Investments in Permitted Infrastructure Entities Regulations

Contents

Her Excellency the Governor in Council, on the recommendation of the Minister of Finance, makes the annexed Investments in Permitted Infrastructure Entities Regulations under section 2.2 and paragraphs 494(b), 501(e), 553(b), 554(9)(c), 970(b) and 977(e) of the Insurance Companies Act.^note^note^note^note^note^note^note^note

Interpretation

1Definitions#

(1)The following definitions apply in these Regulations.

Act means the Insurance Companies Act. (Loi)

insurance entity means a life company, society or insurance holding company. (entité d’assurances)

public body means

(a)the Government of Canada, the government of a province, a municipality or the government of a foreign country or any political subdivision of a foreign country;

(b)an agency or corporation of a public body referred to in paragraph (a), other than an agency or corporation that administers or manages the funds of a public pension plan or that is a sovereign wealth fund, but that does not have a mandate to support, foster or attract investments in infrastructure;

(c)a regulatory body established under federal, provincial or foreign legislation;

(d)an Indigenous government, a band council, a body established under a land claim agreement or a governing body that is authorized to act on behalf of an Indigenous group, community or people inside or outside Canada;

(e)an international organization that is governed by a treaty to which Canada is a signatory; or

(f)a not-for-profit entity or non-share capital corporation in respect of which another public body may, directly or indirectly, appoint one or more members to the board of directors or to a similar group or committee. (organisme public)

value means

(a)in respect of the shares or other ownership interests or loans held on a particular day by an insurance entity or any of its subsidiaries, the aggregate value that would be reported on their balance sheets on an unconsolidated basis as of that day;

(b)in respect of loans held on a particular day by a public body and made to a permitted infrastructure entity, the aggregate value that would be reported on the balance sheet of the permitted infrastructure entity on an unconsolidated basis as of that day; and

(c)in respect of guarantees given by an insurance entity or any of its subsidiaries, their aggregate face value. (valeur)

(2)For the purposes of these Regulations, control or substantial investment is deemed not to have been acquired under subsection 495(2.1), 554(2.1) or 971(2.1) of the Act if, since it was last acquired or deemed to have been acquired under any of those subsections, it is deemed under subsection 493(7), 552(6) or 969(6) of the Act to have been acquired under another provision.

Prescribed Physical Assets and Activities

2Prescribed physical assets#

The physical assets set out in the schedule are prescribed for the purposes of the definition infrastructure asset in subsection 2(1) of the Act.

3Prescribed activities#

For the purposes of the definition permitted infrastructure entity in subsection 2(1) of the Act, a permitted infrastructure entity is permitted to engage in the following prescribed activities:

(a)operating an infrastructure asset;

(b)acquiring or holding shares of or other ownership interests in another entity;

(c)holding, managing or otherwise dealing with real property or immovables connected to an infrastructure asset; and

(d)designing an infrastructure asset or acting as a general contractor for the construction or maintenance of an infrastructure asset.

Terms and Conditions

4Involvement of public body#

(1)An insurance entity may only acquire a substantial investment in a permitted infrastructure entity if that permitted infrastructure entity, or each of the infrastructure assets that is the subject of its activities, involves a public body.

(2)An insurance entity that does not have a substantial investment in a permitted infrastructure entity may only acquire control of it if that permitted infrastructure entity, or each of the infrastructure assets that is the subject of its activities, involves a public body.

(3)An insurance entity may only acquire or hold control of, or a substantial investment in, a permitted infrastructure entity that operates an infrastructure asset if that infrastructure asset is wholly owned by one or more of the following entities:

(a)the permitted infrastructure entity;

(b)another permitted infrastructure entity that the insurance entity, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1), 554(2.1) or 971(2.1) of the Act; or

(c)an entity that is not affiliated with the insurance entity and in which the insurance entity does not have a substantial investment.

(4)An insurance entity may only acquire or hold control of, or a substantial investment in, a permitted infrastructure entity that designs or acts as a general contractor for the construction or maintenance of an infrastructure asset if that infrastructure asset is – or if a contract sets out that once its construction is complete it will be – operated by one of the following entities or wholly owned by one or more of the following entities:

(a)the permitted infrastructure entity; or

(5)If a permitted infrastructure entity that an insurance entity holds control of or has a substantial investment in engages in an activity in respect of an infrastructure asset that was not already subject to an activity of the permitted infrastructure entity since the insurance entity acquired control or substantial investment, the insurance entity may only continue to hold such control or substantial investment if, at the moment the permitted infrastructure entity engages in the activity in relation to that infrastructure asset for the first time,

(a)the infrastructure asset involves a public body; or

(b)the permitted infrastructure entity involves a public body.

5Involvement of public body#

(1)For the purposes of section 4, an infrastructure asset involves a public body if

(a)the infrastructure asset is partially or entirely located in the same country as the public body, unless the public body is a body referred to in paragraph (e) of the definition public body in subsection 1(1); and

(b)the public body fulfills at least one of the following conditions in respect of the infrastructure asset:

(i)it owns at least 10% of the infrastructure asset,

(ii)it is the purchaser of all or substantially all of the product or service of the infrastructure asset,

(iii)it is the lessor of all or substantially all of the infrastructure asset,

(iv)it is the guarantor of all or substantially all of the revenues resulting from the operation of the infrastructure asset,

(v)it approves or sets the price that users pay for the product or service of the infrastructure asset, and

(vi)it determines the rights regarding access to or use of the infrastructure asset.

(2)For the purposes of section 4, an infrastructure asset that is being designed or that is under construction involves a public body if a contract sets out that, once its construction is complete, the conditions referred to in subsection (1) will be satisfied.

(3)For the purposes of section 4, a permitted infrastructure entity involves a public body if

(a)the public body holds control of or has a substantial investment in the permitted infrastructure entity; or

(b)the aggregate value of the outstanding principal of the loans held by the public body and made to the permitted infrastructure entity is greater than 10% of the value of the total liabilities of the permitted infrastructure entity.

6Matching of assets with liabilities#

An insurance entity may only acquire control of, or acquire or increase a substantial investment in, a permitted infrastructure entity if one of the purposes of the acquisition or increase is to match its consolidated assets with its long-term liabilities.

7Regulatory capital of life company#

(1)A life company must not acquire control of, or acquire or increase a substantial investment in, a permitted infrastructure entity if the sum of the following values is greater than 20% of the life company’s regulatory capital:

(a)the value of all shares and other ownership interests held by the life company or any of its subsidiaries, whether individually or jointly, in all the permitted infrastructure entities that the life company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1) of the Act;

(b)the value of the outstanding principal of all loans held by the life company or any of its subsidiaries, whether individually or jointly, and made to permitted infrastructure entities that the life company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1) of the Act; and

(c)the value of the outstanding guarantees given by the life company or any of its subsidiaries, whether individually or jointly, on behalf of all permitted infrastructure entities that the life company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1) of the Act.

(2)If the sum of the values set out in paragraphs (1)(a) to (c) is greater than 20% of a life company’s regulatory capital, that life company must not and must not permit its subsidiaries to

(a)acquire additional shares of or other ownership interests in, or acquire loans made to, a permitted infrastructure entity that the life company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1) of the Act;

(b)make new loans or guarantees or increase the value of the loans or guarantees referred to in paragraphs (1)(b) and (c); or

(c)acquire control of, or amalgamate or merge with, an entity that holds

(i)shares of or other ownership interests in a permitted infrastructure entity that the life company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1) of the Act, or

(ii)loans to or guarantees on behalf of a permitted infrastructure entity that the life company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1) of the Act.

8Regulatory capital of society#

(1)A society must not acquire control of, or acquire or increase a substantial investment in, a permitted infrastructure entity if the sum of the following values is greater than 20% of the society’s regulatory capital:

(a)the value of all shares and other ownership interests held by the society or any of its subsidiaries, whether individually or jointly, in all the permitted infrastructure entities that the society, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1) or 554(2.1) of the Act;

(b)the value of the outstanding principal of all loans held by the society or any of its subsidiaries, whether individually or jointly, and made to permitted infrastructure entities that the society, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1) or 554(2.1) of the Act; and

(c)the value of the outstanding guarantees given by the society or any of its subsidiaries, whether individually or jointly, on behalf of all permitted infrastructure entities that the society, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1) or 554(2.1) of the Act.

(2)If the sum of the values set out in paragraphs (1)(a) to (c) is greater than 20% of a society’s regulatory capital, the society must not and must not permit its subsidiaries to

(a)acquire additional shares of or other ownership interests in, or acquire loans made to, a permitted infrastructure entity that the society, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1) or 554(2.1) of the Act;

(b)make new loans or guarantees or increase the value of the loans or guarantees referred to in paragraphs (1)(b) and (c); or

(c)acquire control of, or amalgamate or merge with, an entity that holds

(i)shares of or other ownership interests in a permitted infrastructure entity that the society, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1) or 554(2.1) of the Act, or

(ii)loans to or guarantees on behalf of a permitted infrastructure entity that the society, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1) or 554(2.1) of the Act.

(3)For the purposes of this section, the regulatory capital of a society must be determined in accordance with the Regulatory Capital (Insurance Companies) Regulations. A reference in those Regulations to a “company” or “life company” is to be read as a reference to a “society”.

9Regulatory capital of insurance holding company#

(1)An insurance holding company must not acquire control of, or acquire or increase a substantial investment in, a permitted infrastructure entity if the sum of the following values is greater than 20% of the insurance holding company’s regulatory capital:

(a)the value of all shares and other ownership interests held by the insurance holding company or any of its subsidiaries, whether individually or jointly, in all the permitted infrastructure entities that the insurance holding company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1) or 971(2.1) of the Act;

(b)the value of the outstanding principal of all loans held by the insurance holding company or any of its subsidiaries, whether individually or jointly, and made to permitted infrastructure entities that the insurance holding company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1) or 971(2.1) of the Act; and

(c)the value of the outstanding guarantees given by the insurance holding company or any of its subsidiaries, whether individually or jointly, on behalf of all permitted infrastructure entities that the insurance holding company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1) or 971(2.1) of the Act.

(2)If the sum of the values set out in paragraphs (1)(a) to (c) exceeds 20% of an insurance holding company’s regulatory capital, the insurance holding company must not and must not permit its subsidiaries to

(a)acquire additional shares of or other ownership interests in, or acquire loans made to, a permitted infrastructure entity that the insurance holding company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1) or 971(2.1) of the Act;

(b)make new loans or guarantees or increase the value of the loans or guarantees referred to in paragraphs (1)(b) and (c); or

(c)acquire control of, or amalgamate or merge with, an entity that holds

(i)shares of or other ownership interests in a permitted infrastructure entity that the insurance holding company, or any of its life company subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1) or 971(2.1) of the Act, or

(ii)loans to or guarantees on behalf of a permitted infrastructure entity that the insurance holding company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.1) or 971(2.1) of the Act.

Amendments to These Regulations

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Coming into Force

15S.C. 2018, c. 12#

*(1)Subject to subsection (2), these Regulations come into force on the day on which section 343 of the Budget Implementation Act, 2018, No. 1 comes into force, but if they are registered after that day, they come into force on the day on which they are registered.

*(2)Sections 10 to 14 come into force on the first day on which both subsections 331(1) and 344(1) of the Budget Implementation Act, 2018, No. 1 are in force.

Physical Assets (Section 2)

TransportationWater SupplyWaste DisposalAgricultureFlood ProtectionInformation Technology and CommunicationEnergyHealth Care and HousingEducation, Science, Culture and RecreationOther assets

Amendments not in force

— SOR/2023-197, s. 10Subsection 1(2) of these Regulations is replaced by the following:For the purposes of these Regulations, control or substantial investment is deemed not to have been acquired under subsection 495(2.01), 554(2.01) or 971(2.01) of the Act if, since it was last acquired or deemed to have been acquired under any of those subsections, it is deemed under subsection 493(7), 552(6) or 969(6) of the Act to have been acquired under another provision. — SOR/2023-197, s. 11Paragraph 4(3)(b) of these Regulations is replaced by the following:another permitted infrastructure entity that the insurance entity, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01), 554(2.01) or 971(2.01) of the Act; orParagraph 4(4)(b) of these Regulations is replaced by the following:another permitted infrastructure entity that the insurance entity, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01), 554(2.01) or 971(2.01) of the Act. — SOR/2023-197, s. 12Paragraphs 7(1)(a) to (c) of these Regulations are replaced by the following:the value of all shares and other ownership interests held by the life company or any of its subsidiaries, whether individually or jointly, in all the permitted infrastructure entities that the life company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01) of the Act;the value of the outstanding principal of all loans held by the life company or any of its subsidiaries, whether individually or jointly, and made to permitted infrastructure entities that the life company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01) of the Act; andthe value of the outstanding guarantees given by the life company or any of its subsidiaries, whether individually or jointly, on behalf of all permitted infrastructure entities that the life company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01) of the Act.Paragraph 7(2)(a) of these Regulations is replaced by the following:acquire additional shares of or other ownership interests in, or acquire loans made to, a permitted infrastructure entity that the life company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01) of the Act;Subparagraphs 7(2)(c)(i) and (ii) of these Regulations are replaced by the following:shares of or other ownership interests in a permitted infrastructure entity that the life company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01) of the Act, orloans to or guarantees on behalf of a permitted infrastructure entity that the life company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01) of the Act. — SOR/2023-197, s. 13Paragraphs 8(1)(a) to (c) of these Regulations are replaced by the following:the value of all shares and other ownership interests held by the society or any of its subsidiaries, whether individually or jointly, in all the permitted infrastructure entities that the society, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01) or 554(2.01) of the Act;the value of the outstanding principal of all loans held by the society or any of its subsidiaries, whether individually or jointly, and made to permitted infrastructure entities that the society, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01) or 554(2.01) of the Act; andthe value of the outstanding guarantees given by the society or any of its subsidiaries, whether individually or jointly, on behalf of all permitted infrastructure entities that the society, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01) or 554(2.01) of the Act.Paragraph 8(2)(a) of these Regulations is replaced by the following:acquire additional shares of, or other ownership interests in or acquire loans made to, a permitted infrastructure entity that the society, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01) or 554(2.01) of the Act;Subparagraphs 8(2)(c)(i) and (ii) of these Regulations are replaced by the following:shares of or other ownership interests in a permitted infrastructure entity that the society, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01) or 554(2.01) of the Act, orloans to or guarantees on behalf of a permitted infrastructure entity that the society, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01) or 554(2.01) of the Act. — SOR/2023-197, s. 14Paragraphs 9(1)(a) to (c) of these Regulations are replaced by the following:the value of all shares and other ownership interests held by the insurance holding company or any of its subsidiaries, whether individually or jointly, in all the permitted infrastructure entities that the insurance holding company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01) or 971(2.01) of the Act;the value of the outstanding principal of all loans held by the insurance holding company or any of its subsidiaries, whether individually or jointly, and made to permitted infrastructure entities that the insurance holding company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01) or 971(2.01) of the Act; andthe value of the outstanding guarantees given by the insurance holding company or any of its subsidiaries, whether individually or jointly, on behalf of all permitted infrastructure entities that the insurance holding company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01) or 971(2.01) of the Act.Paragraph 9(2)(a) of these Regulations is replaced by the following:acquire additional shares of or other ownership interests in, or acquire loans made to, a permitted infrastructure entity that the insurance holding company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01) or 971(2.01) of the Act;Subparagraphs 9(2)(c)(i) and (ii) of these Regulations are replaced by the following:shares of or other ownership interests in a permitted infrastructure entity that the insurance holding company, or any of its life company subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01) or 971(2.01) of the Act, orloans to or guarantees on behalf of a permitted infrastructure entity that the insurance holding company, or any of its subsidiaries that is a life company, holds control of or has a substantial investment in, if that control or substantial investment was acquired under subsection 495(2.01) or 971(2.01) of the Act.

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