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The Corporations Amendment Act

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S.M. 1997, c. 26

THE CORPORATIONS AMENDMENT ACT


 

(Assented to June 28, 1997)

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:

C.C.S.M. c. C225 amended

1         The Corporations Act is amended by this Act.

2         Section 154 is amended

(a) by repealing clause (1)(b) and subsections (2), (3) and (5); and

(b) in subsection (6) by striking out ", and a subsidiary corporation is not exempted from this requirement by subsection (5)".

3         Subsection 254(1) is amended by adding the following after clause (h.2):

(h.3) respecting the determination of the amount or value of loans, investments and interests for the purposes of Division IV of Part XXIV;

(h.4) respecting the loans and investments, and the maximum aggregate amount of all loans and investments, that may be made or acquired by a corporation and its prescribed subsidiaries to or in a person and any persons connected with that person;

(h.5) specifying the classes of persons who are connected with any persons for the purposes of clause (h.4);

(h.6) permitting a corporation to acquire or increase a substantial investment for the purposes of clause 329.5(4)(c);

(h.7) permitting a corporation to divest itself of shares for the purposes of subsection 329.5(5);

(h.8) restricting the ownership by a corporation of shares of a body corporate or interests in a real property holding vehicle pursuant to sections 329.5 to 329.10 and imposing terms and conditions applicable to corporations that own such shares or interests;

(h.9) determining the method of valuing a corporation's interests in real property for the purposes of Division IV of Part XXIV;

(h.10) determining a method of allocating costs for the purposes of subsection 359(1);

4         Section 315 is amended

(a) by repealing the definition "superintendent"; and

(b) by adding the following definitions in alphabetical order:

"entity" means

(a) a body corporate,

(b) a trust,

(c) a partnership,

(d) a fund,

(e) an unincorporated association or organization,

(f) Her Majesty in the right of Canada or of a province,

(g) an agency of Her Majesty in the right of Canada or of a province, or

(h) the government of, or of a political subdivision of, a foreign country or any agency thereof; (« entité »)

"financial institution" means

(a) a bank to which the Bank Act (Canada) applies,

(b) an association to which the Cooperative Credit Associations Act (Canada) applies,

(c) an insurance company or a fraternal benefit society to which the Insurance Companies Act (Canada) applies,

(d) a trust, loan or insurance corporation incorporated by or under an Act of the Parliament of Canada, of the Legislature or of the legislature of another province of Canada,

(e) a cooperative credit society incorporated and regulated by or under an Act of the Legislature or of the legislature of another province of Canada,

(f) an entity that is incorporated or formed by or under an Act of the Parliament of Canada, of the Legislature or of the legislature of another province of Canada and that is primarily engaged in dealing in securities, including portfolio management and investment counselling, and

(g) an entity that is

(i) engaged in the business of banking, the trust, loan or insurance business, the business of a cooperative credit society or the business of dealing in securities or is otherwise engaged primarily in the business of providing financial services, and

(ii) incorporated or formed otherwise than by or under an Act of the Parliament of Canada, of the Legislature or of the legislature of another province of Canada; (« établissement financier »)

5(1)      Subsection 317(1) is amended

(a) by striking out "A corporation is authorized to apply for deposit insurance under the Canada Deposit Insurance Corporation Act" and substituting "The Director may authorize a corporation to apply to the Canada Deposit Insurance Corporation for deposit insurance"; and

(b) by striking out "for the purposes of that Act" and substituting "for the purposes of the Canada Deposit Insurance Corporation Act".

5(2)      Subsection 317(4) is amended by striking out "$1,000,000." and substituting "$5,000,000.".

6         Subsection 319(1) is repealed and the following is substituted:

Amalgamation

319(1)    Two or more bodies corporate, of which at least one is a corporation, may amalgamate and continue as one corporation or extra-provincial corporation, except that, if any of the bodies corporate being amalgamated is required to be insured under subsection 317(1), the Director shall not issue a certificate of amalgamation unless the Canada Deposit Insurance Corporation confirms in writing that either

(a) an existing policy of deposit insurance relating to one of the bodies corporate will continue in force in relation to the corporation or extra-provincial corporation; or

(b) a new policy of deposit insurance will be issued to the corporation or extra-provincial corporation.

7(1)      Subsection 321(1) is repealed and the following is substituted:

Capital requirements

321(1)    The authorized capital of a corporation

(a) that intends to accept deposits from the public within the meaning of the Canada Deposit Insurance Corporation Act shall not be less than $5,000,000.; or

(b) that is a trust corporation whose business authorization will be subject to a condition prohibiting it from carrying on any deposit-taking business shall not be less than $2,000,000.

7(2)       Subsection 321(2) is amended by striking out "superintendent" and substituting "Director".

7(3)      Subsection 321(5) is repealed and the following is substituted:

Directors need not hold shares

321(5)    Unless the articles or by-laws of a corporation otherwise provide, a director of the corporation is not required to hold shares issued by the corporation.

8         Subsection 322(4) is amended by striking out "superintendent" and substituting "Director".

9(1)      Subsection 323(1) is repealed and the following is substituted:

Security not necessary

323(1)    A trust corporation or extra-provincial trust corporation with a business authorization may be appointed to execute the office of executor, administrator, trustee, receiver, liquidator, assignee, guardian, substitute decision maker for property under The Vulnerable Persons Living with a Mental Disability Act or committee, by the Court of Queen's Bench, and it is not necessary for the trust corporation or extra-provincial trust corporation to give security for the due performance of the duty of that office.

9(2)      Subsection 323(2) is amended

(a) by repealing the section heading and substituting "Appointment as trustee, etc."; and

(b) by adding "or extra-provincial trust corporation" after "trust corporation" wherever it occurs.

9(3)      Subsection 323(3) is repealed.

10        The heading for Division IV of Part XXIV is amended by striking out ", PURCHASES".

11        Sections 328 and 329 are repealed.

12        The following is added after section 329:

Definitions

329.1(1)  In this Division,

"commercial loan"means

(a) any loan made or acquired by a corporation or any investment in debt obligations, other than

(i) a loan to a natural person in an amount of $250,000. or less,

(ii) a loan to or debt obligation issued by the Government of Canada, the government of a province of Canada or a municipality, or to or by any agency of any of them, or to or by the government of a foreign country or a political subdivision of a foreign country, or any agency thereof, or to or by an international agency prescribed in the regulations,

(iii) a loan or debt obligation that is guaranteed by, or fully secured by securities issued by, a government, a municipality or an agency referred to in subclause (ii),

(iv) a loan that is secured by a mortgage on real property

(A) where the mortgage is on residential property and the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, does not exceed 75% of the value of the property at the time the loan is made, or

(B) where the mortgage is on a real property other than residential property and the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, does not exceed 75% of the value of the property at the time the loan is made and the property provides an annual income sufficient to pay all annual expenses related to the property, including the payments owing under the mortgage, and the mortgages having an equal or prior claim against the property,

(v) a loan that is secured by a mortgage on real property and the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, exceeds 75% of the value of the property at the time the loan is made if repayment of the amount of the loan that exceeds 75% of the value of the property is guaranteed or insured by an agency of the government of the country in which the real property is situated or of a province or state of that country or a private insurer approved by the Director,

(vi) a loan or debt obligation that

(A) consists of a deposit made by the corporation with another financial institution,

(B) is fully secured by a deposit with any financial institution, including the corporation,

(C) is fully secured by debt obligations guaranteed by any financial institution other than the corporation, or

(D) is guaranteed by any financial institution other than the corporation, or

(vii) debt obligations that are widely distributed, as that expression is defined by the regulations,

(b) an investment in shares of a body corporate or ownership interests in an unincorporated entity, other than

(i) shares or ownership interests that are widely distributed, as that expression is defined by the regulations, and

(ii) participating shares,

(c) financial leasing, and

(d) any other prescribed investment; (« prêt commercial »)

"debt obligation" means a bond, debenture, note or other evidence of indebtedness of an entity, whether secured or unsecured; (« titre de créance »)

"factoring body corporate" means a body corporate the activities of which are limited to acting as a factor in respect of accounts receivable, which activities include the raising of money for the purpose of acting as a factor and the lending of money while acting as such a factor; (« personne morale d'affacturage »)

"financial leasing body corporate" means a body corporate

(a) the activities of which are limited to the financial leasing of personal property and such related activities as are prescribed and whose activities conform to such restrictions and limitations thereon as are prescribed, and

(b) that, in conducting the activities referred to in clause (a) in Canada, does not direct its customers or potential customers to particular dealers in the leased property or the property to be leased; (« personne morale de crédit-bail »)

"information processing services" means the collection, manipulation and transmission of information that is primarily financial or economic in nature or that relates to the business of an entity referred to in any of clauses 329.5(2)(a) to (n) or subsection 329.5(3) or any other information that the Director may, by order, specify; (« services de traitement des données »)

"information services body corporate" means a body corporate that, except as may be prescribed, is primarily engaged in

(a) providing information processing services,

(b) providing advisory and other services in the design, development and implementation of information management systems, or

(c) designing, developing and marketing computer software,

and the activities of which may include, as an ancillary activity, the design, development, manufacture or sale of special purpose computer hardware; (« personne morale d'information  »)

"investment counselling and portfolio management body corporate" means a body corporate the principal activity of which consists of

(a) the offering of advice, or advising, on investments, or

(b) the investment or control, in any way that involves an element of discretionary judgment by the body corporate, of money, property, deposits or securities that

(i) are not owned by the body corporate, or

(ii) are not moneys deposited with the body corporate in the ordinary course of business; (« personne morale de conseil en placement et de gestion de portefeuille »)

"loan" includes an acceptance, endorsement or other guarantee, a deposit, a financial lease, a conditional sales contract, a repurchase agreement and any other similar arrangement for obtaining funds or credit but does not include investments in securities; (« prêt » ou « emprunt »)

"mutual fund body corporate" means a body corporate whose activities are limited to the investing of the funds of the body corporate, and includes a body corporate that is an issuer of securities that entitle the holder to receive, on demand, or within a specified period after demand, an amount computed by reference to the value of a proportionate interest in the whole or in a part of the net assets, including a separate fund or trust account, of the issuer of the securities; (« personne morale de fonds mutuel »)

"mutual fund distribution body corporate" means a body corporate whose principal activity is acting as a selling agent of units, shares or other interests in a mutual fund and acting as a collecting agent in the collection of payments for any such interests if

(a) the proceeds of the sales of any such interests, less any sales commissions and service fees, are paid to the fund, and

(b) the existence of a sales commission and service fee in respect of the sale of any such interest is disclosed to the purchaser of the interest prior to the purchase thereof; (« personne morale de courtage de fonds mutuels »)

"participating share" means a share of a body corporate that carries the right to participate in the earnings of the body corporate to an unlimited degree and to participate in a distribution of the remaining property of the body corporate on dissolution; (« action participante »)

"prescribed subsidiary" means a subsidiary that is one of a prescribed class of subsidiaries; (« filiale réglementaire »)

"real property body corporate" means a body corporate that is primarily engaged in holding, managing or otherwise dealing with real property or shares of a body corporate or ownership interests in an unincorporated entity that is also primarily engaged in holding or otherwise dealing with real property, including another real property body corporate or a real property holding vehicle; (« personne morale de biens réels »)

"real property brokerage body corporate" means a body corporate that is primarily engaged in

(a) acting as an agent for vendors, purchasers, mortgagors, mortgagees, lessors or lessees of real property, and

(b) the provision of consulting or appraisal services in respect of real property; (« personne morale de courtage de biens réels »)

"real property holding vehicle" means a limited partnership or a trust that is primarily engaged in holding, managing or otherwise dealing with real property or shares of a body corporate or ownership interests in an unincorporated entity that is also primarily engaged in holding or otherwise dealing with real property, including a real property body corporate or another real property holding vehicle;  (« société d'opérations sur biens réels »)

"service body corporate", in relation to a corporation, means a body corporate that engages exclusively in the provision of services to any or all of the following:

(a) the corporation,

(b) any entity in which the corporation has a substantial investment,

(c) a financial institution that is affiliated with the corporation,

(d) any entity in which a financial institution referred to in clause (c) has a substantial investment,

(e) any other Canadian financial institution that has a substantial investment in the service body corporate,

(f) any entity in which any Canadian financial institution referred to in clause (e) has a substantial investment,

(g) any financial institution that is affiliated with any Canadian financial institution referred to in clause (e), and

(h) any entity in which a financial institution referred to in clause (g) has a substantial investment,

so long as the body corporate is providing services to the corporation or any of the entities referred to in clauses (b) to (d); (« personne morale de services »)

"special purpose computer hardware" means computer equipment that is not generally available and that is integral to the provision of

(a) financial services, or

(b) information services related to the business of financial institutions; (« matériel informatique spécial »)

"specialized financing body corporate" means a body corporate that is primarily engaged, under prescribed terms and conditions, in providing specialized business management, in making investments or in providing financing or advisory services.  « personne morale de financement spécial »)

Body corporate holding shares

329.1(2)  For the purposes of this Division, a factoring body corporate, a financial leasing body corporate, an information services body corporate, an investment counselling and portfolio management body corporate, a mutual fund body corporate, a mutual fund distribution body corporate, a real property brokerage body corporate, a service body corporate and a specialized financing body corporate includes any such body corporate that also

(a) holds shares of another body corporate of the same type; or

(b) holds shares of a financial holding body corporate referred to in clause 329.5(2)(l).

Control

329.1(3)  For the purposes of this Division and Division VIII,

(a) a person controls a body corporate if securities of the body corporate to which are attached more than 50% of the votes that may be cast to elect directors of the body corporate are beneficially owned by the person and the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the body corporate;

(b) a person controls an unincorporated entity, other than a limited partnership, if more than 50% of the ownership interests, however designated, into which the entity is divided are beneficially owned by that person and the person is able to direct the business and affairs of the entity;

(c) the general partner of a limited partnership controls the limited partnership; and

(d) a person controls an entity if the person has any direct or indirect influence that, if exercised, would result in control in fact of the entity.

Deemed control

329.1(4)  A person who controls an entity is deemed to control any entity that is controlled, or deemed to be controlled, by the entity.

Deemed control

329.1(5)  A person is deemed to control an entity where the aggregate of

(a) any securities of the entity that are beneficially owned by that person; and

(b) any securities of the entity that are beneficially owned by any entity controlled by that person;

is such that, if that person and all of the entities referred to in clause (b) that beneficially own securities of the entity were one person, that person would control the entity.

Subsidiary

329.1(6)  A body corporate is a subsidiary of another body corporate if it is controlled, determined without regard to clause (3)(d), by the other body corporate.

Substantial investment in body corporate

329.1(7)  A person has a substantial investment in a body corporate where

(a) the voting rights attached to the aggregate of any voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person exceed 10% of the voting rights attached to all of the outstanding voting shares of the body corporate; or

(b) the aggregate of any shares of the body corporate beneficially owned by the person and by any entities controlled by the person represents ownership of greater than 25% of the shareholders' equity of the body corporate.

Non-application to shares of securities underwriter

329.1(8)  For the purposes of this section,

(a) in computing the percentage of voting rights attached to voting shares owned by a securities underwriter, there shall be excluded the voting rights attached to voting shares; and

(b) in computing the percentage of shareholders' equity comprised by shares of a body corporate beneficially owned by a securities underwriter and by any entities controlled by him or her, there shall be excluded shares;

acquired by him or her as an underwriter during the course of a distribution to the public by him or her of those shares.

Increasing substantial investment

329.1(9)  A person who has a substantial investment in a body corporate pursuant to clause (8)(a) increases that substantial investment when the person or any entity controlled by the person

(a) acquires beneficial ownership of additional voting shares of the body corporate in such number as to increase the percentage of voting rights attached to the aggregate of the voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person; or

(b) acquires control of any entity that beneficially owns any voting shares of the body corporate in such number as to increase the percentage of voting rights attached to the aggregate of the voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person.

Increasing substantial investment

329.1(10) A person who has a substantial investment in a body corporate pursuant to clause (8)(b) increases that substantial investment when the person or any entity controlled by the person

(a) acquires beneficial ownership of additional shares of the body corporate in such number as to increase the percentage of the shareholders' equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person; or

(b) acquires control of any entity that beneficially owns any shares of the body corporate in such number as to increase the percentage of the shareholders' equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person.

New substantial investment

329.1(11) For greater certainty,

(a) where a person has a substantial investment in a body corporate pursuant to clause (8)(a) and the person, or any entity controlled by the person,

(i) purchases or otherwise acquires beneficial ownership of shares of the body corporate, or

(ii) acquires control of any entity that beneficially owns shares of the body corporate,

in such number as to cause the shareholders' equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person to exceed 25% of the shareholders' equity of the body corporate; or

(b) where a person has a substantial investment in a body corporate pursuant to clause (8)(b) and the person or any entity controlled by the person

(i) purchases or otherwise acquires beneficial ownership of voting shares of the body corporate, or

(ii) acquires control of any entity that beneficially owns voting shares of the body corporate,

in such number as to cause the voting rights attached to the aggregate of the voting shares beneficially owned by the person and by any entities controlled by the person to exceed 10% of the voting rights attached to all of the outstanding voting shares of the body corporate;

the acquisition is deemed to cause the person to increase a substantial investment in the body corporate.

Substantial investment in unincorporated entity

329.1(12) A person has a substantial investment in an unincorporated entity where the aggregate of any ownership interests, however designated, into which the entity is divided, beneficially owned by the person and by any entities controlled by the person exceeds 25% of all of the ownership interests into which the entity is divided.

Non-application to interests of securities underwriter

329.1(13) For the purposes of this section, in computing the percentage of ownership interests in an unincorporated entity comprised by ownership interests in the entity beneficially owned by a securities underwriter and by any entities controlled by him or her, there shall be excluded ownership interests acquired by him or her as an underwriter during the course of a distribution to the public by him or her of those interests.

Increasing substantial investment

329.1(14) A person who has a substantial investment in an unincorporated entity increases that substantial investment when the person or any entity controlled by the person

(a) acquires beneficial ownership of additional ownership interests in the unincorporated entity in such number as to increase the percentage of ownership interests in the unincorporated entity beneficially owned by the person and by any entities controlled by the person; or

(b) acquires control of any entity that beneficially owns ownership interests in the unincorporated entity in such number as to increase the percentage of ownership interests beneficially owned by the person and by any entities controlled by the person.

Non-application of Division

329.2     This Division does not apply in respect of

(a) money or other assets held in trust by a corporation, other than guaranteed trust money and assets held in respect thereof;

(b) the holding of a security interest in real property, unless the security interest is prescribed to be an interest in real property; or

(c) the holding of a security interest in securities of an entity.

Investment standards

329.3      The directors of a corporation shall establish and the corporation shall adhere to investment and lending policies, standards and procedures that a reasonable and prudent person would apply in respect of a portfolio of investments and loans to avoid undue risk of loss and obtain a reasonable return.

Restriction on substantial investments

329.4(1)  No corporation shall acquire or increase a substantial investment in any entity, except as provided in section 329.5 or 329.6 unless the substantial investment was acquired or increased by way of

(a) an acquisition of control of a financial institution or specialized financing body corporate that has a substantial investment in the entity;

(b) an acquisition of shares of or ownership interests in the entity by a financial institution or a specialized financing body corporate that is controlled by the corporation;

(c) a temporary investment permitted by section 329.8;

(d) an acquisition of shares of a body corporate or of ownership interests in an unincorporated entity permitted by section 329.9; or

(e) a realization of security permitted by section 329.10.

Exception for an uncontrolled event

329.4(2)  A corporation shall be deemed not to contravene subsection (1) where the corporation acquires a substantial investment solely as the result of an event not within the control of the corporation.

Definition

329.5(1)  In this section "control" means control of a body corporate within the meaning of subsection 329.1(3) determined without regard to clause 329.1(3)(d).

Permitted substantial investments

329.5(2)  Subject to subsection (4) and Division VIII, a corporation may acquire or increase a substantial investment in a body corporate if the body corporate is any of the following:

(a) a financial institution;

(b) a factoring body corporate;

(c) a financial leasing body corporate;

(d) an information services body corporate;

(e) an investment counselling and portfolio management body corporate;

(f) a mutual fund body corporate;

(g) a mutual fund distribution body corporate;

(h) a real property brokerage body corporate;

(i) a real property body corporate;

(j) a service body corporate;

(k) a specialized financing body corporate;

(l) a financial holding body corporate that does not have a substantial investment in any entity except in a body corporate referred to in this subsection or a real property holding vehicle referred to in subsection (3);

(m) a body corporate whose activities are ancillary to the business of the corporation or of a financial institution that is its subsidiary; or

(n) a body corporate that engages in two or more of the businesses or activities engaged in or carried on by bodies corporate referred to in any of clauses (b) to (m).

Real property holding vehicles

329.5(3)  Subject to Division VIII, a corporation may acquire or increase a substantial investment in a real property holding vehicle.

Where control or approval required

329.5(4)  A corporation may not acquire or increase a substantial investment in a body corporate pursuant to subsection (2) unless

(a) the corporation controls the body corporate or would thereby acquire control of the body corporate;

(b) the corporation jointly owns and controls the body corporate or would thereby jointly own or control the body corporate with another financial institution; or

(c) the corporation is permitted by regulations to acquire or increase the substantial investment.

Divestiture of shares

329.5(5)  Where a corporation controls a body corporate referred to in clause (4)(a), the corporation may only divest itself of shares of the body corporate in such number that the result would be that the corporation would no longer control the body corporate but would have a substantial investment in the body corporate if the corporation is permitted to do so by regulations.

Similar activities

329.6(1)  On application in writing by a corporation, the minister may, by order and on such terms and conditions as are specified in the order, deem a body corporate named in the order to be, for all purposes of this Part, a body corporate referred to in any of clauses 329.5(2)(b) to (n) if the activities of the body corporate are substantially similar to those of a body corporate referred to in any of those clauses.

Revocation of order

329.6(2)  Where, in the opinion of the minister, a corporation has failed to comply with any term or condition set out in an order made under subsection (1) or the activities of a body corporate in respect of which an order is made under that subsection are no longer substantially similar to those of a body corporate referred to in any of clauses 329.5(2)(b) to (n), the minister may revoke the order and, where the minister does so, the corporation is deemed to have acquired, on the day the order is revoked a temporary investment in the body corporate in respect of which clause 329.8(1)(b) applies.

Undertakings

329.7(1)  Where a corporation controls a financial institution or a body corporate referred to in any of clauses 329.5(2)(b) to (n), the corporation shall provide the Director with such undertakings as he or she may require regarding

(a) the activities of the financial institution or body corporate; and

(b) access to information about the financial institution or body corporate.

Agreements with other jurisdictions

329.7(2)  The minister may enter into an agreement with the appropriate official or public body responsible for the supervision of financial institutions for Canada or in each province or in any other jurisdiction concerning any matters referred to in clauses (1)(a) and (b) or any other matter the minister deems appropriate.

Access to records

329.7(3)  Notwithstanding any other provision of this Division, a corporation shall not control a body corporate referred to in any of clauses 329.5(2)(a) to (n) unless

(a) where control is acquired after the coming into force of this subsection, in the course of acquiring control or within a reasonable time thereafter; and

(b) in any other case, within a reasonable time after the coming into force of this subsection;

the corporation obtains from the body corporate an undertaking to provide the Director with reasonable access to the records of the body corporate.

Temporary investment in body corporate

329.8(1)  A corporation may, by way of a temporary investment, acquire or increase a substantial investment in a body corporate, subject to the following conditions:

(a) after the acquisition or increase, the voting rights attached to the aggregate of any voting shares of the body corporate beneficially owned by the corporation and by any bodies corporate referred to in any of clauses 329.5(2)(a) to (n) that it controls shall not exceed 50% of the voting rights attached to all of the outstanding voting shares of the body corporate; and

(b) within two years, or such other period as may be specified by the Director after acquiring the substantial investment in the body corporate, the corporation shall do all things necessary to ensure that the corporation no longer has a substantial investment in the body corporate.

Temporary investments in unincorporated entity

329.8(2)  A corporation may, by way of a temporary investment, acquire or increase a substantial investment in an unincorporated entity, but within two years, or such other period as may be specified by the Director after acquiring the substantial investment the corporation shall do all things necessary to ensure that the corporation no longer has a substantial investment in the unincorporated entity.

Transitional

329.8(3)  Notwithstanding subsections (1) and (2), where on the day this section comes into force a corporation had an investment in an entity that is a substantial investment within the meaning of subsections 329.1(7) to (14) and the corporation subsequently increases that substantial investment by way of a temporary investment, the corporation shall, within two years, or such other period as may be specified by the Director, after increasing the substantial investment, do all things necessary to ensure that its substantial investment in the entity is no greater than it was on that day.

Extension

329.8(4)  The Director may, in the case of any particular corporation, extend the period of two years, or the other period specified by the Director, referred to in subsections (1) to (3) for such further period or periods, and on such terms and conditions, as the Director considers necessary.

Exception

329.8(5)  Notwithstanding clause (1)(a), the Director may, on application therefor, by order, and on such terms and conditions as may be specified in the order, permit a corporation to purchase or otherwise acquire, by way of a temporary investment, voting shares of a body corporate in such number that, after the acquisition, the voting rights attached to the aggregate of any voting shares of the body corporate beneficially owned by the corporation and by any bodies corporate referred to in any of clauses 329.5(2)(a) to (n) that it controls exceed 50% of the voting rights attached to all of the outstanding voting shares of the body corporate.

Loan workouts

329.9(1)  Notwithstanding anything in this Division, where a corporation has made a loan to an entity and, pursuant to the terms of the agreement between the corporation and the entity with respect to the loan and any other documents governing the terms of the loan, a default has occurred, the corporation may acquire

(a) where the entity is a body corporate, all or any of the shares of the body corporate;

(b) where the entity is an unincorporated entity, all or any of the ownership interests in the entity;

(c) all or any of the shares or all or any of the ownership interests in any entity that is an affiliate of the entity; or

(d) all or any of the shares of a body corporate that is primarily engaged in holding shares of, ownership interests in or assets acquired from the entity or any of its affiliates;

but the corporation shall within two years after acquiring the shares or ownership interests do all things necessary to ensure that the corporation does not have a substantial investment in any entity referred to in clauses (a) to (d).

Transitional

329.9(2)  Notwithstanding subsection (1), where on the day this section comes into force a corporation had an investment in an entity that is a substantial investment within the meaning of subsections 329.1(7) to (14) and the corporation subsequently increases that substantial investment by way of an investment made pursuant to subsection (1), the corporation shall, within two years after increasing the substantial investment, do all things necessary to ensure that its substantial investment in the entity is no greater than it was on that day.

Extension

329.9(3)  The Director may, in the case of any particular corporation, extend the period of two years referred to in subsections (1) and (2) for such further period or periods, and on such terms and conditions, as the Director considers necessary.

Exception for entities controlled by governments of foreign countries

329.9(4)  Notwithstanding anything in this Division, where a corporation has made a loan to, or holds a debt obligation of, the government of a foreign country or an entity controlled by the government of a foreign country and, pursuant to the terms of the agreement between the corporation and that government or the entity, as the case may be, and any other documents governing the terms of the loan or debt obligation, a default has occurred, the corporation may acquire all or any of the shares of, or ownership interests in, that entity, or in any other entity designated by that government, if the acquisition is part of a debt restructuring program of that government.

Time for holding shares

329.9(5)  Where a corporation acquires any shares or ownership interests, pursuant to subsection (4), the corporation, on such terms and conditions as the Director considers appropriate, may hold those shares or ownership interests for an indeterminate period or for such other period as the Director may specify.

Realizations

329.10(1) Notwithstanding anything in this Part, a corporation may acquire

(a) an investment in a body corporate;

(b) an interest in an unincorporated entity; or

(c) an interest in real property;

if the investment or interest is acquired through the realization of a security interest held by the corporation.

Disposition

329.10(2) Subject to subsection (6), where, pursuant to the realization of a security interest held by a corporation, the corporation acquires a substantial investment in an entity, the corporation shall, within two years after the day on which the substantial investment was acquired, do all things necessary to ensure that the corporation no longer has a substantial investment in the entity.

Transitional

329.10(3) Notwithstanding subsection (2), where on the day this section comes into force a corporation had an investment in an entity that is a substantial investment within the meaning of subsections 329.1(7) to (14) and the corporation subsequently increases that substantial investment by way of a realization of security pursuant to subsection (1), the corporation shall, within two years after increasing the substantial investment, do all things necessary to ensure that its substantial investment in the entity is no greater than it was on that day.

Extension

329.10(4) The Director may, in the case of any particular corporation, extend the period of two years referred to in subsections (2) and (3) for such further period or periods, and on such terms and conditions, as the Director considers necessary.

Exception

329.10(5) Where, pursuant to the realization of a security interest held by a corporation, the corporation acquires or increases a substantial investment in an entity that it would otherwise be permitted to acquire or increase pursuant to section 329.5, the corporation may continue to hold the substantial investment if the approval in writing of the minister is obtained prior to the expiration of the period referred to in subsection (2) or (3), including any extension thereof granted pursuant to subsection (4).

Requirement to sell

329.10(6) Notwithstanding section 30, where a corporation or any of its subsidiaries, through the realization of security, acquires any shares of the corporation or of any body corporate that controls the corporation or any ownership interests in an unincorporated entity that controls the corporation, the corporation shall, or shall cause its subsidiaries to, as the case may be, within six months after the day of the realization, sell or otherwise dispose of the shares or ownership interests.

Exclusion from portfolio limits

329.11(1) Subject to subsection (3), the value of all loans, investments and interests acquired by a corporation and any of its prescribed subsidiaries as a result of a realization of a security interest or pursuant to section 329.9 shall not be included in calculating the value of loans, investments and interests of the corporation and its prescribed subsidiaries under sections 329.12 to 329.17

(a) for a period of 12 years following the day on which the interest was acquired, in the case of an interest in real property; and

(b) for a period of two years following the day on which the loan, investment or interest was acquired, in the case of a loan, investment or interest, other than an interest in real property.

Extension

329.11(2) The Director may, in the case of any particular corporation, extend any period referred to in subsection (1) for such further period or periods, and on such terms and conditions, as the Director considers necessary.

Exceptions

329.11(3) Subsection (1) does not apply to any loan, investment or interest that is defined by regulation to be an interest in real property.

Lending limit where regulatory capital not more than $25,000,000.

329.12    A corporation with $25,000,000. or less of regulatory capital shall not, and shall not permit its prescribed subsidiaries to,

(a) make or acquire a commercial loan; or

(b) acquire control of a body corporate referred to in any of clauses 329.5(2)(a) to (n) that holds commercial loans;

if the aggregate value of all commercial loans held by the corporation and its prescribed subsidiaries exceeds, or the acquisition or making of the commercial loan or the acquisition of control of the body corporate would cause the aggregate value of all commercial loans held by the corporation and its prescribed subsidiaries to exceed, 7% of the total assets of the corporation.

Lending limit where regulatory capital more than $25,000,000.

329.13    A corporation with more than $25,000,000. of regulatory capital may

(a) make or acquire commercial loans; or

(b) acquire control of a body corporate referred to in any of clauses 329.5(2)(a) to (n) that holds commercial loans;

where the aggregate value of all commercial loans held by the corporation and its prescribed subsidiaries would thereby exceed 7% of the total assets of the corporation only with the prior approval in writing of the Director and in accordance with such terms and conditions as the Director may specify.

Meaning of "total assets"

329.14    For the purposes of sections 329.12 and 329.13, "total assets", in respect of a corporation, has the meaning given it in the regulations.

Limit on total property interest

329.15    A corporation shall not, and shall not permit its prescribed subsidiaries to,

(a) purchase or otherwise acquire an interest in real property; or

(b) make an improvement to any real property in which the corporation or any of its prescribed subsidiaries has an interest;

if the aggregate value of all interests of the corporation in real property exceeds, or the acquisition of the interest or the making of the improvement would cause that aggregate value to exceed, 70% of the regulatory capital of the corporation.

Limits on equity acquisitions

329.16    A corporation shall not, and shall not permit its prescribed subsidiaries to,

(a) purchase or otherwise acquire any participating shares of any body corporate or any ownership interests in any unincorporated entity, other than those of an entity referred to in section 329.5 in which the corporation has, or by virtue of the acquisition would have, a substantial investment; or

(b) acquire control of a body corporate that holds shares or ownership interests referred to in clause (a);

if the aggregate value of

(c) all participating shares, excluding participating shares of bodies corporate referred to in section 329.5 in which the corporation has a substantial investment; and

(d) all ownership interests in unincorporated entities;

beneficially owned by the corporation and its prescribed subsidiaries exceeds, or the purchase or acquisition would cause that aggregate value to exceed, 70% of the regulatory capital of the corporation.

Aggregate limit

329.17    A corporation 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 body corporate referred to in section 329.5 in which the corporation has, or by virtue of the acquisition would have, a substantial investment,

(ii) ownership interests in an unincorporated entity, or

(iii) interests in real property; or

(b) make an improvement to real property in which the corporation or any of its prescribed subsidiaries has an interest;

if the aggregate value of

(c) all participating shares and ownership interests referred to in subclauses (a)(i) and (ii) that are beneficially owned by the corporation and its prescribed subsidiaries; and

(d) all interests of the corporation in real property referred to in subclause (a)(iii);

exceeds, or the acquisition or the making of the improvement would cause that aggregate value to exceed, 100% of the regulatory capital of the corporation.

Deemed temporary investment

329.18    Where a corporation has a substantial investment in an entity as permitted by this Part and the corporation becomes aware of a change in the business or affairs of the entity that, if the change had taken place prior to the acquisition of the substantial investment, would have precluded the acquisition, the corporation shall be deemed to have acquired, on the day the corporation becomes aware of the change, a temporary investment in respect of which clause 329.8(1)(b) or subsection 329.8(2) applies.

Assets transactions

329.19    A corporation shall not, without the approval in writing of the Director, in any transaction or series of transactions with the same party during a period of 12 months, acquire or dispose of, directly or indirectly, assets, other than assets that are debt obligations referred to in subclauses (a)(ii), (iii), (iv) and (vi) of the definition "commercial loan" in subsection 329.1(1), having a value in excess of 10% of the total assets of the corporation as at the beginning of the 12 month period.

Restriction on amount of single investment

329.20(1) No corporation shall, directly or indirectly, make loans to or investments in any one person or to or in two or more persons that to the knowledge of the corporation are related, in an amount exceeding the greater of

(a) $500,000.; or

(b) 1% of the corporation's total assets.

Exceptions

329.20(2) Subsection (1) does not apply so as to restrict

(a) investments in securities issued or guaranteed by the Government of Canada, including mortgages insured under the National Housing Act (Canada), by the government of any province of Canada or by any municipality in Canada;

(b) investments in debt instruments endorsed with recourse by a bank incorporated under an Act of the Parliament of Canada; or

(c) substantial investments in entities referred to in section 329.5 or 329.6.

Transitional

329.21    Nothing in this Division requires

(a) the termination of a loan or a commitment to make a loan or investment or to increase a loan or investment; or

(b) the disposal of an investment;

made before the coming into force of this section but, if the loan or investment would be precluded or limited by this Division, the amount of the loan or investment shall not, except as provided in subsections 329.8(3), 329.9(2) and 329.10(3), or pursuant to a commitment referred to in clause (a), be increased after the coming into force of this section.

Saving

329.22    A loan or investment referred to in section 329.21 is deemed not to be prohibited by the provisions of this Division.

Restriction on residential mortgages

329.23(1) A corporation shall not make a loan in Canada on the security of residential property in Canada for the purpose of purchasing, renovating or improving that property, or refinance such a loan, if the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, would exceed 75% of the value of the property at the time of the loan.

Exception

329.23(2) Subsection (1) does not apply in respect of

(a) a loan made or guaranteed under the National Housing Act (Canada) or any other Act of Parliament by or pursuant to which a different limit on the value of property on the security of which the corporation may make a loan is established;

(b) a loan if repayment of the amount of the loan that exceeds the maximum amount set out in subsection (1) is guaranteed or insured by a government agency or a private insurer approved by the Director; or

(c) the acquisition by the corporation from an entity of securities issued or guaranteed by the entity that are secured on any residential property, whether in favour of a trustee or otherwise, or the making of a loan by the corporation to the entity against the issue of such securities.

13        The heading for Division V of Part XXIV is amended by striking out "RESTRICTIONS ON INVESTMENTS AND LOANS".

14        Sections 330 to 335 are repealed.

15        Section 336 is amended

(a) in clause (5)(e), by striking out "Superintendent" and substituting "Director";

(b) in subsection (9)

(i) in the part preceding clause (a), by striking out "on the recommendation in writing of the Superintendent and", and

(ii) in the part following clause (b), by striking out ", on the written recommendation of the Superintendent,"; and

(c) by striking out "Superintendent" and substituting "Director" in

(i) the part of subclause (12)(a)(i) following paragraph (B), and

(ii) subclause (13)(a)(i).

16        Section 339 is amended

(a) by striking out "superintendent" and substituting "Director"

(i) in clause (1)(a), and

(ii) wherever it occurs in clause (d);

(b) in clauses (2)(a) and (b), by striking out "superintendent" and substituting "Director"; and

(c) by repealing subsection (3).

17        The heading for Division VIII of Part XXIV is amended by striking out "LIMITATION OF TRANSACTIONS" and substituting "SELF DEALING".

18        Sections 340 to 342 are repealed.

19        The following is added after section 342:

Definition

342.1(1)  In this Division,

"loan" includes a deposit, a financial lease, a conditional sales contract, a repurchase agreement and any other similar arrangement for obtaining funds or credit, but does not include investments in securities or the making of an acceptance, endorsement or other guarantee; (« prêt »)

"officer" means

(a) in relation to a body corporate, a chief executive officer, president, vice-president, secretary, controller, treasurer and any other natural person designated as an officer of the body corporate by by-law or by resolution of the directors of the body corporate, and

(b) in relation to any other entity, any natural person designated as an officer of the entity by by-law, by resolution of the members of the entity or otherwise.  (« dirigeant »)

Significant interest

342.1(2)  A person has a significant interest in a class of shares of a corporation where the aggregate of

(a) any shares of that class beneficially owned by the person; and

(b) any shares of that class beneficially owned by entities controlled by the person;

exceeds 10% of all of the outstanding shares of that class of shares of the corporation.

Increasing significant interest

342.1(3)  A person who has a significant interest in a class of shares of a corporation increases that significant interest in the class of shares where the person or any entity controlled by the person

(a) acquires beneficial ownership of additional shares of that class; or

(b) acquires control of any entity that beneficially owns shares of that class;

in such number as to increase the percentage of shares of that class that are beneficially owned by the person and by any entities controlled by the person.

Interpretation

342.1(4)  For the purposes of this Division,

(a) entering into a transaction with a related party of a corporation includes

(i) making a guarantee on behalf of the related party,

(ii) making an investment in any securities of the related party,

(iii) taking an assignment of or otherwise acquiring a loan made by a third party to the related party, and

(iv) taking a security interest in the securities of the related party; and

(b) the fulfilment of an obligation under the terms of any transaction, including the payment of interest on a loan or deposit, is part of the transaction, and not a separate transaction.

Interpretation

342.1(5)  For the purposes of this Division, a natural person is affiliated with a corporation where the person

(a) is an officer or employee of the corporation or of an affiliate of the corporation;

(b) has a significant interest in a class of shares of the corporation;

(c) has a substantial investment in an affiliate of the corporation;

(d) is a significant borrower in respect of the corporation;

(e) is an officer or employee of an entity that is a significant borrower in respect of the corporation;

(f) controls one or more entities of which the total indebtedness to the corporation or to an affiliate of the corporation would cause those entities, if treated as a single entity, to be a significant borrower of the corporation;

(g) provides goods or services to the corporation, or is a partner or an employee in a partnership that provides goods or services to the corporation or an officer or employee of, or a person who has a substantial investment in, a body corporate that provides goods or services to the corporation, if the total annual billings to the corporation in respect of the goods and services provided exceeds ten per cent of the total annual billings of the person, partnership or body corporate, as the case may be;

(h) has a loan that is not in good standing from the corporation or from an affiliate of the corporation or is a director, an officer or an employee of, or a person who controls, an entity that has a loan that is not in good standing from the corporation or from an affiliate of the corporation; or

(i) is the spouse of a person described in any of clauses (a) to (h).

Acting in concert

342.2(1)  For the purposes of subsection 342.3(6), where two or more persons have agreed, pursuant to any agreement, commitment or understanding, whether formal or informal, verbal or written, to act jointly or in concert in respect of

(a) shares of a corporation that they beneficially own;

(b) shares or ownership interests that they beneficially own of any entity that beneficially owns shares of a corporation; or

(c) shares or ownership interests that they beneficially own of any entity that controls any entity that beneficially owns shares of a corporation;

those persons shall be deemed to be a single person who is acquiring beneficial ownership of the aggregate number of shares of the corporation or shares or ownership interests of the entity that are beneficially owned by them.

Acting in concert

342.2(2)  Without limiting the generality of subsection (1), any agreement, commitment or understanding by or between two or more persons who beneficially own shares of a corporation or shares or ownership interests of any entity referred to in clause (1)(b) or (c),

(a) whereby any of them or their nominees may veto any proposal put before the board of directors of the corporation; or

(b) pursuant to which no proposal put before the board of directors of the corporation may be approved except with the consent of any of them or their nominees;

shall be deemed to be an agreement, commitment or understanding referred to in subsection (1).

Exceptions

342.2(3)  For the purposes of this section, persons shall be presumed not to have agreed to act jointly or in concert solely by reason of the fact that

(a) one is the proxyholder of one or more of the others in respect of shares or ownership interests referred to in subsection (1); or

(b) they vote the voting rights attached to shares or ownership interests referred to in subsection (1) in the same manner.

Designation

342.2(4)  Where in the opinion of the Director it is reasonable to conclude that an agreement, commitment or understanding referred to in subsections (1) and (2) exists by or among two or more persons, the Director may designate those persons as persons who have agreed to act jointly or in concert.

Determination of substantial investment

342.3(1)  For the purpose of determining whether an entity or a person has a substantial investment for the purposes of any of clauses (4)(d) to (f), the references to "control" and "controlled" in subsections 329.1(7) to (14) shall be construed as references to "control, within the meaning of subsections 329.1(3) to (5), determined without regard to clause 329.1(3)(d)," and "controlled, within the meaning of subsections 329.1(3) to (5), determined without regard to clause 329.1(3)(d),", respectively.

Determination of control

342.3(2)  For the purposes of clause (4)(g), "controlled" means "controlled, within the meaning of subsections 329.1(3) to (5), determined without regard to clause 329.1(3)(d)".

Meaning of equity

342.3(3)  For the purposes of subsection (9), "equity" in respect of a corporation means the sum of the shareholders' equity of the corporation and the minority interests in entities controlled by the corporation as they appear in the consolidated financial statements of the corporation.

Related party of corporation

342.3(4)  For the purposes of this Division, a person is a related party of a corporation where the person

(a) is a person who has a significant interest in a class of shares of the corporation;

(b) is a director or an officer of the corporation or of a body corporate that controls the corporation or is acting in a similar capacity in respect of an unincorporated entity that controls the corporation;

(c) is the spouse, or a child who is less than 18 years of age, of a person described in clause (a) or (b);

(d) is an entity in which a director or an officer of the corporation has a substantial investment;

(e) is an entity in which a person who controls the corporation has a substantial investment;

(f) is an entity in which the spouse, or a child who is less than 18 years of age, of a person described in clause (d) or (e) has a substantial investment;

(g) is an entity that is controlled by a person referred to in any of clauses (a) to (c) or by an entity referred to in any of clauses (d) to (f); or

(h) is a person, or a member of a class of persons, designated under subsection (6) or (7) as, or deemed under subsection (8) to be, a related party of the corporation.

Exception

342.3(5)  An entity in which a corporation has a substantial investment is deemed not to be an entity referred to in clause (4)(e) unless the person referred to in that clause has a substantial investment in the entity otherwise than through the person's controlling interest in the corporation.

Designated related party

342.3(6)  For the purposes of this Division, the Director may, with respect to a particular corporation, designate as a related party of the corporation

(a) any person or class of persons whose direct or indirect interest in or relationship with the corporation or a related party of the corporation might reasonably be expected to affect the exercise of the best judgment of the corporation in respect of a transaction; or

(b) any person who is a party to any agreement, commitment or understanding referred to in section 342.2 if the corporation referred to in that section is the corporation referred to in this section.

Designated related party

342.3(7)  Where a person is designated as a related party of a corporation pursuant to subsection (6), the Director may also designate any entity in which the person has a substantial investment and any entity controlled by such an entity to be a related party of the corporation.

Deemed related party

342.3(8)  Where, in contemplation of a person becoming a related party of a corporation, the corporation enters into a transaction with the person, the person is deemed for the purposes of this Division to be a related party of the corporation in respect of that transaction.

Holders of exempted shares

342.3(9)  Notwithstanding clause (4)(a), a person shall be deemed not to be a related party of a corporation where the person would otherwise be a related party of the corporation by reason only that the person has a significant interest in a class of non-voting shares of the corporation that do not amount to more than 10% of the equity of the corporation.

Holding body corporate

342.3(10) Where the holding body corporate of corporation is a financial institution incorporated by or under an Act of Canada or a province or territory of Canada, the holding body corporate is not a related party of the corporation under clause (4)(a).

Non-application of this Division

342.4(1)  This Division does not apply in respect of any transaction entered into prior to the coming into force of this subsection but, after the coming into force of this subsection, any modification of, addition to, or renewal or extension of a prior transaction is subject to this Division.

Non-application of this Division

342.4(2)  This Division does not apply in respect of

(a) money or other assets held in trust, other than guaranteed trust money and assets held in respect thereof;

(b) the issue of shares of any class of shares of a corporation when fully paid for in money or when issued

(i) in accordance with any provisions for the conversion of other issued and outstanding securities of the corporation into shares of that class of shares,

(ii) as a share dividend,

(iii) in exchange for shares of a body corporate that has been continued as a corporation under Part XIV,

(iv) in accordance with the terms of an amalgamation under Part XIV,

(v) by way of consideration in accordance with the terms of a sale agreement under section 318, or

(vi) with the approval in writing of the Director in exchange for shares of another body corporate;

(c) the payment of dividends by a corporation; or

(d) transactions that consist of the payment or provision by a corporation to persons who are related parties of the corporation of salaries, fees, stock options, pension benefits, incentive benefits or other benefits or remuneration in their capacity as directors, officers or employees of the corporation.

Exception

342.4(3)  Nothing in clause (2)(d) exempts from the application of this Division the payment by a corporation of fees or other remuneration to a person for

(a) the provision of services referred to in clause 342.12(1)(a); or

(b) duties outside the ordinary course of business of the corporation.

Conduct review committee

342.5(1)  The directors of a corporation shall establish a conduct review committee to perform the duties referred to in subsection (3).

Membership of conduct review committee

342.5(2)  The conduct review committee of a corporation shall consist of at least three directors and majority of the members of the conduct review committee must consist of directors who are not persons affiliated with the corporation and none of the members of the conduct review committee may be officers or employees of the corporation or a subsidiary of the corporation.

Duties of conduct review committee

342.5(3)  The conduct review committee of a corporation shall

(a) establish procedures for the review of transactions with related parties of the corporation to which this Division applies;

(b) review all proposed transactions with related parties of the corporation in accordance with this Division; and

(c) review the practices of the corporation to ensure that any transactions with related parties of the corporation that may have a material effect on the stability or solvency of the corporation are identified.

Corporation report to Director

342.5(4)  A corporation shall report to the Director on the mandate and responsibilities of the conduct review committee and the procedures established by the committee under clause (3)(a).

Committee report to directors

342.5(5)  After each meeting of the conduct review committee of a corporation, the committee shall report to the directors of the corporation on all transactions and other matters reviewed by the committee.

Directors' report to Director

342.5(6)  Within 90 days after the end of each financial year, the directors of a corporation shall report to the Director on the proceedings of the conduct review committee and on all transactions and other matters reviewed by the committee during the year.

Prohibited transactions

342.6(1)  Except as provided in this Division, a corporation shall not, directly or indirectly, enter into any transaction with a related party of the corporation.

Transaction of entity

342.6(2)  Without limiting the generality of subsection (1), a corporation is deemed to have indirectly entered into a transaction in respect of which this Division applies where the transaction is entered into by an entity that is controlled by the corporation.

Exception

342.6(3)  Subsection (2) does not apply where an entity that is controlled by a corporation is a financial institution incorporated or formed under the laws of Canada or a province or territory of Canada and is subject to regulation and supervision, satisfactory to the Director, regarding transactions with related parties of the corporation.

Exception

342.6(4)  Subsection (2) does not apply in respect of transactions entered into by an entity that is controlled by a corporation if the transaction is a prescribed transaction or is one of a class of prescribed transactions.

Nominal value transactions

342.7     Notwithstanding anything in this Division, a corporation may enter into a transaction with a related party of the corporation if the value of the transaction is nominal or immaterial to the corporation when measured by criteria that have been established by the conduct review committee of the corporation and approved in writing by the Director.

Secured loans

342.8     A corporation may make a loan to or a guarantee on behalf of a related party of the corporation or take an assignment of or otherwise acquire a loan to a related party of the corporation if

(a) the loan or guarantee is fully secured by securities of or guaranteed by the Government of Canada or the government of a province; or

(b) the loan is a loan permitted by section 329.23 made to a related party who is a natural person on the security of a mortgage of the principal residence of that related party.

Deposits

342.9     A corporation may enter into a transaction with a related party of the corporation if the transaction consists of a deposit by the corporation with a financial institution that is a direct clearer or a member of a clearing group under the by-laws of the Canadian Payments Association and the deposit is made for clearing purposes.

Borrowing from related party

342.10    A corporation may borrow money from, take deposits from, or issue debt obligations to, a related party of the corporation.

Acquisition of assets

342.11(1) A corporation may purchase or otherwise acquire from a related party of the corporation

(a) securities of, or securities guaranteed by, the Government of Canada or the government of a province;

(b) assets fully secured by securities of, or securities guaranteed by, the Government of Canada or the government of a province; or

(c) goods for use in the ordinary course of business.

Sale of assets

342.11(2) Subject to section 329.19, a corporation may sell any assets of the corporation to a related party of the corporation if

(a) the consideration for the assets is fully paid in money; and

(b) there is an active market for those assets.

Asset transactions with financial institutions

342.11(3) Notwithstanding any of the provisions of subsections (1) and (2), a corporation may, in the normal course of business and pursuant to arrangements that have been approved by the Director in writing, acquire or dispose of any assets, other than real property, from or to a related party of the corporation that is a financial institution.

Asset transactions in restructuring

342.11(4) Notwithstanding any of the provisions of subsections (1) and (2), a corporation may acquire any assets from, or dispose of any assets to, a related party of the corporation as part of, or in the course of, a restructuring, if the acquisition or disposition has been approved in writing by the Director.

Goods or space for use in business

342.11(5) A corporation may lease assets

(a) from a related party of the corporation for use in the ordinary course of business of the corporation; or

(b) to a related party of the corporation;

if the lease payments are made in money.

Services

342.12(1) A corporation may enter into a transaction with a related party of the corporation if the transaction

(a) subject to subsection (2), consists of a written contract for the purchase by the corporation of services used in the ordinary course of business;

(b) subject to subsection (4), involves the provision by the corporation of services, other than loans or guarantees, normally offered to the public by the corporation in the ordinary course of business;

(c) consists of a written contract with a financial institution or an entity in which the corporation is permitted to have a substantial investment pursuant to section 329.5 that is a related party of the corporation

(i) for the networking of any services provided by the corporation or the financial institution or entity, or

(ii) for the referral of any person by the corporation to the financial institution or entity, or for the referral of any person by the financial institution or entity to the corporation;

(d) consists of a written contract for such pension or benefit plans or their management or administration as are incidental to directorships or to the employment of officers or employees of the corporation or its subsidiaries; or

(e) involves the provision by the corporation of management, advisory, accounting, information processing or other services in relation to any business of the related party.

Order concerning management by employees

342.12(2) Where a corporation has entered into a contract pursuant to clause (1)(a) and the contract, when taken together with all other such contracts entered into by the corporation, results in all or substantially all of the management functions of the corporation being exercised by persons who are not employees of the corporation, the Director may, by order, if the Director considers that result to be inappropriate, require the corporation, within such time as may be specified in the order, to take all steps necessary to ensure that management functions that are integral to the carrying on of business by the corporation are exercised by employees of the corporation to the extent specified in the order.

Service bodies corporate

342.12(3) Notwithstanding subsection 342.6(2), a corporation shall be deemed not to have indirectly entered into a transaction in respect of which this Division applies where the transaction is entered into by a service body corporate, within the meaning of section 329.1, that is controlled by the corporation if subsection 342.19(1) is complied with.

Directors and officers and their interests

342.13(1) Subject to subsection (2) and sections 342.14 and 342.15, a corporation may enter into any transaction with a related party of the corporation if the related party is

(a) a natural person who is a related party of the corporation by reason only of being

(i) a director or an officer of the corporation or of an entity that controls the corporation, or

(ii) the spouse, or a child who is less than 18 years of age, of a director or an officer of the corporation or of an entity that controls the corporation; or

(b) an entity that is a related party of the corporation by reason only of being an entity

(i) in which a director or an officer of the corporation, or the spouse or a child who is less than 18 years of age of such person, has a substantial investment,

(ii) that is controlled by a director or an officer of an entity that controls the corporation, or the spouse or a child who is less than 18 years of age of such person, or

(iii) that is controlled by an entity in which a director or an officer of the corporation, or the spouse or a child who is less than 18 years of age of such person, has a substantial investment.

Loans to full-time officers

342.13(2) A corporation may, with respect to a related party of the corporation referred to in subsection (1) who is a full-time officer of the corporation, make, take an assignment of or otherwise acquire a loan to the related party only if the aggregate principal amount of all outstanding loans to the related party that are held by the corporation and its subsidiaries, together with the principal amount of the proposed loan, does not exceed the greater of twice the annual salary of the related party and $100,000.

Exception

342.13(3) Subsection (2) does not apply in respect of

(a) loans referred to in clause 342.8(b); and

(b) margin loans referred to in section 342.15;

and the amount of any such loans to a related party of a corporation shall not be included in determining, for the purposes of subsection (2), the aggregate principal amount of all outstanding loans made by the corporation to the related party.

Preferred terms

342.13(4) Notwithstanding section 342.18, a corporation may make a loan, other than a margin loan, to an officer of the corporation on terms and conditions more favourable to the officer than those offered to the public by the corporation if those terms and conditions have been approved by the conduct review committee of the corporation.

Preferred terms

342.13(5) Notwithstanding section 342.18, a corporation may make a loan referred to in clause 342.8(b) to the spouse of an officer of the corporation on terms and conditions more favourable to the spouse of that officer than those offered to the public by the corporation if those terms and conditions have been approved by the conduct review committee of the corporation.

Preferred terms

342.13(6) Notwithstanding section 342.18, a corporation may offer financial services, other than loans or guarantees, to an officer of the corporation, or to the spouse or a child who is less than 18 years of age of an officer of the corporation, on terms and conditions more favourable than those offered to the public by the corporation where

(a) the financial services are offered by the corporation to employees of the corporation on such favourable terms and conditions; and

(b) the approval of the conduct review committee of the corporation has been obtained.

Board approval required

342.14(1) Except with the concurrence of at least two thirds of the directors present at a meeting of the board of directors of the corporation, a corporation shall not, with respect to a related party of the corporation referred to in subsection 342.13(1),

(a) make, take an assignment of or otherwise acquire a loan to the related party, including a margin loan referred to in section 342.15;

(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 corporation and its subsidiaries, other than

(i) loans referred to in clause 342.8(b), and

(ii) where the related party is a full-time officer of the corporation, loans to the related party that are permitted by subsection 342.13(2);

(e) the sum of all outstanding amounts guaranteed by the corporation 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 corporation and its subsidiaries in the securities of the entity

would exceed 2% of the regulatory capital of the corporation.

Limit on transactions with directors and officers

342.14(2) A corporation shall not, with respect to a related party of the corporation referred to in subsection 342.13(1),

(a) make, take an assignment of or otherwise acquire a loan to the related party, including a margin loan referred to in section 342.15;

(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 corporation referred to in subsection 342.13(1) that are held by the corporation and its subsidiaries, other than

(i) loans referred to in section 342.8, and

(ii) loans permitted by subsection 342.13(2);

(e) the sum of all outstanding amounts guaranteed by the corporation and its subsidiaries on behalf of all related parties of the corporation referred to in subsection 342.13(1); and

(f) the book value of all investments by the corporation and its subsidiaries in the securities of all entities that are related parties of the corporation referred to in subsection 342.13(1);

would exceed 50% of the regulatory capital of the corporation.

Exclusion of nominal value transactions

342.14(3) Loans, guarantees and investments that are referred to in section 342.7 shall not be included in calculating the aggregate of loans, guarantees and investments referred to in subsections (1) and (2).

Margin loans

342.15    The Director may establish terms and conditions with respect to the making by a corporation of margin loans to any director or officer of the corporation.

Exemption by order

342.16(1) A corporation may enter into a transaction with a related party of the corporation if the minister, by order, on the advice of the Director, has exempted the transaction from the provisions of section 342.6.

Order may contain condition or limitation

342.16(2) An order made by the minister under subsection (1) may contain any condition or limitation the minister considers appropriate.

Conditions for order

342.16(3) The minister shall not make an order referred to in subsection (1) unless the minister is satisfied that the decision of the corporation 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 corporation and does not involve in any significant way the interests of a related party of the corporation.

Prescribed transactions

342.17    A corporation may enter into a transaction with a related party of the corporation if the transaction is a prescribed transaction or one of a class of prescribed transactions.

Definition

342.18(1) In this section, "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 corporation in the ordinary course of business, terms and conditions that are no more or less favourable than those offered to the public by the corporation in the ordinary course of business; and

(b) in respect of any other transaction, 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 acting prudently, knowledgeably and willingly.

Market terms and conditions

342.18(2) Except as provided in subsections 342.13(4) to (6), any transaction entered into with a related party of the corporation shall be on terms and conditions that are at least as favourable to the corporation as market terms and conditions.

Pre-approval by conduct review committee

342.19(1) No corporation shall enter into any transaction permitted by this Division, except as provided in subsections 342.13(4) to (6), unless the conduct review committee of the corporation is satisfied that the transaction is on terms and conditions at least as favourable to the corporation as market terms and conditions, within the meaning of section 342.18, and has approved the transaction.

General arrangements

342.19(2) Nothing in this section precludes the conduct review committee of a corporation from approving a general arrangement covering a number or series of transactions of a similar type or nature that may be entered into or made during the term of the arrangement.

Annual review

342.19(3) An arrangement that is approved under subsection (2) shall be reviewed by the conduct review committee at least once a year during the term of the arrangement.

Exception

342.19(4) The approval of the conduct review committee under this section need not be obtained in respect of

(a) transactions in respect of which subsection 342.14(1) applies;

(b) transactions entered into pursuant to section 342.7; and

(c) such transactions as are prescribed to be exempted from the requirements of this section.

Subsequent transactions

342.20    No corporation shall enter into any transaction, other than a transaction referred to in clause 342.19(4)(b) or (c), with any person who has ceased to be a related party of the corporation during the period of 12 months after the date on which the person ceased to be a related party of the corporation, unless the conduct review committee of the corporation is satisfied that the transaction is on terms and conditions at least as favourable to the corporation as market terms and conditions, within the meaning of section 342.18, and has approved the transaction.

Corporation obligation

342.21(1) Where, in respect of any proposed transaction permitted by this Division, other than those referred to in section 342.7, a corporation has reason to believe that the other party to the transaction is a related party of the corporation, the corporation 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 corporation.

Reliance on information

342.21(2) A corporation and any person who is a director or an officer, employee or agent of the corporation may rely on any information contained in any disclosure received by the corporation 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 corporation or any such person for anything done or omitted in good faith in reliance on any such information.

Notice to Director

342.22    Where a corporation has entered into a transaction that the corporation is prohibited from entering into by this Division or where a corporation has entered into a transaction for which approval is required under subsection 342.14(1) or 342.19(1) or section 342.20 without having obtained the approval, the corporation shall, on becoming aware of that fact, forthwith notify the Director.

Voidable contracts

342.23(1) Where a corporation enters into a transaction that it is prohibited from entering into by this Division, the corporation or the Director may apply to a court for an order setting aside the transaction and directing that the related party of the corporation involved in the transaction account to the corporation for any profit or gain realized.

Court order

342.23(2) On an application to a court under subsection (1), the court may make such order as it thinks fit, including an order for compensation for any loss or damage incurred by the corporation.

Time limit

342.23(3) 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 342.22 in respect of the transaction is given to the Director.

20(1)     Subsection 343(1) is amended in the part following clause (b)

(a) by striking out "shall deposit with the superintendent" and substituting "shall deposit with the Director"; and

(b) by striking out "before the expiration of 30 days after the notice has been deposited with the superintendent" and substituting "until the transfer of shares has been approved by the Director".

20(2)     The following is added after subsection 343(1):

Restriction on voting rights

343(1.1)  Where, with respect to any corporation, a person contravenes subsection (1), no person and no entity controlled by that person, shall in person or by proxy, exercise any voting rights attached to the shares of the corporation beneficially owned by the person or any entity controlled by the person but this restriction shall cease to apply in respect of a person

(a) when the shares to which the contravention relates have been disposed of; or

(b) when the Director, upon receiving the notice and information referred to in subsection 343(1) whether before or after the transfer is recorded in the register, approves the transfer of the shares.

21        The heading for Division X of Part XXIV is amended by striking out "SUPERINTENDENT" and substituting "EXAMINATION OF CORPORATIONS".

22(1)     Subsection 349(1) is amended

(a) in the section heading, by striking out "superintendent" and substituting "Director";

(b) in the subsection,

(i) by striking out "The superintendent shall visit personally or cause a duly qualified member of his staff or duly qualified agent to visit" and substituting "The Director shall visit personally or cause a duly qualified member of his or her staff or a duly qualified agent to visit", and

(ii) by striking out "to the Director as to all matters requiring his" and substituting "to the minister as to all matters requiring his or her".

22(2)     Subsection 349(2) is amended

(a) by striking out "the corporation" wherever it occurs and substituting "the corporation and its subsidiaries"; and

(b) by striking out "the superintendent" wherever it occurs and substituting "the Director or person conducting the examination".

22(3)     Subsection 349(3) is repealed.

22(4)     Subsection 349(4) is repealed and the following is substituted:

Examination under oath

349(4)     The Director, or some person appointed by him or her for the purpose, may examine under oath the officers, agents and employees of the corporation and its subsidiaries for the purpose of obtaining any information he or she considers necessary for the purpose of the examination, audit or inspection.

22(5)     Subsection 349(5) is repealed.

23        The following is added after section 349:

Examination by Director

349.1     The Director, or a person designated by the Director,

(a) may at any reasonable time examine any books, vouchers, securities and documents of or in the possession of a corporation or extra-provincial corporation with a business authorization or any of its subsidiaries relating to its business, wherever situated; and

(b) may require the directors, officers and auditor of a corporation or extra-provincial corporation with a business authorization to provide information and explanations, to the extent that they are reasonably able to do so, in respect of the condition and affairs of the corporation or its subsidiaries.

Director's direction to corporation

349.2(1)  Where, in the opinion of the Director, a corporation or an extra-provincial corporation, or a person with respect to it, is committing, or is about to commit, an act that is an unsafe or unsound practice in conducting the business of the corporation or extra-provincial corporation, or is pursuing or is about to pursue any course of conduct that is an unsafe or unsound practice in conducting the business of the corporation or extra-provincial corporation, the Director may direct the corporation, extra-provincial corporation or person to

(a) cease or refrain from committing the act or pursuing the course of conduct; and

(b) perform such acts as in the opinion of the Director are necessary to remedy the situation.

Opportunity for representations

349.2(2)  Subject to subsection (3), no direction shall be issued to a corporation, extra-provincial corporation or person under subsection (1) unless the corporation, extra-provincial corporation or person is provided with a reasonable opportunity to make representations in respect of the matter.

Temporary direction

349.2(3)  Where, in the opinion of the Director, the length of time required for representations to be made under subsection (2) might be prejudicial to the public interest, the Director may make a temporary direction with respect to the matters referred to in clauses (1)(a) and (b) having effect for a period of not more than 15 days.

Continuation of temporary direction

349.2(4)  Subject to subsection (5), a temporary direction under subsection (3) continues to have effect after the expiration of the 15 day period referred to in that subsection if no representations are made to the Director within that period or, if representations have been made, the Director notifies the corporation, extra-provincial corporation or person that the Director is not satisfied that there are sufficient grounds for revoking the direction.

Appeal from Director's decision

349.2(5)  A corporation, extra-provincial corporation or person in respect of which or to whom a direction has been issued under subsection (1) or (3) may, by notice in writing served on the minister and the Director not later than

(a) 15 days after the date of the direction; or

(b) in the case of a temporary direction that is continued pursuant to subsection (4), 30 days after the date of the direction;

appeal the matter to the minister, and on any such appeal, the minister may allow or dismiss the appeal or make such other order as he or she considers appropriate in the circumstances.

No stay on appeal

349.2(6)  A direction or temporary direction shall not be stayed by an appeal under subsection (5) without the consent in writing of the Director.

24        Section 350 is repealed.

25        Section 351 is repealed and the following is substituted:

Report to minister

351(1)    Where the Director is of the opinion

(a) that a corporation is in violation of subsections 336(7) to (13);

(b) that any asset appearing on the books or records of a corporation or held in trust by or under the administration of the corporation is not satisfactorily accounted for;

(c) that a corporation has failed to pay any liability that has become due and payable, or will not be able to pay its liabilities as they become due and payable, or, the assets of a corporation are not sufficient, having regard to all the circumstances, to give adequate protection to persons who have been issued securities of the corporation, or who have entrusted money to the corporation for investment the repayment of which is guaranteed by the corporation, or to creditors of the corporation;

(d)  that there exists any other state of affairs within a corporation that is or may be materially prejudicial to persons who have been issued securities of the corporation, or who have entrusted money to the corporation for investment the repayment of which is guaranteed by the corporation, or to creditors of the corporation; or

(e) a corporation with a business authorization, or a person who is a shareholder, director, officer, employee or agent of the corporation, has failed to comply with a direction issued to the corporation or the person under subsection 349.2(1) or (3);

he or she shall so report to the minister.

Remedial powers of minister

351(2)    Where the minister, after due consideration and after a reasonable opportunity has been provided to a corporation or a person to make representations, believes that any circumstances described in subsection (1) exist, the minister may

(a) fix a time within which the corporation or the person, as the case may be, must

(i) correct the non-compliance referred to in clause (1)(d),

(ii) produce satisfactory accounts,

(iii) make good the deficiency of assets referred to in clause (1)(a) or (b), or

(iv) cease the practice or remedy the state of affairs; or

(b) direct the Director to take control of the corporation.

Immediate order

351(3)    Where, in the opinion of the minister, the length of time required for representations to be made under subsection (2) might be prejudicial to the public interest, the minister may make an immediate direction with respect to the matters referred to in subsection (2).

Direction to Director to take control

351(4)    On the failure of a corporation or a person to

(a) correct the non-compliance;

(b) produce satisfactory accounts;

(c) make good the deficiency of assets; or

(d) cease the practice or remedy the state of affairs;

within the time that may have been fixed pursuant to clause (2)(a) or any extension thereof subsequently given by the minister, the minister may direct the Director to take control of the corporation.

Appointment of appraisers

351(5)    For the purpose of carrying out this section, the minister may appoint such persons as the minister considers necessary to appraise and report on the condition of the corporation and its ability to meet its obligations and guarantees, and the remuneration of any person so appointed shall be fixed by the minister and included in the expenditure assessed against the corporation under subsection 354(3) or (4).

26(1)     Subsection 352(1) is repealed and the following is substituted:

Effect of Director's control

352(1)    Where the Director has control of a corporation under section 351,

(a) the corporation shall not make, acquire or transfer any loan or make any purchase, sale or exchange of securities or any disbursement or transfer of cash of any kind without the prior approval of the Director or a representative designated by him or her;

(b) no director, officer or employee of the corporation shall have access to any cash or securities held by or under the administration of the corporation unless

(i) a representative of the Director accompanies the director, officer or employee, or

(ii) the access is previously authorized by the Director or the Director's representative; and

(c) expenses incurred by the Director in having control of the corporation shall be included in the expenditure assessed against the corporation under subsection 354(4).

26(2)     The following is added after subsection 352(1):

Objectives of Director

352(1.1)  Where the Director has control of a corporation under section 351, he or she may do all things necessary or expedient to protect the rights and interests of the creditors of the corporation or the beneficiaries of any trust under the administration of the corporation.

Powers of directors and officers suspended

352(1.2)  Where the Director has control of a corporation under section 351, the powers, duties, functions, rights and privileges of the directors and officers of the corporation responsible for its management are suspended.

Director to manage corporation

352(1.3)  Where the Director has control of a corporation under section 351, the Director shall manage the business and affairs of the corporation, and in so doing, the Director

(a) may perform any of the duties and functions that the persons referred to in subsection (1.2) were performing prior to the taking of control; and

(b) has and may exercise any power, right or privilege that any such person had or could have exercised prior to the taking of control.

Not liable as director

352(1.4)  Where the Director has control of a corporation, neither the Director nor the minister is a director of the corporation and neither is liable as a director of the corporation.

26(3)     Subsections 352(2) and (3) are repealed and the following is substituted:

Application to court

352(2)    While the Director has control of a corporation under section 351, the minister may apply to the court for an order for the liquidation of the corporation.

Persons to assist

352(3)    Where the Director has control of a corporation under section 351, he or she may appoint one or more persons to manage and operate the business of the corporation and

(a) each person so appointed is a representative of the Director; and

(b) the remuneration of any persons appointed under clause (a) shall be fixed by the Director and shall be included, together with any other expenses incurred by the Director in the management of the corporation, in the expenditure assessed against the corporation under subsection 354(4).

27        Section 353 is repealed.

28(1)     Subsection 354(1) is repealed and the following is substituted:

Revesting control in the corporation

354(1)    Where the minister believes that a corporation in the control of the Director meets all the requirements of this Act and that it is otherwise proper for the corporation to resume control of its property and the conduct of its business, he or she may direct the Director to relinquish control of the corporation, subject to such terms and conditions, if any, as the minister thinks fit, and from the date specified in the direction the powers of the Director under section 352 cease.

28(2)     Subsection 354(2) is repealed.

28(3)     Subsection 354(3) is repealed and the following is substituted:

Payment of expenses

354(3)    Where the Director relinquishes control of a corporation under subsection (1), the corporation is liable for repayment of all expenses incurred by the Director in accordance with or assessed against the corporation under section 352 and interest in respect thereof on such terms and conditions as may be approved by the Director.

28(4)     Subsection 354(4) is amended

(a) by striking out "and paid by corporations" and substituting "the corporation";

(b) by striking out "superintendent" and substituting "Director"; and

(c) by striking out "prior to any claim in respect of" and substituting "that ranks after all other claims but prior to any claim in respect of the subordinated debt and".

28(5)     Subsection 354(5) is amended

(a) by striking out "352 or 353" and substituting "352"; and

(b) by striking out "350, 351, 352, 353" and substituting "351, 352".

29        The following is added after section 354:

Application to court

354.1(1)  Notwithstanding any other provision of this Act, where the Director has control of a corporation under section 351, the minister may apply to the court for an order

(a) authorizing some other person to conduct the business of the corporation on the terms and conditions the court considers appropriate;

(b) authorizing and directing the sale of the assets of the corporation in whole or in part;

(c) appointing an interim or permanent substitute trustee in respect of all or any part of the fiduciary obligations and duties of the corporation;

(d) staying any civil proceeding against the corporation while the Director is in control of the corporation; or

(e) authorizing or directing any other action the court considers appropriate and in the best interest of the depositors, the persons for whom the corporation acts in a fiduciary capacity, the creditors and the public.

Substituted trustee

354.1(2)  Where the court makes an order under subsection (1)(c), the fiduciary duties vest in, bind and may be enforced against the substituted trustee as fully and effectually as if the substituted trustee were originally named as trustee.

30        Section 355 is repealed.

31        Section 356 is repealed and the following is substituted:

Divestment order

356(1)    The Director may, by order, direct a corporation to dispose of, within such period as the Director considers reasonable, any loan, investment or interest made or acquired in contravention of this Part.

Divestment order

356(2)    Where, in the opinion of the Director,

(a) an investment by a corporation or any entity it controls in shares of a body corporate or in ownership interests in an unincorporated entity enables the corporation to control the body corporate or the unincorporated entity; or

(b) the corporation 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 corporation, the entity it controls or the nominee;

the Director may, by order, require the corporation, within such period as the Director considers reasonable, to do all things necessary to ensure that the corporation no longer controls the body corporate or unincorporated entity or has the ability to veto or otherwise defeat any proposal referred to in clause (b).

Divestment order

356(3)    Where

(a) a corporation

(i) fails to provide or obtain within a reasonable time the undertakings referred to in subsection 329.7(1) or (3), or

(ii) is in default of an undertaking referred to in subsection 329.7(1) and the default is not remedied within 90 days after the day of receipt by the corporation of a notice from the Director of the default; or

(b) a body corporate referred to in subsection 329.7(3) is in default of an undertaking referred to in subsection 329.7(3) and the default is not remedied within 90 days after the day of receipt by the corporation of a notice from the Director of the default;

the Director may, by order, require the corporation, within such period as the Director considers reasonable, to do all things necessary to ensure that the corporation no longer has a substantial investment in the body corporate to which the undertaking relates.

Exception

356(4)    Subsection (2) does not apply in respect of an entity in which a corporation has a substantial investment permitted by this Part.

32        Sections 357 and 358 are repealed.

33        Section 359 is repealed and the following is substituted:

Recovery of costs

359(1)    Where an examination of a corporation is made under subsection 349(1), the Director may require the corporation to pay the costs incurred in connection with the examination in accordance with the method specified in the regulations for allocating the costs.

Assessment a debt payable to government

359(2)    The amount assessed against each corporation under subsection (1) constitutes a debt payable to the government, and shall be payable to the Director on demand, and may be recovered as a debt in the court.

34(1)     Subsection 360(1) is repealed.

34(2)     Subsection 360(2) is repealed and the following is substituted:

Agreements

360(2)    Notwithstanding anything in this or any other Act of the Legislature, with the approval of the Lieutenant Governor in Council, the minister, for and on behalf of the government, may, from time to time, enter into an agreement with the Government of Canada or the government of a province of Canada under which a designated official of Canada or the province who is responsible for the supervision or examination or both of trust and loan corporations, shall perform specified duties imposed on the Director under this Division.

34(3)     Subsection 360(3) is amended

(a) by adding "or of the government of the other province" after "Government of Canada"; and

(b) by striking out "the relevant authority for Canada" and substituting "the designated official".

34(4)     Subsection 360(4) is amended by striking out everything after "and may authorize" and substituting "the designated official of the government with which the agreement is made to exercise and perform any powers granted to, and the duties imposed upon, the Director under this Division."

35        The following is added after section 361:

Definition of foreign body corporate

361.1(1)  In this section, "foreign body corporate" means a body corporate that is incorporated elsewhere than in Canada and carries on the business of a trust corporation or borrows money from the public in the form of deposits for the purpose of making loans or investments.

Prohibition on carrying on business

361.1(2)  No foreign body corporate shall carry on business in Manitoba.

Offence and penalty

361.1(3)  A foreign body corporate that carries on business in Manitoba in contravention of subsection (2) and every director and officer of the foreign body corporate, and each person acting on its behalf, is guilty of an offence and is liable to a penalty of not more than $50,000. plus the costs incurred in connection with investigating these circumstances.

36        Section 365 is amended

(a) in subsections (1), (2) and (4), by striking out "or superintendent" wherever it occurs; and

(b) in subclause (3)(a)(i), by striking out "Director, superintendent or both" and substituting "Director, or any official acting under an agreement under subsection 360(2), or any person appointed by the Director,".

37        Subsection 370(1) is amended in clause (e) by striking out "superintendent" and substituting "Director".

38        Clause 372(2)(c) is repealed.

39(1)     Subsection 374(2) is amended, by striking out "and" at the end of clause (b), by adding "and" at the end of clause (c) and by adding the following after clause (c):

(d) a copy of any change made to its by-laws within seven days after the effective date of the change.

39(2)     Subsection 374(4) is amended by striking out "and" at the end of clause (a) and by adding the following after clause (b):

(c) a change of its auditor; and

(d) a change of its fiscal year.

Coming into force

40        This Act comes into force on a day fixed by proclamation.