deposits payable in Canada while no longer being a member institution; or

(d)the institution’s policy of deposit insurance has been terminated under section 31 or cancelled under section 33.

(2)If the order approving the commencement and carrying on of business by a federal institution is at any time amended so as to not contain the prohibition or restriction referred to in paragraphs (1)(a) and (b), respectively,

(a)on the day on which the amendment takes effect, any authorization under section 26.03 that permits the institution to accept deposits payable in Canada while no longer being a member institution is revoked;

(b)on the day on which the amendment takes effect, any existing cancellation of the institution’s policy of deposit insurance under paragraph 33(1)(b) or (c) or subsection 33(2) is revoked; and

(c)as of the day on which the amendment takes effect, the Corporation shall insure the deposits held by the institution under subsection (1).

(3)Subsection (2) does not apply in respect of a federal institution whose policy of deposit insurance has been terminated under section 31 or cancelled under paragraph 33(1)(a).

(4)The Superintendent shall notify the Corporation of

(a)every application to incorporate a federal institution, or to continue a corporation as a federal institution, in respect of which the Superintendent is likely to make an order approving the commencement and carrying on of business that does not contain the prohibition or restriction referred to in paragraphs (1)(a) and (b), respectively; and

(b)every application by a federal institution to have its order approving the commencement and carrying on of business amended so as to not contain the prohibition or restriction referred to in paragraphs (1)(a) and (b), respectively.

^note

17.01Insurance of amalgamating institutions#

Despite section 17, the Corporation must, in the manner and to the extent provided in this Act and the by-laws, insure the deposits held by a federal credit union that was a local cooperative credit society prior to the issuance of the letters patent in respect of its continuation for the purposes of amalgamation.^note

17.1Insurance of provincial institutions#

On the application of a provincial institution, the Corporation may insure the deposits held by the institution in the manner and to the extent provided in this Act and the by-laws, if

(a)the Corporation approves the institution for deposit insurance;

(b)the institution is authorized by the province of its incorporation to apply for deposit insurance;

(c)the institution agrees, in carrying on its business, not to exercise powers substantially different from the powers exercisable by a company to which the Trust and Loan Companies Act applies; and

(d)the Corporation is satisfied that at all times the Corporation will have adequate access to information regarding the institution.

^note

17.2Policy of deposit insurance#

Every member institution is deemed to have obtained a policy of deposit insurance on the day on which it became a member institution.^note

18Form of application for deposit insurance#

(1)An application for deposit insurance shall be in the form, and accompanied by a fee of the amount and type, that may be prescribed by the by-laws.

(2)[Repealed, R.S., 1985, c. 18 (3rd Supp.), s. 55] (repealed)

(3)The policy of deposit insurance shall consist of the provisions that may be prescribed by the by-laws.

(3.1)Where a member institution that is authorized to do so under the by-laws retains at a place outside Canada records referred to in the policy of deposit insurance, including for the purpose of any examination by or on behalf of the Corporation, the Corporation may, in the case referred to in paragraph (a), and shall, in the case referred to in paragraph (b), direct the institution to maintain a copy of those records in Canada:

(a)if the Corporation is of the opinion that it does not have immediate, direct, complete and ongoing access to those records; or

(b)if the Corporation is advised by the Minister that the Minister is of the opinion that it is not in the national interest for the institution not to maintain a copy of those records in Canada.

(3.2)The Board may make by-laws respecting:

(a)what constitutes immediate, direct, complete and ongoing access, for the purpose of paragraph (3.1)(a); and

(b)the time within and manner in which a member institution is required to comply with a direction under subsection (3.1).

(4)If a by-law respecting the content of the policy of deposit insurance is amended, or revoked and replaced, every policy of deposit insurance is deemed to be amended or replaced accordingly.

^note

19 #

[Repealed, R.S., 1985, c. 18 (3rd Supp.), s. 56] (repealed)

20Funds#

The Corporation shall maintain funds for the purpose of carrying out its objects.^note

21Assessment and collection of premiums#

(1)The Corporation shall, for each premium year, assess and collect from each member institution an annual premium in an amount equal to the lesser of

(a)the annual premium for that member institution determined under the by-laws, and

(b)the maximum annual premium.

(2)The Board may make by-laws respecting the determination of annual premiums for member institutions and, without restricting the generality of the foregoing, may make by-laws

(a)for the establishment of a system of classifying member institutions in different categories;

(b)respecting the criteria or factors to be taken into account or procedures to be followed by the Corporation in determining the category in which a member institution is classified; and

(c)fixing the amount of, or providing for the manner of determining the amount of, the annual premium applicable to each category.

(3)A by-law made under subsection (2) is not effective unless it has been approved in writing by the Minister.

(4)In this section, maximum annual premium means, in respect of a member institution, the greater of

(a)$5,000, and

(b)one third of one per cent, or such smaller proportion of one per cent as may be fixed in respect of the premium year by the Governor in Council, of an amount equal to the sum of so much of the deposits as are considered to be insured by the Corporation and deposited with the member institution as of April 30 in the immediately preceding premium year.

(5)For the purposes of this section, a member institution may use any method approved by the Corporation for that premium year to determine or estimate the aggregate amount of its deposits that are considered to be insured by the Corporation.

^note

22Returns#

(1)The premium payable by a member institution shall be based on returns to be certified by the institution and submitted in such form and at such time as the Corporation may require.

(2)One half of the premium payable by a member institution shall be paid to the Corporation on or before July 15 in the premium year for which the premium is payable and the remainder shall be paid to the Corporation, without interest, on or before December 15 in that premium year.

^note

23Calculation of first premium#

(1)The premium payable by a member institution in respect of the premium year in which it becomes a member institution shall be the same proportion of the lesser of

(a)the annual premium for that member determined by by-law made under subsection 21(2) based on an amount equal to the sum of so much of the deposits as are considered to be insured by the Corporation and deposited with the member institution as of the end of the month in which it becomes a member institution, and

(b)the greater of

(i)$5,000, and

(ii)one third of one per cent, or such smaller proportion of one per cent as may be fixed in respect of the premium year by the Governor in Council, of an amount equal to the sum of so much of the deposits as are considered to be insured by the Corporation and deposited with the member institution as of the end of the month in which it becomes a member institution,

as the number of days in which any of the deposits with that member institution are insured by the Corporation in that premium year is of 365.

(2)Despite subsection 22(2), the premium payable by a member institution under subsection (1) must be paid to the Corporation, without interest, within 30 days after the end of the month in which the member institution becomes a member institution.

^note

24Where premiums payable#

All premiums payable shall be paid to the Corporation at its head office.^note

24.1No set-off on premium payment#

No member institution shall, without the prior agreement of the Corporation, reduce or extinguish a premium payment, interest or other payment to be made to the Corporation by reason of a set-off or claim by the member institution against the Corporation.^note

25Overdue charges#

Notwithstanding anything in sections 21 to 23, the Corporation may charge interest at a rate equal to the rate prescribed pursuant to subsection 161(1) of the Income Tax Act plus two per cent on the unpaid amount of any premium instalment not paid on or before the due date of that instalment.^note

25.1Premium surcharge#

(1)Notwithstanding sections 21 to 25, where, in the opinion of the Corporation, a member institution is engaging in such practice as may be prescribed in the by-laws as warranting a premium surcharge, the Corporation, after

(a)consultation with the Superintendent or the provincial supervisor, as the case may be, and

(b)giving the member institution an opportunity to make written representations,

may assess and collect from the member institution a premium surcharge in respect of the premium year or any part thereof.

(2)The amount of the premium surcharge that may be assessed against and collected from a member institution under subsection (1) in respect of any premium year shall be such amount as the Corporation may determine to be fair in the circumstances and in no case shall exceed an amount equal to one sixth of one per cent of so much of each deposit as is considered to be insured by the Corporation and deposited with the member institution as of April 30 in the immediately preceding premium year.

(3)The provisions of sections 21 to 25 that are not inconsistent with subsections (1) and (2) apply, with such modifications as the circumstances require, in respect of any premium surcharge assessed under subsection (1).

^note

25.2Non-application to special premium#

Section 21, subsection 22(2), section 23 and subsection 37(5) do not apply to a special premium.^note

25.3By-laws — special premium#

(1)In respect of each order made under subsection 7.1(1) or each direction given under subsection 11.1(1), the Board may make by-laws respecting the recovery from member institutions or any class of member institutions of the loss referred to in section 7.3 or 11.3, as the case may be, including by-laws

(a)fixing the special premium payable by member institutions or any class of member institutions or providing for the manner of fixing the special premium;

(b)establishing a system of classifying member institutions in different classes;

(c)establishing the criteria or factors to be taken into account or procedures to be followed by the Corporation in determining the class in which a member institution is classified; or

(d)respecting the time and manner in which a special premium shall be paid.

(2)A by-law made under subsection (1) is not effective unless it has been approved in writing by the Minister.

^note

25.4Interpretation#

For the purposes of sections 21 to 25.3, the deposits that are considered to be insured by the Corporation include the total amount of all deposits held in accounts that are identified as professional trustee accounts in accordance with section 9 of the schedule.^note

26 #

(1)[Repealed, 2018, c. 27, s. 164] (repealed)

(2)[Repealed, 1996, c. 6, s. 32] (repealed)

Federal Institutions Without Deposit Insurance

26.01Interpretation#

(1)Subject to subsections (2) and (3), for the purposes of sections 26.02 to 26.06, deposit has the meaning that would be given to it by the schedule, for the purposes of deposit insurance, if the schedule were read without reference to subsections 2(2), (5) and (6) of the schedule.

(2)For the purposes of subparagraph 26.03(1)(c)(iii) and paragraph 26.03(1)(d), deposit has the meaning that would be given to it by the schedule, for the purposes of deposit insurance, but does not include deposits not payable in Canada.

(3)For the purposes of paragraph 26.03(1)(b) and subsection 26.03(2), deposit has the meaning that would be given to it by the schedule, for the purposes of deposit insurance, if the schedule were read without reference to subsections 2(2), (5) and (6) of the schedule, but does not include deposits prescribed by the by-laws.

(4)The Board may make by-laws

(a)prescribing the deposits referred to in subsection (3); and

(b)prescribing terms and conditions with respect to the acceptance of those deposits.

^note

26.02Application#

If a federal member institution intends to accept deposits payable in Canada while no longer being a member institution, it must apply to the Corporation for an authorization to do so. The application must be in a form that is acceptable to the Corporation and must contain the information that the Corporation may require.^note

26.03Granting of application#

(1)Subject to section 26.04, the Corporation may give that authorization if

(a)[Repealed, 2001, c. 9, s. 209] (repealed)

(b)the sum of all the deposits held by the federal member institution that are less than $150,000 and payable in Canada is less than one per cent of the sum of all the deposits held by the institution that are payable in Canada;

(c)the institution has informed all its depositors, in accordance with any rules that may be prescribed by the by-laws,

(i)that the institution has applied to become authorized to accept deposits while no longer being a member institution,

(ii)that after the institution receives that authorization, no deposit with the institution will be insured in whole or in part by the Corporation, and

(iii)that the institution’s obligation to repay the deposit to the depositor will be assumed by a member institution if an option referred to in subparagraph (d)(i) or (ii) is not exercised;

(d)in respect of each deposit that is held by the institution, the institution has

(i)obtained from the depositor an acknowledgement in writing that the deposit will no longer be insured in whole or in part by the Corporation after the institution receives authorization to accept deposits without being a member institution,

(ii)at the request in writing of the depositor, paid to the depositor the principal amount of the deposit and interest determined in accordance with rules prescribed by the by-laws and has not charged any fee or penalty in connection with the payment, or

(iii)obtained from a member institution an agreement in writing to assume the institution’s liability in relation to the deposit on the same terms and conditions; and

(e)the institution has paid to the Corporation a fee determined in accordance with rules prescribed by the by-laws.

(2)For the purpose of subsection (1), the rate of exchange that shall be applied on any day in determining the amount in Canadian dollars of a deposit in a currency of a country other than Canada shall be determined in accordance with rules prescribed by the by-laws.

^note

26.04Minister and Superintendent to be informed#

(1)Before giving an authorization under subsection 26.03(1), the Corporation must inform the Minister and the Superintendent that it proposes to give the authorization.

(2)If the Minister is of the opinion that giving the authorization would not be in the public interest, the Minister may, within thirty days after being informed about the proposal to give the authorization, direct the Corporation not to give the authorization.

(3)If the Minister does not issue that direction within those 30 days, the Corporation may then give the authorization under subsection 26.03(1). The giving of the authorization cancels the policy of deposit insurance of the federal member institution to which the authorization is given.

(4)If the Corporation gives the authorization under subsection 26.03(1), the Superintendent must, under paragraph 54(1)(a) of the Bank Act, paragraph 62(1)(a) of the Cooperative Credit Associations Act or paragraph 58(1)(b) of the Trust and Loan Companies Act, as the case may be, amend the federal member institution’s order approving the commencement and carrying on of business accordingly.

^note

26.05Fees by-law#

A by-law prescribing rules for the purpose of paragraph 26.03(1)(e) is not effective unless it has been approved in writing by the Minister.^note

26.06Deposits not insured#

After a federal member institution has been given authorization under subsection 26.03(1), no deposit with the institution is insured in whole or in part by the Corporation.^note

Inspection of Member Institutions

27Annual inspections#

(1)The Superintendent shall, notwithstanding any other Act of Parliament, examine on behalf of the Corporation the affairs of each federal member institution once in each year and at the times that the Corporation may require for a specified purpose.

(2)Where an examination under subsection (1) is made for a specified purpose, such costs incurred in relation thereto as in the opinion of the Superintendent are extraordinary shall be borne by the Corporation.

^note

28Provincial member institutions#

It is a condition of the policy of deposit insurance of a provincial member institution that

(a)the Corporation or a person designated by the Corporation may, at least once in each year and at such other times as the Corporation deems appropriate, make or cause to be made such inspections of the affairs of the provincial member institution as the Corporation or that person may deem to be necessary or expedient;

(b)the Corporation and the person designated by the Corporation have, for the purposes referred to in paragraph (a), a right of access to the records of the member institution; and

(c)the member institution will cause its officers and auditors to furnish such information and explanations pertaining to its affairs as the Corporation or the person designated by the Corporation may require.

^note

28.1Costs may be charged back#

Where an examination or an inspection is carried out other than once in each year, the Corporation may

(a)pay the costs of the examination or inspection;

(b)charge the costs to the member institution in respect of which they were incurred; and

(c)recover the costs from the member institution as a debt due and payable to the Corporation.

^note

29Examination considerations#

(1)The person who conducts an examination under section 27 or an inspection under section 28 in respect of a member institution shall make all examinations or inspections that the person considers necessary to

(a)provide, by way of a rating or any other means, an assessment of the safety and soundness of the member institution, including its financial condition;

(b)comment on the operations of the member institution;

(b.1)if the member institution is a domestic systemically important bank, provide an assessment of its capacity to absorb losses that it is required to maintain under section 485 of the Bank Act; and

(c)if the member institution is a provincial institution and the Corporation and the person agree, comment on whether the provisions of the statutes governing the provincial institution are being complied with.

(2)The person shall provide written reports to the Corporation on the matters referred to in paragraphs (1)(a) to (c) in a timely manner.

(3)The Corporation is entitled to all information obtained by or produced by or for the person, whether in the course of conducting the examination or inspection or otherwise, regarding the affairs of the member institution or any of its affiliates or of any person dealing with the member institution or any of its affiliates.

(4)Without limiting subsection (3), the person shall provide the Corporation with any information that the person considers relevant to any matter referred to in any of paragraphs (1)(a) to (c) or to any report provided under subsection (2).

(5)The person shall without delay inform the Corporation if, at any time, whether in the course of conducting an examination or inspection or otherwise, there comes to the attention of the person any change in the circumstances of the member institution that might materially affect the position of the Corporation as an insurer.

^note

29.1Review of returns#

If requested to do so by the Corporation, the person who conducts an examination under section 27 or an inspection under section 28 in respect of a member institution shall review, or cause another person to review on the person’s behalf, within the time specified by the Corporation, the correctness of the returns made by the member institution on which its premiums are based and through which its premium classification is in part determined.^note

29.2Certain reports to be provided to Corporation#

When a report is sent by the Superintendent to the Minister under section 643 of the Bank Act, section 505 of the Trust and Loan Companies Act or section 437 of the Cooperative Credit Associations Act, a copy of the report shall be sent by the Superintendent at the same time to the Corporation.^note

30Reporting breaches#

(1)If, in the Corporation’s opinion, a member institution is in breach of a provision of this Act or the regulations, a by-law of the Corporation or a condition of its policy of deposit insurance, the Corporation may send a report of the facts to the chief executive officer or chairperson of the board of directors of the member institution. The report may be sent by registered mail or delivered by hand and a copy of it must be provided to the Minister.

(2)The chief executive officer or chairperson of the board of directors of a member institution to whom a report has been sent or delivered under subsection (1) shall, within 15 days after the receipt of the report, cause

(a)the report to be presented to a meeting of the board of directors of the member institution and to be incorporated in the minutes of the meeting; and

(b)a certified copy of that portion of the minutes of the meeting that relates to the presentation of the report to be sent by registered mail to the chief executive officer of the Corporation at its head office.

^note

Termination and Cancellation of Insurance

31Notice of termination#

(1)Where a report has been sent or delivered under subsection 30(1) and the progress made by the member institution in remedying the breach is not satisfactory to the Corporation, the Corporation shall, by notice,

(a)where the member institution is a federal member institution, so inform the institution and the Minister; and

(b)where the member institution is a provincial member institution, give the institution not less than thirty days notice of the termination of its policy of deposit insurance.

(2)Where a notice of termination is given to a provincial member institution under subsection (1), the Corporation shall forthwith send a copy thereof to the appropriate provincial Minister.

(3)The policy of deposit insurance of a provincial member institution shall terminate on the expiration of the period specified in the notice given under subsection (1) unless, before the expiration of that period,

(a)the Corporation is satisfied that the member institution is taking the necessary action to remedy the breach to which the notice relates; or

(b)the appropriate provincial Minister requests an extension of the period to enable the necessary remedial action to be taken, in which case the termination may be deferred by the Corporation for a further period not exceeding sixty days.

(4)Where a report has been sent or delivered under subsection 30(1) in respect of a federal member institution and the member institution and the Minister have been informed in accordance with subsection (1) by the Corporation that the Corporation is not satisfied with the member institution’s progress in remedying the breach to which the report relates, the Corporation may, unless the Minister advises the Corporation that the Minister is of the opinion that it is not in the public interest to do so, give the member institution not less than thirty days notice of the termination of its policy of deposit insurance.

(5)The policy of deposit insurance of a federal member institution shall terminate on the expiration of the period specified in the notice given under subsection (4) or such later period not exceeding sixty days as the Corporation may determine unless, before the expiration of that period, the Corporation is satisfied that the member institution is taking the necessary action to remedy the breach to which the notice relates.

(5.1)The Corporation may impose conditions on a federal member institution in connection with any extension of the period referred to in subsection (5) and failure by the federal member institution to comply with any such condition constitutes a termination of the extension.

(6)Where, at any time after a notice of termination has been given to a member institution under subsection 31(1) or (4), the Corporation is satisfied that as the result of any action by the member institution, or any other person, the risk to depositors or to the Corporation has been averted or substantially reduced, the Corporation may revoke its notice of termination.

^note

31.1Acceleration of termination of policy of deposit insurance#

(1)Despite any other provision of this Act, if, at any time after a notice of termination has been given to a provincial member institution under subsection 31(1), the Corporation concludes that

(a)the financial condition of the provincial member institution has deteriorated since the giving of the notice, and

(b)the interests of depositors will be adversely affected by any further delay in terminating the provincial member institution’s policy of deposit insurance,

the Corporation shall without delay send a notice by registered mail, or deliver a notice by hand, to the provincial member institution and to the appropriate provincial Minister, to the effect that the policy of deposit insurance of the institution will be terminated on the expiration of a period of five days after the receipt of the notice by the institution.

(2)The Board of Directors of the Corporation or one of its committees established for the purpose may, before the expiry of the period specified in the notice, revoke the notice if, after considering any written representations made by the provincial member institution, it is satisfied that it is appropriate to do so.

(3)[Repealed, 2007, c. 6, s. 414] (repealed)

(4)The Corporation shall revoke a notice sent or delivered under subsection (1) where the appropriate provincial Minister or provincial supervisor, as the case may be, has taken control of the provincial member institution or its assets.

(5)Unless a notice sent or delivered under subsection (1) is revoked under subsection (3) or (4), the policy of deposit insurance of the provincial member institution to which the notice was sent or delivered shall terminate on the expiration of the period specified in the notice.

(6)The revocation of a notice under subsection (3) or (4) does not revoke a notice given under subsection 31(1).

^note

32Termination of policy by provincial member institution#

(1)A provincial member institution may terminate a policy of deposit insurance by giving such notice of termination as may be required by the policy.

(2)Unless the policy of deposit insurance of a provincial member institution otherwise provides, section 34 applies in respect of deposits with the institution on the termination of the policy by the institution.

^note

33Cancellation#

(1)Subject to subsection (3), the policy of deposit insurance of a member institution may be cancelled by the Corporation if, in the opinion of the Corporation, the member institution

(a)is or is about to become insolvent;

(b)has ceased to accept deposits; or

(c)has not begun to accept deposits within a period of two years beginning on the day on which it became a member institution.

(2)If a member institution intends to cease to accept deposits, it must notify the Corporation and the institution’s policy of deposit insurance may, subject to subsection (3), be cancelled by the Corporation.

(3)The Corporation shall notify the Minister and the Superintendent of the action it is proposing to take under subsection (1) or (2) and it shall not take the action if it is advised by the Minister that in the opinion of the Minister taking the action would not be in the public interest.

^note

34Effect of termination or cancellation#

(1)If the policy of deposit insurance of a member institution is terminated or cancelled by the Corporation, the deposits with the institution on the day the termination or cancellation takes effect, less any withdrawals from those deposits, continue to be insured under the terminated or cancelled policy of deposit insurance for a period of two years or, in the case of a term deposit with a remaining term exceeding two years, to the maturity of the term deposit.

(2)Subsection (1) does not apply in respect of a deposit with

(a)a member institution if the deposit has been assumed by another member institution; or

(b)a former member institution that has received authorization to accept deposits payable in Canada without being a member institution and the policy of deposit insurance of which has been cancelled.

(3)A corporation is not considered to be a member institution by reason only that its deposits continue to be insured under subsection (1).

(4)Termination or cancellation of a policy of deposit insurance does not relieve a former member institution from obligations and liabilities to the Corporation that have accrued before the termination or cancellation.

(5)If the policy of deposit insurance of a federal member institution is cancelled by the Corporation under paragraph 33(1)(b) or (c) or subsection 33(2), the Superintendent must, under paragraph 54(1)(a) of the Bank Act, paragraph 62(1)(a) of the Cooperative Credit Associations Act or paragraph 58(1)(b) of the Trust and Loan Companies Act, as the case may be, amend the federal member institution’s order approving the commencement and carrying on of business to prohibit the institution from accepting deposits in Canada.

^note

35Creditor remedies available#

(1)Where in the opinion of the Corporation a member institution is or is about to become insolvent, the Corporation is deemed to be a creditor of the member institution and the Corporation may initiate and take any measures or proceedings that a creditor of the member institution may initiate or take under law to preserve the assets of the member institution or to have it wound up or liquidated.

(1.1)The Corporation shall notify the Minister of the action it is proposing to take under subsection (1) and shall not take the action if it is advised by the Minister that in the opinion of the Minister taking the action would not be in the public interest.

(2)For the purposes of this section, the Corporation is deemed to be a creditor of a member institution despite the termination or cancellation of the institution’s policy of deposit insurance.

^note

36Removal of references to deposit insurance#

(1)If the policy of deposit insurance of a member institution is terminated or cancelled, the member institution shall notify its depositors of that fact and shall remove all references to deposit insurance under this Act from all forms of advertising by the institution.

(2)The Corporation may, in the manner and through any news media that it considers appropriate, give public notice of the termination or cancellation of the policy of deposit insurance of a member institution if, in the opinion of the Corporation, the public interest requires that such notice be given.

^note

Provincial Insuring Arrangements

37Provincial deposit insurance#

(1)If under the law of any province the government of the province or an agent of that government guarantees or insures any of the deposits with a provincial institution operating within the province, the Corporation, subject to section 17.1 and any agreement entered into under subsection (3), may

(a)insure some or all of the deposits with the institution; or

(b)amend the institution’s policy of deposit insurance, to exclude from the policy any of the deposits with the institution.

(2)[Repealed, 2007, c. 6, s. 419] (repealed)

(3)The Corporation may, with the approval of the Governor in Council, enter into an agreement with the government, or an agent of the government, of a province referred to in subsection (1), to provide for reciprocal arrangements relating to the administration or operation of the law of that province and of this Act.

(4)For the purpose of enabling the Corporation to carry out an insuring arrangement referred to in subsection (1) or provided for in an agreement under subsection (3), the Governor in Council may, by regulation, make provision for any matter or thing arising from the insuring arrangement or agreement.

(5)Where the Corporation during any premium year ceases to insure any of the deposits held by a member institution that is a provincial institution, by reason of the fact that such deposits are guaranteed or insured pursuant to the law of a province, the Corporation may refund to that provincial institution the proportion of the premium paid by the provincial institution to the Corporation for that premium year in respect of those deposits that bears the same relation to the premium for the full premium year in respect of those deposits that the unexpired part of the premium year bears to the full premium year, but in no case shall a refund be made that will reduce the premium paid by the provincial institution to the Corporation for the premium year to less than five thousand dollars.

(6)Nothing in this section shall be construed as authorizing the Corporation to insure deposits contrary to section 12.

(7)In this section, deposits includes a part of a deposit.

^note

38Agreements for examination of provincial institutions#

(1)Notwithstanding section 28, the Corporation may enter into an agreement with the government, or an agent of the government, of a province referred to in subsection 37(1) to provide for

(a)the exchange between the Corporation and that government or agent of information that is obtained by any examination of provincial institutions required by this Act or the law of that province; and

(b)special examinations, by representatives of both parties to the agreement and at the request of either party, of any of the provincial institutions that are member institutions operating in that province.

(2)The Corporation may accept information received from an exchange of information referred to in paragraph (1)(a) in lieu of any examination required by this Act.

^note

39Short term loans to insuring agents#

The Corporation may, with the approval of the Governor in Council and on such terms and conditions as the Governor in Council may prescribe, enter into an agreement with an agent of the government of a province that guarantees or insures deposits with provincial institutions in that province, to extend to that agent short term loans, secured by such security as the Corporation deems adequate, to enable that agent to meet short term requirements for liquid funds arising from its operations.^note

Restructuring of Federal Member Institutions

Resolution Plans

39.01Submission of plan#

A domestic systemically important bank shall, on the request of the Corporation, develop and maintain a resolution plan that meets the requirements referred to in paragraph 11(2)(e) and shall submit that plan to the Corporation.^note

Vesting in Corporation and Appointing Corporation as Receiver

39.1Report of Superintendent#

(1)Where the Superintendent is of the opinion that

(a)a federal member institution has ceased, or is about to cease, to be viable, and

(b)the viability of the federal member institution cannot be restored or preserved by the exercise of the Superintendent’s powers under the Bank Act, the Trust and Loan Companies Act or the Cooperative Credit Associations Act,

the Superintendent, after providing the federal member institution with a reasonable opportunity to make representations, shall, in writing, report thereon to the Corporation.

(2)For the purposes of subsection (1), the Superintendent may take into account all matters the Superintendent considers relevant, but in all cases the Superintendent shall have regard to whether, in the opinion of the Superintendent,

(a)the federal member institution is dependent to an excessive extent on loans, advances, guarantees or other financial assistance to sustain its operations;

(b)the federal member institution has lost the confidence of depositors and the public;

(c)the federal member institution’s regulatory capital, within the meaning assigned to that expression by the Bank Act, the Trust and Loan Companies Act or the Cooperative Credit Associations Act, whichever is applicable, is or is about to become substantially deficient; or

(d)the federal member institution has failed to pay any liability that has become due and payable or will not be able to pay its liabilities as they become due and payable.

(3)Where the Superintendent is of the opinion that

(a)circumstances exist in respect of a federal member institution that would allow the Superintendent to take control of the federal member institution under the Bank Act, the Trust and Loan Companies Act or the Cooperative Credit Associations Act, and

(b)if such control were taken, grounds would exist for the making of a winding-up order in respect of the federal member institution,

the Superintendent, after providing the federal member institution with a reasonable opportunity to make representations, shall, in writing, report thereon to the Corporation.

(4)Despite subsections (1) and (3), the Superintendent may report to the Corporation orally if he or she is of the opinion that the federal member institution’s circumstances must be considered without delay.

^note

39.11Request of Corporation#

On receipt of a report made by the Superintendent under section 39.1, the Corporation may

(a)after determining that a transaction referred to in section 39.2 is reasonably likely to be expeditiously carried out after the making of the order, request the Minister to recommend that one or more orders be made under subsection 39.13(1); or

(b)in the case of a domestic systemically important bank, request the Minister to recommend that one or more orders be made under subsection 39.13(1) and that an order be made under subsection 39.13(1.3).

^note

39.12Recommendation of Minister#

If a request referred to in section 39.11 is made by the Corporation, the Minister may, if he or she is of the opinion that it is in the public interest to do so, recommend to the Governor in Council that one or more orders be made under subsection 39.13(1) in respect of the federal member institution and, in the case of a domestic systemically important bank, that an order be made under subsection 39.13(1.3) in respect of that institution.^note

39.13Order#

(1)The Governor in Council may, on the recommendation of the Minister made under section 39.12, by order,

(a)vest in the Corporation the shares and subordinated debt of the federal member institution that are specified in the order;

(b)appoint the Corporation as receiver in respect of the federal member institution;

(c)direct the Minister to incorporate a federal institution designated in the order as a bridge institution and specify the date and time as of which the federal member institution’s deposit liabilities are assumed; or

(d)direct the Corporation to carry out a conversion under subsection 39.2(2.3).

(1.1)The making of an order, under paragraph (1)(b), appointing the Corporation as receiver of the federal member institution is a condition precedent to the making of an order under paragraph (1)(c) in respect of the federal member institution.

(1.2)An order may be made under paragraph (1)(d) in respect of the federal member institution only if the institution is a domestic systemically important bank and an order has also been made under paragraph (1)(a) or (b) in respect of the institution.

(1.3)The Governor in Council may, on the recommendation of the Minister made under section 39.12, by order, require the Corporation to apply for a winding-up order in respect of the federal member institution in accordance with subsection 39.22(1.1).

(2)An order made under paragraph (1)(a)

(a)vests in the Corporation the shares and subordinated debt that are subject to the order, free from any adverse claim, including any claim that a transfer was wrongful or that a particular adverse person was the owner of or had an interest or right in respect of the shares or subordinated debt, even though the Corporation knows of the adverse claim;

(b)extinguishes any such adverse claim to the extent that the claim is a claim that a person other than the Corporation is the owner of or has an interest or right in respect of the shares or subordinated debt;

(c)does not extinguish any such adverse claim to the extent that the claim is a personal claim against a person other than the Corporation or a person claiming under it;

(d)does not prevent a secured creditor or assignee or successor in interest of the person who was the holder of the shares or subordinated debt immediately before the making of the order from being entitled to receive compensation under section 39.23; and

(e)gives the Corporation the right to recover, out of the assets of the federal member institution and in priority to all other claims, all the costs, charges and expenses properly incurred by the Corporation in furtherance of the order, including those related to its operation of the institution.

(2.1)In addition to subsection (2), if an order made under paragraph (1)(a) is in respect of a federal credit union, the Corporation has the powers, rights and privileges it would have if it were a member of the federal credit union and the federal credit union is exempt from any requirement to have a minimum number of members for so long as the shares are vested in the Corporation.

(3)An order made under paragraph (1)(b)

(a)constitutes the Corporation as the exclusive receiver of the assets and undertaking of the federal member institution or of such part thereof as may be specified in the order;

(b)gives the Corporation, as receiver, in respect of the assets and undertaking of the federal member institution or such part thereof as may be specified in the order, the power to

(i)enter the federal member institution and take possession and control of the assets and require any person therein to account for and deliver up to the Corporation possession and control of the assets,

(ii)subject to subparagraph (iii), sell or otherwise dispose of the assets and undertaking by private or public sale or in such other manner and on such terms and conditions as the Corporation deems appropriate,

(iii)sell or otherwise dispose of any asset that is subject to an agreement creating a security interest to any person who agrees to assume the obligation secured by the security interest,

(iv)arrange for the assumption by any person of all or any part of the federal member institution’s liabilities,

(v)carry on the business of the federal member institution to the extent that the Corporation deems is necessary or beneficial to the receivership,

(vi)sue for, defend, compromise and settle, in the name of the federal member institution, any claim made by or against it,

(vii)in the name of the federal member institution, do all acts and execute all receipts and other documents and for that purpose, when necessary, use its seal, and

(viii)do all such other things as may be necessary or incidental to the exercise of the Corporation’s rights, powers, privileges and immunities as receiver; and

(c)gives the Corporation the right to recover, out of the assets of the federal member institution and in priority to all other claims, all the costs, charges and expenses properly incurred by the Corporation in furtherance of the order, including those related to its operation of the institution.

(4)For greater certainty, shares and subordinated debt that are subject to an order made under paragraph (1)(a) and that, immediately before the making of the order, are vested in a trustee in bankruptcy under the Bankruptcy and Insolvency Act are vested in the Corporation.

(4.1)For greater certainty, an order made under paragraph (1)(a) or (b) prevents any person, other than the Corporation, who is the holder of shares or subordinated debt or other debts or liabilities of the federal member institution or who is a party to or a beneficiary of a contract with the institution, and any secured creditor or assignee or successor in interest of such a person, from exercising any voting or other rights arising from the person’s status in any manner that could defeat or interfere with the rights, powers, privileges and immunities of the Corporation as holder of shares or subordinated debt or as receiver, as the case may be.

(5)Where an order is made under paragraph (1)(b),

(a)the Corporation, as receiver, may exercise its powers, rights, privileges and immunities without leave, approval or other intervention of a court, but may seek the assistance of a superior court in order to give effect to those powers, rights, privileges and immunities,

(b)an asset of the federal member institution that is acquired from the Corporation, as receiver, shall, except to the extent that it is an asset referred to in subparagraph (3)(b)(iii), be acquired free of any adverse claim of the federal member institution or any other person, and

(c)the Corporation, as receiver, may cause or refrain from causing any obligation of the federal member institution to be performed and may cause the federal member institution to incur an obligation or do so on its behalf,

and the Corporation shall not, by reason of its appointment as receiver or any action taken by it, be held to have assumed or incurred any obligation of the federal member institution for its own account.

(5.1)Without limiting the generality of subsection (5) and despite anything in federal or provincial law, the Corporation, as receiver, is not liable in that capacity for any environmental condition that arose or environmental damage that occurred

(a)before the Corporation’s appointment as receiver; or

(b)after the Corporation’s appointment as receiver unless it is established that the condition arose or the damage occurred as a result of the Corporation’s gross negligence or wilful misconduct or, in Quebec, the Corporation’s gross or intentional fault.

(5.2)Nothing in subsection (5.1) exempts the Corporation, as receiver, from any duty to report or make disclosure imposed by a law referred to in that subsection.

(5.3)Without limiting the generality of subsection (5) and despite anything in federal or provincial law but subject to subsection (5.2), if an order is made that has the effect of requiring the Corporation, as receiver, to remedy any environmental condition or environmental damage affecting property involved in the receivership, the Corporation, as receiver, is not liable for failure to comply with the order, and is not liable for any costs that are or would be incurred by any person in carrying out the terms of the order,

(a)if, within the time that is specified in the order, or within 10 days after the appointment of the Corporation as receiver if the order is in effect when the Corporation is appointed as receiver, the Corporation, as receiver,

(i)complies with the order, or

(ii)on notice to the person who issued the order, abandons, disposes of or otherwise releases any interest in any real property, or any right in any immovable, affected by the condition or damage; or

(b)if the Corporation, as receiver, had, before the order was made, abandoned, disposed of or otherwise released any interest in any real property, or any right in any immovable, affected by the condition or damage.

(5.4)Without limiting the generality of subsection (5) and despite anything in federal or provincial law, the Corporation, as receiver, is not liable in respect of a liability, including one as a successor employer,

(a)that is in respect of the employees or former employees of the federal member institution or a predecessor of the federal member institution or in respect of a pension plan for the benefit of those employees or former employees; and

(b)that existed before the Corporation is appointed as receiver or that is calculated by reference to a period before the Corporation’s appointment.

(5.5)Subsection (5.4) does not affect the liability of a successor employer other than the Corporation, as receiver.

(6)An order made under this section and any action taken or decision made in furtherance of such an order are for all purposes final and conclusive and shall not be questioned or reviewed in any court.

^note

39.131 #

[Repealed, 2016, c. 7, s. 132] (repealed)

39.132 #

[Repealed, 2016, c. 7, s. 132] (repealed)

39.14Powers of Corporation#

(1)If an order is made under paragraph 39.13(1)(a) or (b) in respect of a federal member institution, the powers, duties, functions, rights and privileges of the directors of the federal member institution and those of its officers who are responsible for its management are suspended except to the extent that is specified in writing by the Corporation. The Corporation may exercise those powers, rights and privileges and perform those duties and functions.

(1.1)In addition to subsection (1), if an order made under paragraph 39.13(1)(a) or (b) is in respect of a federal credit union, the powers, rights and privileges of its members are suspended, but nothing in this subsection affects the powers, rights and privileges of the Corporation under subsection 39.13(2.1).

(1.2)If an order is made under paragraph 39.13(1)(a) or (b) in respect of a federal member institution, the powers, rights and privileges of its shareholders to vote or give approvals are suspended and the Corporation may exercise those powers, rights and privileges.

(2)The Corporation may appoint one or more persons to assist it in the management of any federal member institution or in carrying out the Corporation’s functions as holder of shares or subordinated debt or as receiver and may delegate to those persons any of the powers, duties, functions, rights or privileges of the directors and officers of the federal member institution.

(3)[Repealed, 2016, c. 7, s. 133] (repealed)

(4)If an order is made under paragraph 39.13(1)(b) in respect of a federal member institution, the Corporation may appoint or remove any director of the federal member institution.

(5)If an order is made under paragraph 39.13(1)(a) or (b) in respect of a federal member institution, the Corporation may give directions to the board of directors of the federal member institution, including to make, amend or repeal any by-law of the institution.

(6)The board of directors of the federal member institution shall ensure that a direction given under subsection (5) is implemented in a prompt and efficient manner and shall, after implementing a direction, notify the Corporation without delay that it has been implemented.

(7)The board of directors of the federal member institution may, with the prior approval of the Corporation, make, amend or repeal any by-law of the institution.

^note

39.15Stay of proceedings#

(1)Where an order is made under subsection 39.13(1),

(a)no action or other civil proceeding before a judicial or quasi-judicial body and no arbitration may be commenced or continued against the federal member institution or in respect of its assets other than a proceeding under the Winding-up and Restructuring Act commenced by the Corporation or the Attorney General of Canada;

(b)no attachment, garnishment, execution or other method of enforcement of a judgment or order against the federal member institution or its assets may take place or continue;

(c)no creditor of the federal member institution has any remedy against the federal member institution or its assets;

(d)except in the normal course of clearing and settlement processes, including the consolidation of accounts in respect of those processes or the services referred to in paragraph (5)(c), no creditor has any right of set-off or compensation against the federal member institution;

(e)no person may terminate or amend any agreement with the federal member institution or claim an accelerated payment, or forfeiture of the term, under such an agreement by reason only of

(i)the insolvency or deteriorated financial condition of the federal member institution or any of its affiliates, providers of credit support or guarantors,

(ii)a non-monetary default, before the order was made, by the federal member institution or any of its affiliates in the performance of obligations under the agreement,

(iii)a monetary default, before the order was made, under the agreement by the federal member institution or any of its affiliates that is remedied within 60 days after the day on which the order is made,

(iv)the making of the order or any change of control or ownership of the federal member institution or any of its affiliates that is related to the making of the order,

(v)the assignment or assumption of the agreement to or by a bridge institution or a third party,

(vi)the transfer to a third party of all or part of the assets or liabilities of the federal member institution or any of its affiliates,

(vii)a conversion under subsection 39.2(2.3) in respect of the federal member institution, or

(viii)a conversion of any of the federal member institution’s shares or liabilities in accordance with the contractual terms of those shares or liabilities; and

(f)no person may terminate the federal member institution’s membership in an organization by reason only of

(i)the insolvency or deteriorated financial condition of the federal member institution or any of its affiliates, providers of credit support or guarantors,

(ii)a non-monetary default, before the order was made, by the federal member institution or any of its affiliates in the performance of obligations under the rules of the organization,

(iii)a monetary default, before the order was made, under the rules of the organization by the federal member institution or any of its affiliates that is remedied within 60 days after the day on which the order is made,

(iv)the making of the order or any change of control or ownership of the federal member institution or any of its affiliates that is related to the making of the order,

(v)the transfer of the federal member institution’s membership to a bridge institution or a third party,

(vi)the transfer to a third party of all or part of the assets or liabilities of the federal member institution or any of its affiliates,

(vii)a conversion under subsection 39.2(2.3) in respect of the federal member institution, or

(viii)a conversion of any of the federal member institution’s shares or liabilities in accordance with the contractual terms of those shares or liabilities.

(1.1)If an order is made under paragraph 39.13(1)(d), no person may terminate or amend any agreement with the federal member institution that is in relation to any of that institution’s shares or liabilities that are prescribed by the regulations made under subsection 39.2(10), claim an accelerated payment or forfeiture of the term under such an agreement or demand payment of any amount under such an agreement, by reason only of a monetary default by that institution in the performance of obligations under the agreement when that default occurs after the order was made but before a conversion under subsection 39.2(2.3) in respect of that institution.

(2)Where an order is made under subsection 39.13(1), any stipulation in an agreement is of no force or effect if it

(a)has the effect of providing for or permitting anything that, in substance, is contrary to paragraph (1)(e), subsection (1.1) or paragraph 39.13(3)(b); or

(b)provides, in substance, that the federal member institution ceases to have the rights — or, in the case of a bridge institution, does not have the rights — to use or deal with assets that the federal member institution or bridge institution would otherwise have, on

(i)the insolvency or deteriorated financial condition of the federal member institution or any of its affiliates, providers of credit support or guarantors,

(ii)a non-monetary default, before the order was made, by the federal member institution or any of its affiliates in the performance of obligations under the agreement,

(iv)the making of the order or any change of control or ownership of the federal member institution or any of its affiliates that is related to the making of the order,

(v)the assignment or assumption of the agreement to or by a bridge institution or a third party,

(vi)the transfer to a third party of all or part of the assets or liabilities of the federal member institution or any of its affiliates,

(vii)a conversion under subsection 39.2(2.3) in respect of the federal member institution, or

(viii)a conversion of any of the federal member institution’s shares or liabilities in accordance with the contractual terms of those shares or liabilities.

(2.1)If an order is made under subsection 39.13(1), any stipulation in the rules of an organization is of no force or effect if it

(a)has the effect of providing for or permitting anything that, in substance, is contrary to paragraph (1)(f) or 39.13(3)(b); or

(b)provides, in substance, that the federal member institution ceases to have the rights — or, in the case of the bridge institution, does not have the rights — of a member of the organization, that the federal member institution or the bridge institution would otherwise have, on

(i)the insolvency or deteriorated financial condition of the federal member institution or any of its affiliates, providers of credit support or guarantors,

(ii)a non-monetary default, before the order was made, by the federal member institution or any of its affiliates in the performance of obligations under the rules of the organization,

(iii)a monetary default, before the order was made, under the rules of the organization by the federal member institution or any of its affiliates that is remedied by the institution within 60 days after the day on which the order is made,

(iv)the making of the order or any change of control or ownership of the federal member institution or any of its affiliates that is related to the making of the order,

(v)the transfer of the federal member institution’s membership to a bridge institution or a third party,

(vi)the transfer to a third party of all or part of the assets or liabilities of the federal member institution or any of its affiliates,

(vii)a conversion under subsection 39.2(2.3) in respect of the federal member institution, or

(viii)a conversion of any of the federal member institution’s shares or liabilities in accordance with the contractual terms of those shares or liabilities.

(3)Subsections (1) to (2.1) do not apply so as to prevent a member of the Canadian Payments Association from acting or ceasing to act as a clearing agent for a federal member institution in accordance with the Canadian Payments Act and the by-laws and rules of that Association.

(3.1)Despite subsection (3), if a clearing agent that is a member of the Canadian Payments Association acts in that capacity for a federal member institution at the time an order is made under subsection 39.13(1) in respect of the institution, the clearing agent shall continue to act in that capacity for the institution after the order is made, if the Corporation has given an undertaking to provide the financial assistance that the institution needs in order to discharge its obligations to the clearing agent as they become due.

(3.2)Subsections (1) to (2.1) do not apply so as to prevent a clearing house

(a)from acting or ceasing to act in that capacity for a federal member institution; or

(b)from exercising its rights under its settlement rules, as defined in subsection 8(5) of the Payment Clearing and Settlement Act.

(3.3)Despite subsection (3.2), a clearing house that acts in that capacity for a federal member institution at the time an order is made under subsection 39.13(1) in respect of the institution shall continue to act in that capacity for the institution and subsections (1) to (2.1) apply in respect of the clearing house, if the Corporation has given an undertaking to provide the financial assistance that the institution needs in order to discharge its obligations to the clearing house as they become due.

(4)A federal member institution in respect of which an order is made under subsection 39.13(1) may not enforce against a person a right to receive an amount against which the person, but for paragraph (1)(d), would have a right of set-off or compensation.

(5)Nothing in subsection (1) or (2) shall be construed

(a)as prohibiting a person from requiring payments to be made in cash for goods, services, use of leased or licensed property or other valuable consideration provided after the making of the order;

(b)as requiring the advance to a federal member institution in respect of which an order is made under subsection 39.13(1) of money or credit after the making of the order; or

(c)as requiring the provision to a federal member institution in respect of which an order is made under subsection 39.13(1) of any of the following services where to do so would be likely, in the reasonable opinion of the person providing the service, to result in that person advancing money or credit to the federal member institution after the making of the order or to give rise, after the making of the order, to a claim of that person against the federal member institution, namely,

(i)cash management services,

(ii)services related to the redemption of debt instruments,

(iii)services related to the issuance of letters of credit or guarantees,

(iv)cheque certification services,

(v)currency supply services,

(vi)funds transfer services and remittance order services,

(vii)securities delivery and settlement services,

(viii)charge, credit, debit and payment card services,

(ix)automated banking and teller machine services,

(x)electronic funds transfer at point of sale services,

(xi)consignment cheque services,

(xii)other services similar to those referred to in subparagraphs (i) to (xi),

(xiii)any service of a kind prescribed by the regulations, and

(xiv)a guarantee of liabilities in respect of any of the services referred to in subparagraphs (i) to (xiii).

(6)Paragraphs (1)(b) to (e) and subsection (2) do not apply in respect of a remedy under, or a stipulation of, a security agreement creating a security interest in assets of a federal member institution or an agreement assigning or transferring the institution’s right, title or interest in any real property or immovable situated in Canada, including any mortgage or hypothec on that real property or immovable, if

(a)an obligation secured by the agreement is to the Bank of Canada or the Corporation; or

(b)the Superintendent, on the application of the federal member institution, exempted the agreement from the application of those paragraphs and that subsection before the making of an order under subsection 39.13(1) and the Corporation does not undertake

(i)to ensure that the obligations secured by the security interest or the assignment or transfer will be assumed by a bridge institution or a third party, or

(ii)to provide the federal member institution with the financial assistance that it needs to discharge the obligations secured by the security interest or the assignment or transfer as they become due.

(7)Nothing in subsection (1), (2) or (2.1) prevents the following actions from being taken in accordance with the provisions of an eligible financial contract:

(a)the termination or amendment of the contract;

(b)the accelerated payment or forfeiture of the term under the contract;

(c)the exercise of remedies for a failure to satisfy an obligation under or in connection with the contract, including the payment of an amount payable — or the delivery of property deliverable — under or in connection with the contract;

(d)the netting or setting off or compensation of an amount payable under or in connection with the contract;

(e)any dealing with financial collateral

(i)to satisfy an amount payable — or the delivery of property deliverable — under or in connection with the contract,

(ii)for the purpose of calculating an amount payable under or in connection with the contract by way of netting, setting off or compensation of the financial collateral or application of the proceeds or value of the financial collateral, or

(iii)as a remedy for a failure described in paragraph (c); or

(f)any dealing with financial collateral, other than a dealing set out in paragraph (e).

(7.01)For the purposes of paragraphs (7)(e) and (f), dealings with financial collateral include

(a)the sale or foreclosure or, in Quebec, the surrender of financial collateral; and

(b)the netting, setting off or compensation of financial collateral or the application of the proceeds or value of financial collateral.

(7.02) and (7.03)[Repealed, 2016, c. 7, s. 134] (repealed)

(7.1)If an order is made under subsection 39.13(1), the actions referred to in paragraphs (7)(a), (b) and (f) are not to be taken by reason only of

(a)the insolvency or deteriorated financial condition of the federal member institution, any of its affiliates or any of its providers of credit support or guarantors in respect of the institution’s obligations under the eligible financial contract;

(b)the assignment or assumption of the eligible financial contract to or by a bridge institution or a third party;

(c)the making of the order or any change of control or ownership of the federal member institution or any of its affiliates that is related to the making of the order;

(d)a conversion under subsection 39.2(2.3) in respect of the federal member institution; or

(e)a conversion of any of the federal member institution’s shares or liabilities in accordance with the contractual terms of those shares or liabilities.

(7.101)If the Corporation considers that all or substantially all of the federal member institution’s assets will be transferred to a third party and that an eligible financial contract of that institution will not be assigned to a third party, it may give notice to that effect to the parties to that contract, in which case paragraphs (7.1)(a) and (c) cease to apply in respect of that contract at the date and time the notice is issued.

(7.102)Paragraph (7.1)(a) and, if the order made under subsection 39.13(1) directs the incorporation of a bridge institution, paragraph (7.1)(c) cease to apply to an eligible financial contract at 5:00 p.m. at the location of the Corporation’s head office on the second business day after the day on which the order is made under subsection 39.13(1), unless the Corporation has undertaken, before that time, to assign the contract to a bridge institution.

(7.103)For greater certainty, paragraph (7.1)(a) and, if applicable, paragraph (7.1)(c) cease to apply in respect of an eligible financial contract to which both subsection (7.101) and (7.102) apply on the earlier of the date and time that a notice is issued under subsection (7.101) and the date and time set out in subsection (7.102).

(7.104)Despite subsections (7.101) and (7.102), an action set out in paragraph (7)(a), (b) or (f) may only be taken by reason of the insolvency or deteriorated financial condition described in paragraph (7.1)(a) if that insolvency or deteriorated financial condition exists on the date and time paragraph (7.1)(a) ceases to apply.

(7.105)Nothing in paragraphs (7.1)(b) to (e) prevents a person from relying on the facts that led to the making of an order under subsection 39.13(1) as evidence of the insolvency or deteriorated financial condition described in paragraph (7.1)(a).

(7.11)Any stipulation in an eligible financial contract is of no force or effect if it

(a)has the effect of providing for or permitting anything that, in substance, is contrary to subsection (7.1); or

(b)provides, in substance, that, by reason of the occurrence of any circumstance described in paragraphs (7.1)(a) to (e), the federal member institution ceases to have the rights — or, in the case of a bridge institution, does not have the rights — to use or deal with assets that the federal member institution or bridge institution would otherwise have.

(7.12)Subsection (7.1) does not apply in respect of an eligible financial contract between the federal member institution and

(a)Her Majesty in right of Canada;

(b)the government of a foreign country;

(c)a central bank; or

(d)a clearing house, unless the Corporation has given the undertaking referred to in subsection (3.3) in respect of the institution.

(7.2)Subject to subsection (7.21), the Corporation may assign to a bridge institution or a third party eligible financial contracts — including any claim under such contracts — that are between a federal member institution and an entity or any of the following entities if the Corporation assigns all of those eligible financial contracts to the bridge institution or the third party:

(a)another entity that is controlled — directly or indirectly — by the entity;

(b)another entity that controls — directly or indirectly — the entity; or

(c)another entity that is controlled — directly or indirectly — by the entity referred to in paragraph (b).

(7.21)The Corporation may assign eligible financial contracts to a third party under subsection (7.2) if the third party has met any condition that may be prescribed in the by-laws and has certified in writing that

(a)it maintains all material licences and registrations that are required for the continued operation of its business and, if applicable, that it is in good standing in respect of those licences and registrations;

(b)it has, on its balance sheet, assets that exceed its liabilities;

(c)it is able to discharge its obligations in respect of the assigned eligible financial contracts as they become due; and

(d)its creditworthiness, taking into account any credit support or guarantee in respect of its obligations under the assigned contracts, is at least as good as the federal member institution’s creditworthiness was immediately before the order was made under subsection 39.13(1), taking into account any credit support or guarantee in respect of the federal member institution’s obligations under those contracts.

(7.3)If any of the eligible financial contracts are assigned to or assumed by a bridge institution or a third party,

(a)the Corporation shall assign all of the federal member institution’s obligations arising from the eligible financial contracts, and the bridge institution or the third party shall assume those obligations; and

(b)the federal member institution’s interest or right in property that secures its obligations under the eligible financial contracts is transferred to the bridge institution or the third party.

(7.4)A federal member institution that is part of a class prescribed by the by-laws must ensure in accordance with the by-laws that this section — or provisions that have substantially the same effect as this section — applies to any eligible financial contract to which the institution is a party and that is part of a class prescribed by the by-laws.

(7.5)The Board may make by-laws respecting the manner in which a federal member institution referred to in subsection (7.4) is to ensure that this section — or provisions that have substantially the same effect as this section — applies to an eligible financial contract referred to in that subsection.

(7.6)The by-laws made under subsection (7.5) may distinguish among classes of federal member institutions and classes of eligible financial contracts.

(8)The Governor in Council may make regulations prescribing

(a)kinds of services for the purposes of subparagraph (5)(c)(xiii); and

(b)kinds of agreements for the purposes of the definition eligible financial contract in subsection (9).

(9)The following definitions apply in this section.

business day means a day, other than a Saturday or a holiday at the location of the head office of the federal member institution. (jour ouvrable)

clearing agent has the same meaning as in section 1 of the Canadian Payments Association By-law No. 3 — Payment Items and Automated Clearing Settlement System. (agent de compensation)

clearing house means

(a)a clearing house, as defined in section 2 of the Payment Clearing and Settlement Act, that provides clearing, settlement or payment message exchange services for a clearing and settlement system designated under section 4 of that Act; or

(b)a securities and derivatives clearing house, as defined in subsection 13.1(3) of the Payment Clearing and Settlement Act. (chambre de compensation)

eligible financial contract means an agreement of a prescribed kind. (contrat financier admissible)

financial collateral has the same meaning as in subsection 13(2) of the Payment Clearing and Settlement Act. (garantie financière)

title transfer credit support agreement means an agreement under which title to property has been provided for the purpose of securing the payment or performance of an obligation in respect of an eligible financial contract. (accord de transfert de titres pour obtention de crédit)

^note

39.151Stay of proceedings — bridge institution#

(1)Any action or other civil proceeding before a judicial or quasi-judicial body and any arbitration, to which a bridge institution may become a party by virtue of acquiring an asset or assuming a liability of the federal member institution shall be stayed for a period of 90 days from the day on which the bridge institution acquires the asset or assumes the liability.

(2)The bridge institution may waive the stay referred to in subsection (1).

^note

39.152Assignments — bridge institution or third party#

(1)Subject to subsection (2), if an agreement with a federal member institution is assigned to or assumed by a bridge institution or a third party,

(a)a person is prohibited from terminating or amending the agreement, or claiming an accelerated payment or forfeiture of the term under the agreement, by reason only of

(i)the insolvency or deteriorated financial condition of the federal member institution or any of its affiliates, providers of credit support or guarantors,

(ii)the making of an order under subsection 39.13(1) or any change of control or ownership of the federal member institution or any of its affiliates that is related to the making of the order,

(iii)a non-monetary default, before the order was made, by the federal member institution or any of its affiliates in the performance of obligations under the agreement,

(iv)a monetary default, before the order was made, under the agreement by the federal member institution or any of its affiliates that is remedied within 60 days after the day on which the agreement is assigned or assumed,

(v)the assignment or assumption of the agreement to or by a bridge institution or a third party,

(vi)the transfer to a third party of all or part of the assets or liabilities of the federal member institution or any of its affiliates,

(vii)a conversion under subsection 39.2(2.3) in respect of the federal member institution, or

(viii)a conversion of any of the federal member institution’s shares or liabilities in accordance with the contractual terms of those shares or liabilities; and

(b)any stipulation in the agreement that has the effect of providing for or permitting anything that, in substance, is contrary to any of subparagraphs (a)(i) to (viii) or provides, in substance, that the bridge institution or the third party does not have the rights to use or deal with assets that the bridge institution or the third party would otherwise have by reason of the occurrence of any circumstance described in those subparagraphs, is of no force or effect.

(2)Subparagraphs (1)(a)(iii) and (iv) do not apply to an eligible financial contract, as defined in subsection 39.15(9).

(3)If a bridge institution or a third party becomes a member of an organization in place of a federal member institution, it is prohibited for the organization to terminate the membership of the bridge institution or of the third party by reason only of

(a)the insolvency or deteriorated financial condition of the federal member institution or any of its affiliates, providers of credit support or guarantors;

(b)the making of an order under subsection 39.13(1) or any change of control or ownership of the federal member institution or any of its affiliates that is related to the making of the order;

(c)a non-monetary default, before the order was made, by the federal member institution or any of its affiliates in the performance of obligations under the rules of the organization;

(d)a monetary default, before the order was made, under the rules of the organization by the federal member institution or any of its affiliates that is remedied within 60 days after the day on which the order is made;

(e)the transfer of the federal member institution’s membership to a bridge institution or a third party;

(f)the transfer to a third party of all or part of the assets or liabilities of the federal member institution or any of its affiliates;

(g)a conversion under subsection 39.2(2.3) in respect of the federal member institution; or

(h)a conversion of any of the federal member institution’s shares or liabilities in accordance with the contractual terms of those shares or liabilities.

^note

39.16Exemption#

The Governor in Council may, in an order made under subsection 39.13(1), provide that subsection 39.15(1) or (2) or any portion thereof does not apply in respect of the federal member institution.^note

39.17Leave of court#

(1)A superior court may, on any terms that it considers proper, grant leave to a person to do anything that the person would otherwise be prevented from doing by section 39.15 or lift, or reduce the length of, a stay under section 39.151 if the court is satisfied

(a)that the person is likely to be materially prejudiced if leave is not granted; or

(b)that it is equitable on other grounds to grant leave.

(2)The Corporation must be joined as a respondent in any application under subsection (1) and is entitled to such notice of the application as the court considers proper.

(3)An order of a superior court of a province under subsection (1) may, if the order so provides, have effect in all or a part of Canada outside the province.

^note

39.18Termination#

(1)Subject to subsection (2), sections 39.14 and 39.15 cease to apply in respect of a federal member institution

(a)on the date specified in a notice described in subsection 39.2(3) in respect of the federal member institution; or

(b)on the date that a winding-up order is made in respect of the federal member institution.

(2)If a notice referred to in paragraph (1)(a) has been published but an order described in paragraph (1)(b) has not been made,

(a)paragraph 39.15(1)(e) or (f) or subsection 39.15(2) or (2.1) continues to apply to the extent that it produced its effects by reason of

(i)the insolvency or deteriorated financial condition of the federal member institution or any of its affiliates, providers of credit support or guarantors,

(ii)the making of the order under subsection 39.13(1) or any change of control or ownership of the federal member institution or any of its affiliates that is related to the making of the order,

(iii)a non-monetary default, before the order was made, by the federal member institution or any of its affiliates in the performance of obligations under an agreement or the rules of an organization,

(iv)a monetary default, before the order was made, under an agreement or the rules of an organization by the federal member institution or any of its affiliates that was remedied within 60 days after the day on which the order was made,

(v)a conversion under subsection 39.2(2.3) in respect of the federal member institution, or

(vi)a conversion of any of the federal member institution’s shares or liabilities in accordance with contractual terms of those shares or liabilities; and

(b)subsections 39.15(7.1) to (7.3) continue to apply.

(3)The Governor in Council may, by order, declare that paragraph (2)(a) ceases to apply in respect of the federal member institution if the Governor in Council considers that all or substantially all of the institution’s assets have been transferred to a bridge institution or a third party.

^note

Non-application of Certain Legislative Provisions

39.181Not agent or Crown corporation#

(1)A federal member institution that is a subsidiary of the Corporation as a result of an order made under paragraph 39.13(1)(a) or (b), a bridge institution or a subsidiary of either of those institutions is not an agent of the Corporation or Her Majesty in right of Canada and, despite Part X of the Financial Administration Act, is not a parent Crown corporation, or a wholly-owned subsidiary, within the meaning of section 83 of that Act. Their respective directors, officers and employees are not part of the federal public administration.

(2)Despite subsection (1), Division V of Part X of the Financial Administration Act and the regulations made under that Division apply to the federal member institution, the bridge institution or a subsidiary of either of those institutions as if it were a Crown corporation within the meaning of section 83 of that Act.

^note

39.19Part VII of Bank Act, etc., inapplicable#

(1)The following enactments do not apply in respect of shares of a federal member institution that are vested in the Corporation by an order made under paragraph 39.13(1)(a):

(a)section 12.1, paragraph 28(1)(a.1), section 35.1, paragraphs 40(f) and (g), sections 40.1, 47.03, 47.04, 47.06, 47.11, 47.12, 47.15, 47.17 and 47.18, subsection 53(2), paragraph 54(1)(b), section 60.1, subsections 79.2(1) and (2) and sections 159.1, 372, 373, 374, 375, 376, 376.1, 376.2, 377, 377.1, 377.2, 379, 382.1, 385, 401.11, 401.2 and 401.3 of the Bank Act;

(b)sections 407, 407.01, 407.02, 407.03, 407.1, 407.2, 408, 411, 428 and 430 of the Insurance Companies Act; and

(c)sections 375, 375.1, 376, 379 and 396 and subsection 399(2) of the Trust and Loan Companies Act.

(2)An exemption from the application of section 385 of the Bank Act, section 411 of the Insurance Companies Act or section 379 of the Trust and Loan Companies Act that is granted under section 388 of the Bank Act, section 414 of the Insurance Companies Act or section 382 of the Trust and Loan Companies Act continues in force notwithstanding that the entity that controls the bank, insurance company, trust company or loan company is a federal member institution the shares of which are vested in the Corporation by an order made under paragraph 39.13(1)(a).

(3)Subsections (1) and (2) cease to apply in respect of a federal member institution on the date specified in a notice described in subsection 39.2(3) in respect of the federal member institution.

^note

39.191Provisions do not apply#

(1)Section 12.1, paragraph 28(1)(a.1), section 35.1, paragraphs 40(f) and (g), section 40.1, 47.11, 47.12, 47.15 and 47.18, subsection 53(2), paragraph 54(1)(b) and section 159.1 of the Bank Act do not apply if the Corporation is appointed as receiver of a federal member institution that is a federal credit union by an order made under paragraph 39.13(1)(b).

(2)Subsection (1) ceases to apply in respect of a federal member institution on the date specified in a notice described in subsection 39.2(3) in respect of the federal member institution.

^note

39.192Regulation to exempt or adapt#

(1)The Governor in Council may, by regulation,

(a)exempt federal member institutions in respect of which an order is made under subsection 39.13(1), bridge institutions or affiliates of either of those institutions, or any class of those institutions or class of their affiliates, or any other person from the application of any provision of this Act or the regulations or of the following Acts or the regulations made under them:

(i)the Bank Act,

(ii)the Canadian Payments Act,

(iii)the Cooperative Credit Associations Act,

(iv)the Financial Consumer Agency of Canada Act,

(v)the Insurance Companies Act,

(vi)the Office of the Superintendent of Financial Institutions Act,

(vii)the Trust and Loan Companies Act, and

(viii)the Winding-up and Restructuring Act; or

(b)provide that any provision of this Act or the regulations or of the Acts referred to in paragraph (a) or the regulations made under them applies to federal member institutions in respect of which an order is made under subsection 39.13(1), bridge institutions or affiliates of either of those institutions, or any class of those institutions or class of their affiliates, or any other person but only in the manner and to the extent provided for in the regulation made under this subsection, and adapt that provision for the purpose of that application.

(2)The Governor in Council or the Minister may, by order, do anything that may be done by regulation under subsection (1) in respect of a federal member institution in respect of which an order is made under subsection 39.13(1), a bridge institution, an affiliate of either of those institutions or any other person.

(3)An exemption made under paragraph (1)(a) or subsection (2) may be limited in scope or duration or subject to conditions.

(4)An order made by the Minister does not take effect before the later of the date specified in a notice described in subsection 39.2(3) in respect of the federal member institution and the day on which an order made by the Governor in Council under subsection (2) expires.

(5)An order made by the Minister expires one year after the day on which the order comes into force or any shorter period specified in the order.

(6)The Minister may, by order, grant one or more extensions of the applicable period set out in subsection (5) — of up to one year each — but the last extension must expire not later than five years after the date specified in the notice described in subsection 39.2(3).

(7)The Statutory Instruments Act does not apply to an order made under subsection (2).

(8)The Minister shall cause an order made under subsection (2) to be published in the Canada Gazette as soon as he or she considers it appropriate to do so.

^note

39.193Office of Superintendent of Financial Institutions#

(1)Despite subsection 4(2) of the Office of the Superintendent of Financial Institutions Act, if an order is made under subsection 39.13(1) in respect of a federal member institution, the objects of the Office of the Superintendent of Financial Institutions, in respect of the institution or, in the case of an order made under paragraph 39.13(1)(c), a bridge institution, are

(a)to monitor the institution in order to assess its financial condition and determine whether it is complying with its governing statute law and supervisory requirements under that law; and

(b)to report the Office’s findings to the Minister and the Corporation.

(2)Subsection (1) applies during the period that begins on the day on which the order is made and ends

(a)on the date specified in a notice described in subsection 39.2(3) in respect of the federal member institution; or

(b)on the day on which the bridge institution ceases to be designated as such.

^note

Restructuring Transactions

39.2Restructuring transactions#

(1)If an order is made under paragraph 39.13(1)(a), the Corporation may, in addition to any other of its rights and powers, carry out, or cause the federal member institution to carry out,

(a)a transaction or series of transactions that involves the sale of all or part of the shares or subordinated debt of the federal member institution;

(b)a transaction that involves the amalgamation of the federal member institution;

(c)a transaction or series of transactions that involves the sale or other disposition by the federal member institution of all or part of its assets or the assumption by another person of all or part of its liabilities, or both; and

(d)any other transaction or series of transactions the purpose of which is to restructure the business of the federal member institution.

(2)If an order is made under paragraph 39.13(1)(b), the Corporation, as receiver, may, in addition to any other of its rights and powers, carry out

(a)a transaction or series of transactions that involves the sale or other disposition of all or part of the assets of the federal member institution or the assumption by another person of all or part of its liabilities, or both; and

(b)any other transaction or series of transactions the purpose of which is to restructure the business of the federal member institution.

(2.1)If a transaction referred to in subsection (1) or (2) between the Corporation, as receiver for a federal member institution, and a bridge institution requires the approval of the Minister or the Superintendent under the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act or the Trust and Loan Companies Act, that approval is not required despite those Acts.

(2.2)If a transaction referred to in subsection (1) or (2), other than one described in subsection (2.1), requires the approval of the Superintendent under the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act or the Trust and Loan Companies Act, that approval is not required despite those Acts but the transaction has no force or effect until the Minister approves it after consultation with the Superintendent.

(2.3)An order made under paragraph 39.13(1)(d) gives the Corporation the power to convert, or cause the federal member institution to convert, in whole or in part — by means of a transaction or series of transactions and in one or more steps — the institution’s shares and liabilities that are prescribed by the regulations made under subsection (10) into common shares of that institution or of any of its affiliates.

(2.4)Subject to any regulations made under subsection (10) and any by-laws made under subsection (12), the Corporation shall set the terms and conditions of the conversion, including its timing.

(2.5)As soon as feasible after the conversion, the Corporation shall cause a notice of it to be published in the Canada Gazette and on the federal member institution’s website.

(3)If the Corporation considers that a transaction or series of transactions referred to in this section has been substantially completed and that no other such transactions are expected in respect of the federal member institution, it shall cause a notice to that effect to be published in the Canada Gazetteand on the institution’s website. The notice must specify the date on which the notice is to take effect.

(4)No restriction on the rights of the federal member institution, including the right to amalgamate, to sell or otherwise dispose of any of its assets or to provide for the assumption of any of its liabilities, other than a restriction provided for in an Act of Parliament, applies so as to prevent the Corporation, the federal member institution or any other person from carrying out a transaction referred to in this section.

(5)[Repealed, 2016, c. 7, s. 139] (repealed)

(6)Any person who assumes a liability of the federal member institution under a transaction referred to in subsection (1) or (2) becomes liable — instead of the federal member institution — to discharge the liability, on approval of the transaction by the Minister or as soon as the person assumes the liability if the transaction does not require the Minister’s approval.

(7)Subsection (6) does not apply to the bridge institution’s assumption of any portion of the federal member institution’s liability that is not insured by the Corporation.

(8)A trust company within the meaning of subsection 57(2) of the Trust and Loan Companies Act that is designated as a bridge institution may become a trustee in substitution for the federal member institution without formality or the consent of any beneficiary of the trust.

(9)The conversion of shares or liabilities under subsection (2.3)

(a)subject to paragraphs (b) and (c), extinguishes any claim, interest or right in respect of the shares or liabilities, or part of them, that were converted;

(b)does not extinguish any claim to the extent that the claim is a personal claim against a person other than the Corporation, the federal member institution or a person claiming under the Corporation or the federal member institution; and

(c)does not prevent a secured creditor or an assignee or successor in interest of the person who was the holder of the shares or liabilities immediately before the conversion from being entitled to receive compensation under section 39.23.

(10)The Governor in Council may make regulations respecting conversion for the purposes of this section.

(11)Regulations made under subsection (10) may, if they so provide, apply in respect of shares and liabilities

(a)that were issued or that originated before the day on which the first regulation made under that subsection comes into force if, on or after that day, they are amended or, in the case of liabilities, their term is extended; or

(b)that are issued or that originate on or after that day.

(12)The Corporation may make by-laws respecting conversion for the purposes of this section, including by-laws that prescribe, for the purposes of subsection (2.3), the interim instruments into which shares and liabilities may be converted before they are converted into common shares.

(13)In the event of any inconsistency between the regulations made under subsection (10) and the by-laws made under subsection (12), the regulations prevail to the extent of the inconsistency.

^note

39.201Terms and conditions of transactions#

(1)If the Corporation as receiver for a federal member institution carries out a transaction with a bridge institution, the Corporation shall establish the terms and conditions of the transaction, including

(a)which assets the bridge institution shall acquire and the consideration to be paid for the assets acquired; and

(b)which liabilities the bridge institution shall assume and the consideration to be paid for the liabilities assumed.

(2)The consideration referred to in paragraph (1)(a) shall be reasonable in the circumstances.

(3)[Repealed, 2016, c. 7, s. 140] (repealed)

^note

39.202Deposit liabilities assumed#

(1)A bridge institution shall assume a federal member institution’s deposit liabilities that are both insured by the Corporation and posted in the federal member institution’s records as of the date and time specified in the order referred to in paragraph 39.13(1)(c).

(1.1)Any interest accrued on the deposit liabilities referred to in subsection (1) is assumed by the bridge institution.

(1.2)Any deposit or withdrawal that is made on or before that date and time but is not posted in the records of the federal member institution as of that date and time, and any deposit or withdrawal made after that date and time, are deemed to be deposited with or withdrawn from, as the case may be, the bridge institution.

(1.3)Any interest accruing on the deposits referred to in subsection (1.2) is owed by the bridge institution.

(2)If the bridge institution assumes any portion of a federal member institution’s liability that is not insured by the Corporation, the bridge institution is subrogated to all the rights and interests of the creditor against the federal member institution in relation to the entire liability and may maintain an action in respect of those rights and interests in its own name or in the name of the creditor.

(3)As soon as the bridge institution receives an amount equal to the liabilities that are not insured by the Corporation that it assumed, the rights and interests in respect of the balance remaining revert to the creditor.

^note

39.203Liquidator bound#

(1)The liquidator of a federal member institution appointed under the Winding-up and Restructuring Act is bound by the terms and conditions of any transaction that involves the sale or other disposition of the federal member institution’s assets or the assumption by a bridge institution of any portion of the federal member institution’s liabilities and shall carry out those transactions or cause them to be carried out.

(2)All costs, charges and expenses properly incurred by the liquidator in complying with the terms and conditions of any transaction referred to in subsection (1), including the liquidator’s remuneration, are payable by the bridge institution.

^note

39.21Right transferable#

If the assets that are sold under a transaction described in section 39.2 or by a bank designated as a bridge institution include any outstanding security under section 426 or 427 of the Bank Act, the buyer of the assets may hold the security for the life of the loan to which the security relates and all the provisions of that Act relating to the security and its enforcement continue to apply to the buyer as though the buyer were a bank.^note

39.22Winding-up#

(1)The Corporation shall apply for a winding-up order in respect of a federal member institution under the Winding-up and Restructuring Act if a notice has not been published under subsection 39.2(3) in respect of the institution on or before

(a)the day that is 12 months after the day on which the order is made under subsection 39.13(1); or

(b)the day on which any extension of that period ends.

(1.1)Despite subsection (1), if an order is made under paragraph 39.13(1)(d) or subsection 39.13(1.3) in respect of the institution, the Corporation shall apply for a winding-up order in respect of the institution under the Winding-up and Restructuring Act if a notice has not been published under subsection 39.2(3) in respect of the institution on or before

(a)the day that is one year after the day on which the order is made under subsection 39.13(1) or any shorter period specified in the order made under paragraph 39.13(1)(d) or subsection 39.13(1.3), as the case may be; or

(b)the day on which any extension of the applicable period ends.

(2)For the purposes of the Winding-up and Restructuring Act, the Corporation is deemed to be a creditor of the federal member institution.

(3)The Governor in Council may, by order made on the recommendation of the Minister, grant one or more extensions of the period set out in subsection (1) but the last extension must expire not later than the day that is 18 months after the day on which the order is made under subsection 39.13(1).

(4)The Governor in Council may, by order made on the recommendation of the Minister, grant one or more extensions of the applicable period set out in subsection (1.1) — of up to one year each — but the last extension must expire not later than five years after the day on which the order is made under subsection 39.13(1).

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Compensation

39.23Amount of compensation#

(1)If an order is made under subsection 39.13(1), the Corporation shall, in accordance with the regulations and the by-laws, determine the amount of compensation, if any, to be paid to a prescribed person.

(2)Only a prescribed person who is, as a result of the application of the regulations, in a worse financial position than they would have been had the federal member institution been liquidated under the Winding-up and Restructuring Act is entitled to be paid compensation.

(3)The Corporation shall pay the compensation and shall decide whether to pay it wholly or partly in cash or wholly or partly in any other form, including shares, that the Corporation considers appropriate.

(4)In determining the amount of compensation to which a person is entitled, the following shall not be taken into account:

(a)any shares or other interest or right received by another person as a result of an order made under subsection 39.13(1) or retained by another person; and

(b)any common shares received by another person as a result of a conversion of shares or liabilities in accordance with the contractual terms of those shares or liabilities.

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39.24Decision conclusive#

Except as otherwise provided in this Act, a decision made by the Corporation under section 39.23 or by an assessor appointed under section 39.26 is for all purposes final and conclusive and shall not be questioned or reviewed in any court.^note

39.241 #

[Repealed, 1996, c. 6, s. 41] (repealed)

39.25Discharge of liability#

Payment of the compensation by the Corporation under section 39.23 discharges the Corporation from its obligations under that section and in no case is the Corporation under any obligation to see to the proper application in any way of any such payment.^note

39.26Appointment of assessor#

In the circumstances prescribed by the regulations, the Governor in Council shall, by order, appoint as assessor a judge who is in receipt of a salary under the Judges Act to review a decision made by the Corporation under subsection 39.23(1) and determine the amount of compensation, if any, to be paid to a prescribed person.^note

39.27Sittings and hearings#

(1)An assessor may sit at any place and shall arrange for the sittings and hearings that may be required.

(2)The assessor has all the powers conferred on a commissioner appointed under Part II of the Inquiries Act for the purpose of obtaining evidence under oath.

(3)An assessor may appoint a person to assist him or her in performing his or her functions.

(4)Fees and disbursements payable to the person may be included by the assessor in an amount awarded in respect of costs under subsection (5) or (6).

(5)If the assessor determines that it is just and reasonable that costs in the proceeding before the assessor be awarded to a prescribed person and against the Corporation, the amount that the assessor determines to be just and reasonable to award in respect of those costs is payable by the Corporation to the prescribed person.

(6)If the assessor determines that it is just and reasonable that costs in the proceeding before the assessor be awarded to the Corporation and against a prescribed person, the amount that the assessor determines to be just and reasonable to award in respect of those costs constitutes a debt payable by the prescribed person to the Corporation and may be recovered as such in any court of competent jurisdiction.

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39.28Regulations#

(1)The Governor in Council may make regulations respecting compensation for the purposes of sections 39.23 to 39.27, including regulations

(a)prescribing persons referred to in subsection 39.23(1);

(b)respecting the factors that the Corporation shall or shall not consider in making a decision under subsection 39.23(1);

(c)respecting the circumstances in which an assessor must be appointed under section 39.26;

(d)respecting the factors that an assessor shall or shall not consider in making a decision; and

(e)respecting procedural requirements.

(2)The Corporation may make by-laws respecting compensation for the purposes of section 39.23.

(3)In the event of any inconsistency between the regulations made under subsection (1) and the by-laws made under subsection (2), the regulations prevail to the extent of the inconsistency.

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