Contents
Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 389, 403 and 463 of the Cooperative Credit Associations Act, hereby makes the annexed Investment Limits (Cooperative Credit Associations) Regulations.notenotenote
Interpretation
1Definitions#
The following definitions apply in these Regulations.
Act means the Cooperative Credit Associations Act. (Loi)
designated entity means an entity other than
(a)a joint venture;
(b)an insurance company;
(c)a securities dealer; or
(d)a subsidiary of an insurance company or securities dealer. (entité désignée)
insurance company means an insurance company incorporated by or under the laws of Canada or a province. (société d’assurances)
joint venture means a real property entity
(a)that was formed by an association, or by a designated entity controlled by an association, and one or more other persons for the purpose of a specific business undertaking;
(b)in which the association or designated entity has a substantial investment; and
(c)in respect of which the persons who formed it have agreed on joint control, regardless of the distribution of their equity. (coentreprise)
real property entity means an entity that is primarily engaged in holding, managing or otherwise dealing with
(a)real property;
(b)shares of a body corporate that is primarily engaged in holding, managing or otherwise dealing with real property, including shares of a body corporate that is another real property entity; or
(c)ownership interests in an unincorporated entity that is primarily engaged in holding, managing or otherwise dealing with real property, including ownership interests in an unincorporated entity that is another real property entity. (entité immobilière)
securities dealer means an entity described in paragraph (g) of the definition financial institution in section 2 of the Act. (négociant en valeurs mobilières)
third party, in respect of an association, means a person other than
(a)the association;
(b)a designated entity controlled by the association; or
(c)a related real property entity of the association. (tierce partie)
2Book value of interest in real property#
For the purposes of sections 8 to 11, the book value of an asset that is an interest of an association in real property, at a particular time, is
(a)if the asset is real property, the gross book value of the real property, less any accumulated depreciation on the real property, that would be reported on a balance sheet of the association prepared as at that time in accordance with the accounting principles and specifications of the Superintendent referred to in subsection 292(4) of the Act; and
(b)if the asset is a security or loan, the book value of the security or loan that would be reported on a balance sheet of the association prepared as at that time in accordance with the accounting principles and specifications of the Superintendent referred to in subsection 292(4) of the Act.
Exemptions
3Exempt associations#
Sections 401 and 402 of the Act do not apply to an association if the sum of the equity of the association and the minority interests in entities controlled by the association, as they appear in the consolidated financial statements of the association, is five billion dollars or more.
Prescribed Subsidiary
4Prescribed subsidiary#
For the purposes of sections 401 and 402 of the Act, a prescribed subsidiary of an association is a subsidiary of the association other than
(a)an insurance company;
(b)a securities dealer; or
(c)a subsidiary of an insurance company or securities dealer.
note
Prescribed Percentage
5Definitions#
(1)The following definitions apply in this section.
real property percentage of an association means the amount determined by the formula
equity percentage of an association means the amount determined by the formula
(2)For the purpose of section 401 of the Act, the prescribed percentage of the regulatory capital of an association is
(a)35%, if the association is primarily engaged in the business of managing liquidity or providing treasury, clearing, settlement or payment services;
(b)70%, if the association is not an association referred to in paragraph (a) and its equity percentage does not exceed 30%; and
(c)100% minus its equity percentage, if the association is not an association referred to in paragraph (a) and its equity percentage exceeds 30%.
(3)For the purpose of section 402 of the Act, the prescribed percentage of the regulatory capital of an association is
(a)35%, if the association is primarily engaged in the business of managing liquidity or providing treasury, clearing, settlement or payment services;
(b)70%, if the association is not an association referred to in paragraph (a) and its real property percentage does not exceed 30%; and
(c)100% minus its real property percentage, if the association is not an association referred to in paragraph (a) and its real property percentage exceeds 30%.
Valuation of Equity
6Value equals book value#
For the purpose of section 402 of the Act, the value of the participating shares and ownership interests referred to in that section that are beneficially owned by an association and its subsidiaries prescribed by section 4 is equal to their book value as reported on the consolidated balance sheet of the association.
Interests of an Association in Real Property
General
7Definition of interest in real property#
(2)For the purpose of subsection 397(3) of the Act, the interests of an association in real property means real property referred to in paragraph 11(1)(a) and shares and ownership interests referred to in paragraph 11(1)(b) that become beneficially owned by the association, or by a designated entity controlled by the association, as a result of the realization of a security interest on a loan or debt obligation referred to in subsection 11(1).
Direct Interests — Real Property and Debt Obligations
8Direct interests#
(1)The following are interests of an association in real property:
(a)real property beneficially owned by the association or by a designated entity controlled by the association; and
(b)a debt obligation, for which the association or a designated entity controlled by the association is liable, that was issued for the purpose of acquiring or improving real property referred to in paragraph (a).
(2)The value of the interests of an association in real property is
(a)in respect of real property referred to in paragraph (1)(a), the book value of the real property; and
(b)in respect of a debt obligation referred to in paragraph (1)(b), any amount by which the book value of the debt obligation exceeds the book value of the real property referred to in that paragraph.
Indirect Interests — Real Property, Shares and Ownership Interests
9Certain indirect interests#
(1)The following are interests of an association in real property:
(a)at a particular time, real property
(i)that is beneficially owned by
(A)a related real property entity of the association that is a joint venture, or
(B)an entity in which an entity described in clause (A) has a substantial investment, and
(ii)that would be reported on a balance sheet of the association prepared as at that time in accordance with the accounting principles and specifications of the Superintendent referred to in subsection 292(4) of the Act; and
(b)shares and ownership interests beneficially owned by the association, or by a designated entity controlled by the association, in any related real property entity of the association other than a related real property entity referred to in paragraph (a).
(2)The value of the interests of an association in real property is
(a)in respect of real property referred to in paragraph (1)(a), the book value of the real property; and
(b)in respect of shares and ownership interests referred to in paragraph (1)(b), the book value of the shares and ownership interests.
Indirect Interests — Loans and Debt Obligations
10Certain indirect interests#
(1)The following are interests of an association in real property:
(a)a debt obligation issued by a related real property entity of the association and beneficially owned by the association or by a designated entity controlled by the association;
(b)a loan made by the association, or by a designated entity controlled by the association, to a related real property entity of the association;
(c)a loan made by the association, or by a designated entity controlled by the association, to
(i)a real property entity in which a securities dealer or insurance company controlled by the association has a substantial investment, or
(ii)a real property entity that is controlled by a real property entity described in subparagraph (i);
(d)a debt obligation issued by a real property entity described in subparagraph (c)(i) or (ii) and beneficially owned by the association or by a designated entity controlled by the association;
(e)a debt obligation that is
(i)issued by a related real property entity of the association,
(ii)beneficially owned by a third party, and
(iii)guaranteed by the association or by a designated entity controlled by the association; and
(f)a loan made by a third party to a related real property entity of the association and guaranteed by the association or by a designated entity controlled by the association.
(2)The value of the interests of an association in real property is
(a)in respect of a debt obligation referred to in paragraph (1)(a) or (d), the book value of the debt obligation;
(b)in respect of a loan referred to in paragraph (1)(b) or (c), the book value of the loan; and
(c)in respect of a guaranteed debt obligation referred to in paragraph (1)(e) or a guaranteed loan referred to in paragraph (1)(f),
(i)if the debt obligation is issued by, or the loan is made to, an entity that is a related real property entity of the association and the entity beneficially owns real property that is an interest of the association in real property under paragraph 9(1)(a), any amount by which the face value of the guarantee exceeds the value of the real property determined in accordance with paragraph 9(2)(a), and
(ii)in any other case, the face value of the guarantee.
Indirect Interests — Secured Loans and Debt Obligations
11Certain indirect interests#
(1)If an association or a designated entity controlled by an association makes a loan to, or beneficially owns or guarantees the debt obligation of, a third party, the loan or debt obligation is an interest of the association in real property if it is secured by
(a)real property beneficially owned by a third party in conjunction with
(i)the association,
(ii)the designated entity,
(iii)a related real property entity of the association,
(iv)a securities dealer or insurance company controlled by the association,
(v)an entity controlled by a securities dealer or insurance company referred to in subparagraph (iv), or
(vi)a real property entity described in subparagraph 10(1)(c)(i) or (ii); or
(b)shares or ownership interests beneficially owned by a third party in
(i)an entity that beneficially owns real property in conjunction with the association, a related real property entity of the association or a designated entity controlled by the association, or
(ii)a related real property entity of the association.
(2)The value of the interests of an association in real property is
(a)in respect of a loan or debt obligation that is secured by real property referred to in paragraph (1)(a), the lesser of
(i)the net realizable value of the third party’s interest in the real property at the time that the security interest was given, and
(ii)the amount determined by the formula
(b)in respect of a loan or debt obligation that is secured by shares or ownership interests beneficially owned by a third party in an entity referred to in subparagraph (1)(b)(i), the lesser of
(i)the net realizable value of the third party’s interest in those shares or ownership interests at the time that the security interest was given, and
(ii)the amount determined by the formula
(c)in respect of a loan or debt obligation that is secured by shares or ownership interests beneficially owned by a third party in a related real property entity referred to in subparagraph (1)(b)(ii), the lesser of
(i)the net realizable value of the third party’s interest in those shares or ownership interests at the time that the security interest was given, and
(ii)the amount determined by the formula
Other Interests
12Other interests#
(1)The following are interests of an association in real property:
(a)a guarantee given by the association, or by a designated entity controlled by the association, to an entity other than the association or designated entity for the purpose of completing the development of real property that is beneficially owned by
(i)the association,
(ii)a designated entity controlled by the association, or
(iii)a related real property entity of the association; and
(b)an agreement made by the association, or by a designated entity controlled by the association, to support a third party’s cost of operating or financing real property that is beneficially owned by
(i)the association,
(ii)a designated entity controlled by the association, or
(iii)a related real property entity of the association.
(2)The value of the interests of an association in real property is
(a)in respect of a guarantee referred to in paragraph (1)(a), the estimated cost of completing the development of the real property; and
(b)in respect of an agreement referred to in paragraph (1)(b), the amount of any funds advanced by the association, or by a designated entity controlled by the association, under the agreement.
Repeals
Coming into Force
*15Coming into force#
These Regulations come into force on the day on which sections 389 and 403 of the Cooperative Credit Associations Act, as enacted by section 314 of the Financial Consumer Agency of Canada Act, chapter 9 of the Statutes of Canada, 2001, come into force.
Federal laws of Canada reproduced under the Reproduction of Federal Law Order (SI/97-5); not the official version. Source: Justice Laws Website.