Insurance Companies Act (S.C. 1991, c. 47)

Aggregate Limit

Marginal note:Aggregate limit

983 An insurance holding company shall not, and shall not permit its prescribed subsidiaries to,

• (a) purchase or otherwise acquire

  • (i) participating shares of a body corporate, other than those of a permitted entity in which the insurance holding company has, or by virtue of the acquisition would have, a substantial investment,

  • (ii) ownership interests in an unincorporated entity, other than ownership interests in a permitted entity in which the insurance holding company has, or by virtue of the acquisition would have, a substantial investment, or

  • (iii) interests in real property, or

• (b) make an improvement to real property in which the insurance holding company or any of its prescribed subsidiaries has an interest

if the aggregate value of

• (c) all participating shares and ownership interests referred to in subparagraphs (a)(i) and (ii) that are beneficially owned by the insurance holding company and its prescribed subsidiaries, and

• (d) all interests of the insurance holding company in real property referred to in subparagraph (a)(iii)

exceeds, or the acquisition or the making of the improvement would cause that aggregate value to exceed, an amount determined in accordance with the regulations.

Miscellaneous

Marginal note:Regulations

984 For the purposes of this Division, the Governor in Council may make regulations

• (a) defining the interests of an insurance holding company in real property;

• (b) determining the method of valuing those interests;

• (c) exempting classes of insurance holding companies from the application of sections 978 to 983; or

• (d) respecting the determination of an amount for the purpose of each of sections 981, 982 and 983.

Marginal note:Divestment order

• 985 (1) The Superintendent may, by order, direct an insurance holding company to dispose of, within any period that the Superintendent considers reasonable, any loan, investment or interest made or acquired in contravention of this Division.

• Marginal note:Divestment order

  (2) If, in the opinion of the Superintendent,

  • (a) an investment by an insurance holding company or any entity it controls in shares of a body corporate or in ownership interests in an unincorporated entity enables the insurance holding company to control the body corporate or the unincorporated entity, or

  • (b) the insurance holding company or any entity it controls has entered into an arrangement whereby it or its nominee may veto any proposal put before

    • (i) the board of directors of a body corporate, or

    • (ii) a similar group or committee of an unincorporated entity,

    or whereby no proposal may be approved except with the consent of the insurance holding company, the entity it controls or the nominee,

  the Superintendent may, by order, require the insurance holding company, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the insurance holding company no longer controls the body corporate or unincorporated entity or has the ability to veto or otherwise defeat any proposal referred to in paragraph (b).

• Marginal note:Divestment order

  (3) If

  • (a) an insurance holding company

    • (i) fails to provide or obtain within a reasonable time the undertakings referred to in subsection 973(1), (2) or (4), or

    • (ii) is in default of an undertaking referred to in subsection 973(1) or (2) and the default is not remedied within ninety days after the day of receipt by the insurance holding company of a notice from the Superintendent of the default, or

  • (b) a permitted entity referred to in subsection 973(4) is in default of an undertaking referred to in subsection 973(4) and the default is not remedied within ninety days after the day of receipt by the insurance holding company of a notice from the Superintendent of the default,

  the Superintendent may, by order, require the insurance holding company, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the insurance holding company no longer has a substantial investment in the entity to which the undertaking relates.

• Marginal note:Exception

  (4) Subsection (2) does not apply in respect of an entity in which an insurance holding company has a substantial investment permitted by this Division.

Marginal note:Deemed temporary investment

986 If an insurance holding company controls or has a substantial investment in an entity as permitted by this Division and the insurance holding company becomes aware of a change in the business or affairs of the entity that, if the change had taken place before the acquisition of control or of the substantial investment, would have caused the entity not to be a permitted entity or would have been such that approval for the acquisition would have been required under subsection 971(5) or (6), the insurance holding company is deemed to have acquired, on the day the insurance holding company becomes aware of the change, a temporary investment in respect of which section 974 applies.

Marginal note:Asset transactions

• 987 (1) An insurance holding company shall not, and shall not permit its subsidiaries to, without the approval of the Superintendent, acquire assets from a person or transfer assets to a person if

  A + B > C

  where

  A

  is the value of the assets;

  B

  is the total value of all assets that the insurance holding company and its subsidiaries acquired from or transferred to that person in the twelve months ending immediately before the acquisition or transfer; and

  C

  is ten per cent of the total value of the assets of the insurance holding company, as shown in the last annual statement of the insurance holding company prepared before the acquisition or transfer.

• Marginal note:Approval of series of transactions

  (1.1) The Superintendent may, for the purposes of subsection (1), approve a transaction or series of transactions relating to the acquisition or transfer of assets that may be entered into with a person, or with persons of any class of persons, regardless of whether those persons are known at the time of the granting of the approval or not.

• Marginal note:Exception

  (2) Subsection (1) does not apply in respect of

  • (a) an asset that is a debt obligation referred to in subparagraphs (b)(i) to (v) of the definition commercial loan in subsection 490(1); or

  • (b) assets acquired or transferred under a transaction or series of transactions by a subsidiary of the insurance holding company with a financial institution as a result of the subsidiary’s participation in one or more syndicated loans with that financial institution.

• Marginal note:Exception

  (3) The approval of the Superintendent is not required if

  • (a) the insurance holding company or its subsidiary acquires shares of, or ownership interests in, an entity for which the approval of the Minister under Division 7 or subsection 971(5) is required or the approval of the Superintendent under subsection 971(6) is required; or

  • (b) the transaction has been approved by the Minister under subsection 715(1) of this Act or subsection 678(1) of the Bank Act.

• Marginal note:Value of assets

  (4) For the purposes of “A” in subsection (1), the value of the assets is

  • (a) in the case of assets that are acquired, the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which will be included in the annual statement of the insurance holding company after the acquisition, the fair market value of the assets; and

  • (b) in the case of assets that are transferred, the value of the assets as reported in the last annual statement of the insurance holding company prepared before the transfer or, if the value of the assets is not reported in that annual statement, the value of the assets as it would be reported in the annual statement of the insurance holding company if the annual statement had been prepared, in accordance with the accounting principles referred to in subsection 887(4), immediately before the transfer.

• Marginal note:Total value of all assets

  (5) For the purposes of subsection (1), the total value of all assets that the insurance holding company or any of its subsidiaries has acquired during the period of twelve months referred to in subsection (1) is the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which immediately after the acquisition were included in the annual statement of the insurance holding company, the fair market value of the assets of the entity at the date of the acquisition.

• Marginal note:Total value of all assets

  (6) For the purposes of subsection (1), the total value of all assets that the insurance holding company or any of its subsidiaries has transferred during the 12-month period referred to in subsection (1) is the total of the value of each of those assets as reported in the last annual statement of the insurance holding company prepared before the transfer of the asset or, if the value of any of those assets is not reported in that annual statement, as it would be reported in the annual statement of the insurance holding company if the annual statement had been prepared, in accordance with the accounting principles referred to in subsection 887(4), immediately before the transfer of the asset.

Marginal note:Transitional

988 Nothing in this Division requires

• (a) the termination of a loan made before February 7, 2001;

• (b) the termination of a loan made after that date as a result of a commitment made before that date;

• (c) the disposal of an investment made before that date; or

• (d) the disposal of an investment made after that date as a result of a commitment made before that date.

But if the loan or investment would be precluded or limited by this Division, the amount of the loan or investment may not be increased after that date.

Marginal note:Saving

989 A loan or investment referred to in section 988 is deemed not to be prohibited by the provisions of this Division.

Meaning of non-insurance entity

• 990 (1) Subject to subsection (2), for the purpose of section 991, non-insurance entity means a Canadian entity, other than a company, that is controlled by an insurance holding company or in which an insurance holding company has a substantial investment.

• Marginal note:Exception

  (2) A Canadian entity is not a non-insurance entity by reason only that a subsidiary of an insurance holding company that is a company that controls, or has a substantial investment, in the Canadian entity.

Marginal note:Disclosure of status

• 991 (1) A non-insurance entity that carries on as part of its business the provision of financial services shall not borrow money in Canada from the public without disclosing that the non-insurance entity is not regulated as a financial institution in Canada.

• Marginal note:Manner of disclosure

  (2) The disclosure shall be

  • (a) in a prospectus, information circular or other offering document related to the borrowing or in a similar document related to the borrowing or, if there is no such document, in a statement delivered to the lender; or

  • (b) in any other manner that may be prescribed.

• Marginal note:Exception for certain borrowings

  (3) Subsection (1) does not apply

  • (a) to a borrowing of a prescribed class or type or to a borrowing in prescribed circumstances or in a prescribed manner; or

  • (b) except as may be provided in any regulations, to a borrowing

    • (i) from a person in an amount of $150,000 or more, or

    • (ii) through the issue of instruments in denominations of $150,000 or more.

• Marginal note:Exception

  (4) Subsection (1) does not apply if the non-insurance entity is

  • (a) an insurance holding company or a bank holding company;

  • (b) a bank;

  • (c) an entity that is controlled by a bank holding company or in which a bank holding company has a substantial investment;

  • (d) a trust, loan or insurance corporation incorporated under an Act of Parliament or of the legislature of a province;

  • (e) a financial institution that is described in paragraph (g) of the definition financial institution in section 2;

  • (f) an entity referred to in paragraph 971(1)(f) or (h); or

  • (g) a prescribed entity.

DIVISION 10Adequacy of Capital and Liquidity

Marginal note:Adequacy of capital and liquidity

• 992 (1) An insurance holding company shall, in relation to its business, maintain

  • (a) adequate capital, and

  • (b) adequate and appropriate forms of liquidity,

  and comply with any regulations in relation to capital and liquidity.

• Marginal note:Regulations and guidelines

  (2) The Governor in Council may make regulations and the Superintendent may make guidelines respecting the maintenance by an insurance holding company of adequate capital and adequate and appropriate forms of liquidity.

• Marginal note:Directives

  (3) Even if an insurance holding company is complying with regulations or guidelines made under subsection (2), the Superintendent may, by order, direct the insurance holding company

  • (a) to increase its capital; or

  • (b) to provide additional liquidity in such forms and amounts as the Superintendent may require.

• Marginal note:Compliance

  (4) An insurance holding company shall comply with an order made under subsection (3) within the time specified by the Superintendent in the order.

DIVISION 11Regulation of Insurance Holding Companies

Supervision

Returns

Marginal note:Required information

993 An insurance holding company shall provide the Superintendent with such information, at such times and in such form as the Superintendent may require.

Marginal note:Names of directors and auditors

• 994 (1) An insurance holding company shall, within thirty days after each annual meeting of the insurance holding company, 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 insurance holding company or any affiliate of the insurance holding company, and the positions they occupy;

  • (e) the name of each committee of the insurance holding company 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 insurance holding company.

• Marginal note:Changes

  (2) Where

  • (a) any information relating to a director or auditor of an insurance holding company 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 insurance holding company occurs or is filled by another person, or

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

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