First Nations Fiscal and Statistical Management Act (S.C. 2005, c. 9)
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Assented to 2005-03-23
Establishment and Organization of Authority
Marginal note:Establishment
58. There is hereby established a non-profit corporation without share capital, to be known as the First Nations Finance Authority.
Marginal note:Membership
59. The members of the Authority shall be its borrowing members and investing members.
Marginal note:Not agent of Her Majesty
60. (1) The Authority is not an agent of Her Majesty or a Crown corporation within the meaning of the Financial Administration Act, and its officers and employees are not part of the public service of Canada.
Marginal note:No guarantees
(2) No person shall give a guarantee on behalf of Her Majesty for the discharge of an obligation or liability of the Authority.
Marginal note:Board of Directors
61. (1) The Authority shall be managed by a board of directors, consisting of from 5 to 11 directors, including a Chairperson and Deputy Chairperson.
Marginal note:Nomination of directors
(2) A representative of a borrowing member may nominate
(a) a representative of a borrowing member for election as Chairperson or Deputy Chairperson; and
(b) any representative for election as a director other than the Chairperson or Deputy Chairperson.
Marginal note:Election of directors
(3) Directors shall be elected by representatives of borrowing members.
Marginal note:Function of Deputy Chairperson
62. In the event of the absence or incapacity of the Chairperson, or if the office of Chairperson is vacant, the Deputy Chairperson shall assume the duties and functions of the Chairperson.
Marginal note:Term of office
63. (1) Directors shall hold office on a part-time basis for a term of one year.
Marginal note:Additional terms
(2) A director is eligible to be re-elected for a second or subsequent term of office.
Marginal note:Ceasing to be director
(3) A person ceases to be a director when
(a) the person ceases to hold office as a chief or councillor of a first nation that is a borrowing member or investing member;
(b) the person’s designation as a representative of a borrowing member or investing member is revoked by a resolution of the council of that first nation; or
(c) the person is removed from office before the expiry of the term of the appointment by a special resolution of the board of directors.
Marginal note:Quorum
64. Two thirds of the directors constitute a quorum at any meeting of the board of directors.
Marginal note:Majority vote
65. Decisions by the board of directors shall be made by a majority vote of the directors present.
Marginal note:Canada Corporations Act
66. (1) The Canada Corporations Act does not apply to the Authority.
Marginal note:Canada Business Corporations Act
(2) The following provisions of the Canada Business Corporations Act apply, with any modifications that the circumstances require, to the Authority and its directors, members, officers and employees as if the Authority were a corporation incorporated under that Act, this Part were its articles of incorporation and its members were its shareholders:
(a) subsection 15(1) (capacity of a natural person);
(b) section 16 (by-law not required to confer powers on Authority, restriction on powers of Authority, and validity of acts of Authority);
(c) subsection 21(1) (access to Authority’s records by members and creditors);
(d) section 23 (corporate seal not needed to validate instrument);
(e) subsections 103(1) to (4) (powers of directors to make and amend by-laws, member approval of by-laws and effective date of by-laws);
(f) subsection 105(1) (qualifications of directors);
(g) subsection 108(2) (resignation of director);
(h) section 110 (right of director to attend members’ meetings and statements by retiring directors);
(i) subsection 114(1) (place of directors’ meetings);
(j) section 116 (validity of acts of directors and officers);
(k) section 117 (validity of directors’ resolutions not passed at meeting);
(l) subsections 119(1) and (4) (liability of directors);
(m) section 120 (conflict of interests of directors);
(n) section 123 (directors’ dissents);
(o) section 124 (directors’ indemnity);
(p) section 155 (financial statements);
(q) section 158 (approval of financial statements by directors);
(r) section 159 (sending financial statements to members before annual meeting);
(s) sections 161 and 162 (qualifications and appointment of auditor);
(t) section 168 (rights and duties of auditor);
(u) section 169 (examination by auditor);
(v) section 170 (auditor’s right to information);
(w) subsections 171(3) to (9) (duty and administration of audit committee and penalty for failure to comply);
(x) section 172 (qualified privilege in defamation for auditor’s statements); and
(y) subsections 257(1) and (2) (certificates of Authority as evidence).
Marginal note:Remuneration of directors
67. Directors shall be paid a fee for attendance at meetings of the board of directors, as fixed by the by-laws of the Authority.
Marginal note:Duty of care
68. (1) The directors and officers of the Authority in exercising their powers and performing their duties shall
(a) act honestly and in good faith with a view to the best interests of the Authority; and
(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
Marginal note:Limit of liability
(2) Directors and officers are not liable for a failure to comply with subsection (1) if they rely in good faith on
(a) a written report of the auditor of the Authority or financial statements represented by an officer of the Authority as fairly reflecting the financial condition of the Authority; or
(b) a report of a lawyer, notary, accountant, engineer, appraiser or other person whose position or profession lends credibility to a statement made by that person.
Marginal note:President
69. (1) The board of directors shall appoint a President to act as the chief executive officer of the Authority.
Marginal note:Other staff
(2) The President may employ any other officers and employees that are necessary to conduct the work of the Authority.
Marginal note:Annual general meeting
70. The Authority shall hold an annual general meeting of representatives for the purpose of
(a) presenting the annual report and audited financial statements of the Authority;
(b) electing the board of directors; and
(c) dealing with any other business of the Authority that may be presented by the board of directors.
Marginal note:By-laws
71. The board of directors may make by-laws
(a) respecting the calling and conduct of meetings of the board, including the holding of meetings by teleconference;
(b) fixing the fees to be paid to directors for attendance at meetings of the board and the reimbursement of reasonable travel and living expenses to directors;
(c) respecting the duties and conduct of the directors, officers and employees of the Authority and the terms and conditions of employment and of the termination of employment of officers and employees of the Authority;
(d) respecting the signing and sealing of securities and interest coupons issued by the Authority; and
(e) generally for the conduct and management of the affairs of the Authority.
Marginal note:Head office
72. The head office of the Authority shall be on reserve lands at a location determined by the board of directors.
Marginal note:Annual budget
73. At the beginning of every year, the President shall prepare an annual budget of the Authority and present it to the board of directors for approval.
Purposes
Marginal note:Mandate
74. The purposes of the Authority are to
(a) secure for its borrowing members, through the use of property tax revenues,
(i) long-term financing of capital infrastructure for the provision of local services on reserve lands,
(ii) lease financing of capital assets for the provision of local services on reserve lands, or
(iii) short-term financing to meet cash-flow requirements for operating or capital purposes under a law made under paragraph 5(1)(b), or to refinance a short-term debt incurred for capital purposes;
(b) secure for its borrowing members, through the use of other revenues prescribed by regulation, financing for any purpose prescribed by regulation;
(c) secure the best possible credit terms for its borrowing members;
(d) provide investment services to its members and first nations organizations; and
(e) provide advice regarding the development of long-term financing mechanisms for first nations.
Functions and Powers
Marginal note:Powers of board of directors
75. (1) For the purposes of this Part, the board of directors may by resolution
(a) borrow money in an amount authorized by the resolution;
(b) issue securities of the Authority;
(c) lend securities to generate income, if the loan is fully secured;
(d) enter into agreements for risk management purposes, including swaps; and
(e) provide for
(i) payments related to the issuance of securities,
(ii) the registration, transfer, management and redemption of securities,
(iii) the re-issuance, reinstatement or other disposition of lost, stolen, destroyed or damaged securities or interest coupons,
(iv) the examination, cancellation or destruction of securities and of materials used in their production, or
(v) the timing of the issuance of securities.
Marginal note:Security issuance requirements
(2) A resolution respecting the issuance of securities shall set out
(a) the rate of interest;
(b) the time and place of repayment of principal and interest; and
(c) the currency in which repayment of principal and interest will be made.
Marginal note:Security issuance resolutions
(3) A resolution respecting the issuance of securities may provide that
(a) the securities are to be redeemable in advance of maturity at a time and price set out in the resolution;
(b) all or any part of the securities may be paid, refunded or renewed;
(c) the securities are to be issued in an amount sufficient to realize the amount of any securities called in and paid before maturity, for a term not longer than the remainder of the term of the securities called in and paid; or
(d) the securities and any interest coupons attached to them are to be in the form set out in the resolution, and are to be exchangeable for other securities of the same issue on any terms and conditions set out in the resolution.
Marginal note:Amount of issue
(4) The Authority may issue securities the principal amounts of which, after payment of any discount and the costs of issue and sale, will realize the net amount authorized by the board of directors in a resolution made under paragraph (1)(a).
Marginal note:Declaration conclusive
(5) A declaration in a resolution authorizing the issuance of securities that it is necessary to issue securities in the principal amount authorized in order to realize the net amount authorized is conclusive evidence of that fact.
Marginal note:Sale price
(6) The board of directors may sell securities at their par value or at other than par value.
Marginal note:Delegation
(7) The board of directors may delegate its powers under this section to a committee of directors and officers of the Authority, subject to any limitations that the board of directors may impose.
Marginal note:Application to become borrowing member
76. (1) A first nation may apply to the Authority to become a borrowing member.
Marginal note:Criteria
(2) The Authority shall accept a first nation as a borrowing member only if the First Nations Financial Management Board has issued to the first nation a certificate under subsection 50(3) and has not subsequently revoked it.
Marginal note:Ceasing to be a borrowing member
77. A first nation may cease to be a borrowing member only with the consent of all other borrowing members.
Marginal note:Priority
78. (1) The Authority has a priority over all other creditors of a first nation that is insolvent, for any moneys that are authorized to be paid to the Authority under a law made under paragraph 5(1)(b) or (d).
Marginal note:Debts to the Crown
(2) For greater certainty, subsection (1) does not apply to Her Majesty.
Marginal note:Limitations — infrastructure loans
79. The Authority shall not make a long-term loan to a borrowing member for the purpose of financing capital infrastructure for the provision of local services on reserve lands unless
(a) the First Nations Tax Commission has approved a law made by the borrowing member under paragraph 5(1)(d); and
(b) the loan is to be paid out of the property tax revenues of the borrowing member in priority to other creditors of the borrowing member.
Marginal note:Restriction on financing
80. A borrowing member shall not obtain long-term financing secured by property tax revenues from any person other than the First Nations Finance Authority.
Marginal note:Limitations — short-term loans
81. The Authority shall not make a short-term loan to a borrowing member for a purpose described in subparagraph 74(a)(iii) unless the loan is made in anticipation of local revenues of the borrowing member set out in a law made under paragraph 5(1)(b).
Marginal note:Sinking fund
82. (1) The Authority shall establish a sinking fund, or any other system of repayment prescribed by regulation, to fulfil its repayment obligations to the holders of each security issued by the Authority.
Marginal note:Separate accounts
(2) Where a sinking fund is established, a separate sinking fund account shall be kept for each borrowing member participating in a security issued by the Authority.
Marginal note:Sinking fund investments
(3) Funds in a sinking fund may be invested only in
(a) securities issued or guaranteed by Canada or a province;
(b) securities of a local, municipal or regional government in Canada;
(c) investments guaranteed by a bank, trust company or credit union; or
(d) deposits in a bank or trust company in Canada or non-equity or membership shares in a credit union.
Marginal note:Surpluses
83. (1) The Authority may declare a surplus in a sinking fund and use the surplus, in order of priority, to
(a) replenish any amounts paid out of the debt reserve fund; and
(b) make a distribution to borrowing members who are participating in that fund.
Marginal note:Recovery from sinking fund
(2) The Authority may recover fees payable by a borrowing member from any surplus to be distributed to that member under paragraph (1)(b).
Marginal note:Debt reserve fund
84. (1) The Authority shall establish a debt reserve fund to make payments or sinking fund contributions for which insufficient moneys are available from borrowing members.
Marginal note:Provisioning of fund
(2) Subject to the regulations, the Authority shall withhold 5% of the amount of any long-term loan to a borrowing member for financing capital infrastructure for the provision of local services on reserve lands and deposit that amount in the debt reserve fund.
Marginal note:Separate account
(3) A separate account shall be kept for each security issued and for each borrowing member contributing to the debt reserve fund.
Marginal note:Investments
(4) The funds of the debt reserve fund may be invested only in securities, investments or deposits referred to in paragraph 82(3)(a), (c) or (d) that mature or are callable within five years, 25% of which must be callable within 90 days.
Marginal note:Liability for shortfall
(5) If payments from the debt reserve fund reduce its balance
(a) by less than 50% of the total amount contributed by borrowing members, the Authority may, in accordance with the regulations, require all borrowing members to pay amounts sufficient to replenish the debt reserve fund; and
(b) by 50% or more of the total amount contributed by borrowing members,
(i) the Authority shall, in accordance with the regulations, require all borrowing members to pay without delay amounts sufficient to replenish the debt reserve fund, and
(ii) the borrowing members shall recover those amounts under their property taxation laws.
Marginal note:Repayment
(6) Money contributed by a borrowing member to the debt reserve fund and investment income received on it shall be repaid by the Authority to the borrowing member when all obligations in respect of the security in respect of which the money was contributed have been satisfied.
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