Solvency Funding Relief Regulations, 2009

22 (1) A letter of credit required by this Part shall be an irrevocable, unconditional standby letter of credit that

• (a) is in accordance with the rules of International Standby Practices 1998 (publication No. 590 of the International Chamber of Commerce), as amended from time to time;

• (b) is payable only in Canadian currency;

• (c) is issued or confirmed by an issuer who is a member of the Canadian Payments Association; and

• (d) provides that

  • (i) the letter of credit is made out to the holder’s benefit,

  • (ii) the issuer will pay the face amount of the letter of credit on demand from the holder without inquiring whether the holder has a right to make the demand,

  • (iii) the bankruptcy of the employer shall have no effect on the rights and obligations of the issuer and the holder set out in the letter of credit,

  • (iv) the letter of credit will expire on the day on which the plan’s year ends,

  • (v) the letter of credit will automatically be renewed for the full face amount for further one-year periods on the expiry date referred to in subparagraph (iv) unless the issuer notifies the holder, in writing, of the non-renewal not less than 90 days before the expiry date, and

  • (vi) the letter of credit may not be amended, except to increase the face amount, during the term of the letter of credit and may not be assigned except to another holder.

(2) The initial letter of credit for funding under this Part shall be obtained by the end of the 2009 plan year and each subsequent letter of credit shall be obtained at least 30 days before the beginning of each subsequent plan year that is covered by it.

(3) The letter of credit shall immediately be provided to the holder.

(4) Subsection 5(4) shall not apply in respect of a plan if the letters of credit are obtained in accordance with this Part.