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Cooperative Credit Associations Act (S.C. 1991, c. 48)

Act current to 2023-01-11 and last amended on 2022-01-01. Previous Versions

PART XIISelf-dealing (continued)

Permitted Related Party Transactions (continued)

Marginal note:Board approval required

  •  (1) Except with the concurrence of at least two thirds of the directors present at a meeting of the board of directors of the association, an association shall not, with respect to a related party of the association referred to in subsection 420(1),

    • (a) make, take an assignment of or otherwise acquire a loan to the related party, including a margin loan referred to in section 422,

    • (b) make a guarantee on behalf of the related party, or

    • (c) make an investment in the securities of the related party

    if, immediately following the transaction, the aggregate of

    • (d) the principal amount of all outstanding loans to the related party that are held by the association and its subsidiaries, other than

      • (i) loans referred to in paragraph 415(b), and

      • (ii) where the related party is a full-time senior officer of the association, loans to the related party that are permitted by subsection 420(2),

    • (e) the sum of all outstanding amounts guaranteed by the association and its subsidiaries on behalf of the related party, and

    • (f) where the related party is an entity, the book value of all investments by the association and its subsidiaries in the securities of the entity

    would exceed 2 per cent of the regulatory capital of the association.

  • Marginal note:Limit on transactions with directors, officers and their interests

    (2) An association shall not, with respect to a related party of the association referred to in subsection 420(1),

    • (a) make, take an assignment of or otherwise acquire a loan to the related party, including a margin loan referred to in section 422,

    • (b) make a guarantee on behalf of the related party, or

    • (c) make an investment in the securities of the related party

    if, immediately following the transaction, the aggregate of

    • (d) the principal amount of all outstanding loans to all related parties of the association referred to in subsection 420(1) that are held by the association and its subsidiaries, other than

      • (i) loans referred to in section 415, and

      • (ii) loans permitted by subsection 420(2),

    • (e) the sum of all outstanding amounts guaranteed by the association and its subsidiaries on behalf of all related parties of the association referred to in subsection 420(1), and

    • (f) the book value of all investments by the association and its subsidiaries in the securities of all entities that are related parties of the association referred to in subsection 420(1)

    would exceed 50 per cent of the regulatory capital of the association.

  • Marginal note:Exclusion of de minimis transactions

    (3) Loans, guarantees and investments that are referred to in section 414 shall not be included in calculating the aggregate of loans, guarantees and investments referred to in subsections (1) and (2).

  • 1991, c. 48, s. 421
  • 1997, c. 15, s. 154

Marginal note:Margin loans

 The Superintendent may establish terms and conditions with respect to the making by an association of margin loans to a director or senior officer of the association.

  • 1991, c. 48, s. 422
  • 1997, c. 15, s. 155
  • 2001, c. 9, s. 320

Marginal note:Exemption by order

  •  (1) An association may enter into a transaction with a related party of the association if the Superintendent, by order, has exempted the transaction from the provisions of section 413.

  • Marginal note:Conditions for order

    (2) The Superintendent shall not make an order referred to in subsection (1) unless the Superintendent is satisfied that the decision of the association to enter into the transaction has not been and is not likely to be influenced in any significant way by a related party of the association and does not involve in any significant way the interests of a related party of the association.

  • 1991, c. 48, s. 423
  • 1996, c. 6, s. 56

Marginal note:Prescribed transactions

 An association may enter into a transaction with a related party of the association if the transaction is a prescribed transaction or one of a class of prescribed transactions.

Restrictions on Permitted Transactions

Marginal note:Market terms and conditions

  •  (1) Except as provided in subsections 420(4) and (5), any transaction entered into with a related party of the association shall be on terms and conditions that are at least as favourable to the association as market terms and conditions.

  • Meaning of market terms and conditions

    (2) For the purposes of subsection (1), market terms and conditions means

    • (a) in respect of a service or a loan facility or a deposit facility offered to the public by the association in the ordinary course of business, terms and conditions that are no more or less favourable than those offered to the public by the association in the ordinary course of business; and

    • (b) in respect of any other transaction,

      • (i) terms and conditions, including those relating to price, rent or interest rate, that might reasonably be expected to apply in a similar transaction in an open market under conditions requisite to a fair transaction between parties who are at arm’s length and who are acting prudently, knowledgeably and willingly, or

      • (ii) if the transaction is one that would not reasonably be expected to occur in an open market between parties who are at arm’s length, terms and conditions, including those relating to price, rent or interest rate, that would reasonably be expected to provide the association with fair value, having regard to all the circumstances of the transaction, and that would be consistent with the parties to the transaction acting prudently, knowledgeably and willingly.

  • 1991, c. 48, s. 425
  • 2001, c. 9, s. 321

 [Repealed, 1997, c. 15, s. 156]

Disclosure

Marginal note:Association obligation

  •  (1) Where, in respect of any proposed transaction permitted by this Part, other than those referred to in section 414, an association has reason to believe that the other party to the transaction is a related party of the association, the association shall take all reasonable steps to obtain from the other party full disclosure, in writing, of any interest or relationship, direct or indirect, that would make the other party a related party of the association.

  • Marginal note:Reliance on information

    (2) An association and any person who is a director or an officer, employee or agent of the association may rely on any information contained in any disclosure received by the association pursuant to subsection (1) or any information otherwise acquired in respect of any matter that might be the subject of such a disclosure and no action lies against the association or any such person for anything done or omitted in good faith in reliance on any such information.

Marginal note:Notice to Superintendent

 If an association has entered into a transaction that the association is prohibited by this Part from entering into, or an association has entered into a transaction for which approval is required under subsection 421(1) without having obtained the approval, the association shall, on becoming aware of that fact, notify the Superintendent without delay.

  • 1991, c. 48, s. 429
  • 1997, c. 15, s. 157

Remedial Actions

Marginal note:Voidable contracts

  •  (1) If an association enters into a transaction that it is prohibited from entering into by this Part, the association or the Superintendent may apply to a court for an order setting aside the transaction or for any other appropriate remedy, including an order directing that the related party of the association involved in the transaction account to the association for any profit or gain realized or that any director or senior officer of the association who authorized the transaction compensate the association for any loss or damage incurred by the association.

  • Marginal note:Time limit

    (2) An application under subsection (1) in respect of a particular transaction may only be made within the period of three months following the day the notice referred to in section 429 in respect of the transaction is given to the Superintendent or, if no such notice is given, the day the Superintendent becomes aware of the transaction.

  • Marginal note:Certificate

    (3) For the purposes of subsection (2), a document purporting to have been issued by the Superintendent, certifying the day on which the Superintendent became aware of the transaction, shall, in the absence of evidence to the contrary, be received in evidence as conclusive proof of that fact without proof of the signature or of the official character of the person appearing to have signed the document and without further proof.

  • 1991, c. 48, s. 430
  • 2001, c. 9, s. 322

PART XIIIRegulation of Associations — Superintendent

Supervision

Returns

Marginal note:Required information

 An association shall provide the Superintendent with such information, at such times and in such form as the Superintendent may require.

 [Repealed, 2007, c. 6, s. 180]

 [Repealed, 2007, c. 6, s. 180]

 [Repealed, 2007, c. 6, s. 180]

Marginal note:Names of directors and auditors

  •  (1) An association shall, within thirty days after each annual meeting of the association, provide the Superintendent with a return showing

    • (a) the name, residence and citizenship of each director holding office immediately following the meeting;

    • (b) the mailing address of each director holding office immediately following the meeting;

    • (c) the bodies corporate of which each director referred to in paragraph (a) is an officer or director and the firms of which each director is a member;

    • (d) the names of the directors referred to in paragraph (a) who are officers or employees of the association or any subsidiary of the association, and the positions they occupy;

    • (e) the name of each committee of the association on which each director referred to in paragraph (a) serves;

    • (f) the date of expiration of the term of each director referred to in paragraph (a); and

    • (g) the name, address and date of appointment of the auditor of the association.

  • Marginal note:Changes

    (2) Where

    • (a) any information relating to a director or auditor of an association shown in the latest return made to the Superintendent under subsection (1), other than information referred to in paragraph (1)(c), becomes inaccurate or incomplete,

    • (b) a vacancy in the position of auditor of the association occurs or is filled by another person, or

    • (c) a vacancy on the board of directors of the association occurs or is filled,

    the association shall forthwith provide the Superintendent with such information as is required to maintain the return in a complete and accurate form.

Marginal note:Copy of by-laws

 An association shall send to the Superintendent within thirty days after the coming into effect of a by-law or an amendment to a by-law, a copy of the by-law or amendment.

  • 1991, c. 48, s. 433
  • 2001, c. 9, s. 325

Marginal note:Register of associations

  •  (1) The Superintendent shall, in respect of each association, cause a register to be maintained containing a copy of

    • (a) the incorporating instrument of the association; and

    • (b) the information referred to in paragraphs 432(1)(a) and (c) to (g) contained in the latest return sent to the Superintendent under section 432.

  • Marginal note:Form

    (2) The register may be maintained in

    • (a) a bound or loose-leaf form or in a photographic film form; or

    • (b) a system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.

  • Marginal note:Access

    (3) Persons are entitled to reasonable access to the register and may make copies of or take extracts from the information in it.

  • Marginal note:Evidence

    (4) A statement containing information in the register and purporting to be certified by the Superintendent is admissible in evidence in all courts as proof, in the absence of evidence to the contrary, of the facts stated in the statement without proof of the appointment or signature of the Superintendent.

  • 1991, c. 48, s. 434
  • 2001, c. 9, s. 325

Marginal note:Confidential information

  •  (1) Subject to section 436, all information regarding the business or affairs of an association, or regarding a person dealing with an association, that is obtained by the Superintendent, or by any person acting under the direction of the Superintendent, as a result of the administration or enforcement of any Act of Parliament, and all information prepared from that information, is confidential and shall be treated accordingly.

  • Marginal note:Disclosure permitted

    (2) Nothing in subsection (1) prevents the Superintendent from disclosing any information

    • (a) to any government agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision,

    • (a.1) to any other agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision,

    • (a.2) to the Canada Deposit Insurance Corporation for purposes related to its operation, and

    • (b) to the Deputy Minister of Finance or any officer of the Department of Finance authorized in writing by the Deputy Minister of Finance or to the Governor of the Bank of Canada or any officer of the Bank of Canada authorized in writing by the Governor of the Bank of Canada, for the purposes of policy analysis related to the regulation of financial institutions,

    if the Superintendent is satisfied that the information will be treated as confidential by the agency, body or person to whom it is disclosed.

  • 1991, c. 48, s. 435
  • 1997, c. 15, s. 158
  • 2001, c. 9, s. 326

Marginal note:Regulations

 The Governor in Council may make regulations prohibiting, limiting or restricting the disclosure by associations of prescribed supervisory information.

  • 1999, c. 28, s. 117

Marginal note:Evidentiary privilege

  •  (1) Prescribed supervisory information shall not be used as evidence in any civil proceedings and is privileged for that purpose.

  • Marginal note:No testimony or production

    (2) No person shall by an order of any court, tribunal or other body be required in any civil proceedings to give oral testimony or to produce any document relating to any prescribed supervisory information.

  • Marginal note:Exceptions to subsection (1)

    (3) Despite subsection (1),

    • (a) the Minister, the Superintendent or the Attorney General of Canada may, in accordance with the regulations, if any, use prescribed supervisory information as evidence in any proceedings; and

    • (b) an association may, in accordance with the regulations, if any, use prescribed supervisory information as evidence in any proceedings in relation to the administration or enforcement of this Act or the Winding-up and Restructuring Act that are commenced by the association, the Minister, the Superintendent or the Attorney General of Canada.

  • Marginal note:Exceptions to subsections (1) and (2)

    (4) Despite subsections (1) and (2) and section 39.1 of the Office of the Superintendent of Financial Institutions Act, a court, tribunal or other body may, by order, require the Minister, the Superintendent or an association to give oral testimony or to produce any document relating to any prescribed supervisory information in any civil proceedings in relation to the administration or enforcement of this Act that are commenced by the Minister, the Superintendent, the Attorney General of Canada or the association.

  • Marginal note:No waiver

    (5) The disclosure of any prescribed supervisory information, other than under subsection (3) or (4), does not constitute a waiver of the privilege referred to in subsection (1).

  • Marginal note:Regulations

    (6) The Governor in Council may, for the purposes of subsection (3), make regulations respecting the circumstances in which prescribed supervisory information may be used as evidence.

  • 2001, c. 9, s. 327
  • 2007, c. 6, s. 181
  • 2015, c. 36, s. 238
 
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