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AR 171/92 LOAN AND TRUST CORPORATIONS REGULATION

(Consolidated up to 62/2013)

ALBERTA REGULATION 171/92

Loan and Trust Corporations Act

LOAN AND TRUST CORPORATIONS REGULATION

Table of Contents

Interpretation and Application

                1       Interpretation

                2       Calculation of total assets

                3       Deposits


                4       Restricted parties

Registration

                5       Prescribed capital accounts

                6       Information to be included in register

Directors and Officers

                7       Eligibility of unaffiliated directors

Auditors Reports

                8       Auditors duty to report changes

Restricted Party Transactions

                9       Prescribed securities for purposes of s167(e) of Act

              10       Prescribed conditions for purposes of s167(g) of Act

              11       Loan to prescribed employee

              12       Prescribed matters re restricted party financial institutions

              13       Restricted party transactions prescribed limits

Capacity and Powers

              14       Exception re carrying on fiduciary activities

              15       Capital adequacy rules

              16       Disclosure of information re subordinated notes

Investments

              17       Commercial loan

              18       Liquidity requirement

              19       Commercial loans

              20       Personal loans

              21       Loans and investments re connected persons

              22       Minimum investment limit

              23       Maximum investment limit re 3rd and subsequent mortgages

              24       Investment limits re real estate

              25       Investment limits re securities

              26       Investments in subsidiaries

              27       Hedging agreements

              28       Duty to comply

              34       Notice of passing of accounts

Application of Parts 9, 10 and 11 of the Act to
Special Purpose Trust Corporations

              35       Application of Part 9 of Act

              36       Application of Part 10 of Act

              37       Application of Part 11 of Act

Other Matters

              38       Exemption from s127 of Act

              39       Leasing and related agreements

              40       Subsidiary financial leasing corporation

              41       Communication to professional body

              42       Penalty for late filing

              43       Maximum deposit transferable on death

              44       Application

              45       Unclaimed balances - significant amounts

              46       Unclaimed balances - minor amounts

              47       Notice of unpaid amount

              48       Designation of unclaimed amounts

              49       Extinguishment of rights

              50       Appraisals of real estate

              51       Duties of audit committee

              52       Duties of investment committee

              53       Meeting between Minister and auditor

              54       Auditors right to information from Minister

              55       Ministers access to audit papers

Schedule

Interpretation and Application

Interpretation

1(1)  For the purposes of the Act and the regulations,

                                 (a)    “commodity sales agreement” means an agreement in which a financial institution undertakes to advance funds in exchange for the future delivery of a commodity in an amount equating to the value of the commodity as determined by the market price of that commodity at the time of future delivery, but does not include a financial future;

                                 (b)    “factoring corporation” means a body corporate whose activities are limited to acting as a factor in relation to accounts receivable, including the lending of money and the raising of money for the purpose of financing those activities;

                                 (c)    “financial future” means a contract to buy or sell a standard quantity of a specified financial instrument on or before a specified future date at an agreed price;

                                 (d)    “financial leasing corporation” means a body corporate that enters into or acquires agreements as defined in section 39(1)(a);

                                 (e)    “financial services” means, for the purposes of section 168(1)(b)(ii) of the Act,

                                           (i)    money orders,

                                          (ii)    travellers’ cheques,

                                         (iii)    automatic teller machines or point of sale systems,

                                         (iv)    Canada Savings Bonds, Alberta Capital Bonds or similar bonds issued by the Government of Canada, the government of a province or an agent of any such government, and

                                          (v)    the collection of fees or similar charges payable in respect of a service or product provided by a restricted party;

                                 (f)    “forward contract” means a contract to buy or sell currency or a specified financial instrument on or before a specified future date at an agreed price;

                                 (g)    “held” or “hold” in relation to shares or to an interest in an entity other than a body corporate means direct legal ownership or holding by way of proxy wherein the grantor of the proxy allows the proxy holder unlimited discretion in voting the shares or the interest;

                                 (h)    “information management corporation” means a body corporate that carries on the business of

                                           (i)    the collection, manipulation and transmission of information of a financial or economic nature, and

                                          (ii)    the sale of related software;

                                  (i)    “investment counselling corporation” means, for the purposes of section 194 of the Act, a body corporate that carries on the activities of an investment counsel under the Securities Act;

                                  (j)    “management services” means services of an administrative nature, including personnel, accounting, computer and building maintenance services, treasury activities and mortgage and real estate administration;

                                 (k)    “mutual fund distribution corporation” means, for the purposes of section 194 of the Act, a body corporate that carries on the activities of a mutual fund dealer under the Securities Act;

                                  (l)    “networking arrangement” means an arrangement between a registered corporation and a party contracting with the corporation, where the corporation

                                           (i)    as agent for the contracting party, sells or offers to sell products or services to the public,

                                          (ii)    co-operates with the contracting party in the sale or offering for sale of products or services to the public,

                                         (iii)    receives from the contracting party a commission as consideration for referring to the contracting party a customer to whom the contracting party sells or offers to sell products or services, or

                                         (iv)    being the owner or the lessor of premises, enters into an arrangement for the sharing of common premises with the contracting party, who sells or offers for sale products or services to the public;

                               (m)    “option” means a contract under which a person acquires the right to buy or sell a particular security at a specified future date at an agreed price;

                                 (n)    “portfolio management corporation” means, for the purposes of section 194 of the Act, a body corporate that carries on the activities of a portfolio manager under the Securities Act;

                                 (o)    “real property brokerage corporation” means a body corporate whose activities are limited to acting as an agent for vendors or purchasers of real estate;

                                 (p)    “real property corporation” means a body corporate whose activities are limited to the acquisition, holding, maintenance, improvement, development, repair, servicing, leasing or disposition of, or other dealing with, real estate;

                                 (q)    “service corporation” means a body corporate whose activities are limited to the provision of management services to

                                           (i)    a provincial corporation,

                                          (ii)    a financial institution that is affiliated with the provincial corporation, or

                                         (iii)    a body corporate in which the provincial corporation or affiliated financial institution holds or beneficially owns, separately or in the aggregate, more than 50% of the issued and outstanding voting shares;

                                  (r)    “short selling” means in respect of a sale of securities, a sale of securities that the seller does not own or have the right to acquire at the time of making the sale;

                                 (s)    “special purpose trust corporation” means a provincial trust corporation whose registration is subject to a term, condition or restriction prohibiting it from carrying on the deposit-taking business;

                                  (t)    “swap” means an agreement between two parties whereby one party offers to pay specified obligations of another party and in exchange the other party agrees to pay specified obligations of the first party.

(2)  For the purposes of the Act and this Regulation a security is widely distributed if

                                 (a)    it was issued by a body corporate pursuant to a prospectus,

                                 (b)    it was issued to at least 25 investors over a period of not more than 6 months,

                                 (c)    no single investor beneficially owns more than 10% of the securities of the same class, and

                                 (d)    at least 90% of the principal amount of the aggregate issue price of the class is beneficially owned by persons other than the body corporate that issued the securities.

AR 171/92 s1

Calculation of total assets

2(1)  A provincial corporation’s total assets shall be calculated by adding the book value of all assets of the corporation on an unconsolidated basis.

(2)  Book value for the purposes of subsection (1) must be calculated in accordance with the principles, policies and rules referred to in or adopted pursuant to section 157 of the Act in respect of the preparation of financial statements.

AR 171/92 s2

Deposits

3   For the purposes of section 1(1)(j) of the Act, “deposit” does not include the following payments:

                                 (a)    money paid for an investment contract within the meaning of that term for the purposes of the Securities Act;

                                 (b)    money paid in respect of a contract of insurance so made as authorized by the Insurance Act or a similar statute of another jurisdiction in Canada;

                                 (c)    cash and margin accounts with a dealer within the meaning of section 16(a), (b), (c), (d) or (e) of the Securities Regulation (Alta. Reg. 46/87), or with a similar person who is registered under the securities legislation of another jurisdiction in Canada, for the purpose of carrying out or facilitating investment transactions.

AR 171/92 s3;251/2001

Restricted parties

4(1)  The prescribed class of employees for the purposes of section 2(7)(b) of the Act is the following employees of the provincial corporation:

                                 (a)    chief financial officers;

                                 (b)    branch managers;

                                 (c)    chief credit officers;

                                 (d)    other persons who perform for the corporation functions that are normally performed by any of the persons referred to in clause (a), (b) or (c). 

(2)  Notwithstanding section 2(9) of the Act, a financial institution referred to in section 2(9)(a) of the Act and a wholly owned subsidiary of a provincial corporation are restricted parties with respect to the corporation in respect of

                                 (a)    transfers of real estate or securities, and

                                 (b)    any transaction, guarantee or investment that is not at fair market rate.

AR 171/92 s4

Registration

Prescribed capital accounts

5   The following are prescribed as capital accounts for the purposes of section 35(b) of the Act:

                                 (a)    capital accounts consisting of non-cumulative shares, non-retractable shares, non-redeemable shares and non-convertible shares;

                                 (b)    contributed surplus accounts;

                                 (c)    retained earnings accounts. 

AR 171/92 s5

Information to be included in register

6   The Minister shall record the following information in the appropriate register referred to in section 28 of the Act:

                                 (a)    particulars of the registered corporation’s instruments of incorporation;

                                 (b)    notice of the issuance of letters patent dissolving a provincial corporation or of the issuance of a certificate of intent to dissolve, a certificate of revocation of intent to dissolve or a certificate of revival in respect of a provincial corporation;

                                 (c)    particulars of any orders or exemptions issued under the Act with respect to the corporation, where the order or exemption so provides;

                                 (d)    particulars of any consents issued under Part 5 of the Act with respect to a provincial corporation;

                                 (e)    particulars respecting the registration of the corporation, including the certificate of registration referred to in section 37(1) of the Act;

                                 (f)    particulars of any power of attorney, consent or change of address referred to in section 32(1)(a) or (b) or 32(4) of the Act;

                                 (g)    the annual return referred to in section 46(1) of the Act, together with the financial statements and auditor’s report referred to in section 46(2)(a) or (3);

                                 (h)    a notice of change of directors referred to in section 113(1) of the Act.

AR 171/92 s6

Directors and Officers

Eligibility of unaffiliated directors

7(1)  The prescribed amount of an entity’s indebtedness for the purposes of section 103(1)(a) of the Act is an amount equal to 25% of the equity of the entity.

(2)  The prescribed amount of an individual’s indebtedness for the purposes of section 103(1)(b) of the Act is an amount equal to 25% of the individual’s net worth.

(3)  For the purposes of section 103(4)(e) of the Act the prescribed number of days that a loan may be in arrears is 60.

AR 171/92 s7;68/93

Auditors Reports

Auditors duty to report changes

8(1)  For the purposes of section 155(1) of the Act, and without limiting that section, a change in circumstances to which that section applies shall be deemed to have occurred where

                                 (a)    reporting by the provincial corporation to the Minister as required by the Act or the regulations is misleading or misrepresents a particular issue,

                                 (b)    the provincial corporation has failed to report or does not intend to report a matter that it is required to report, and that non-reporting is or would be materially misleading,

                                 (c)    conditions exist that cast doubt on the ability of a provincial corporation to continue as a going concern, including, without limitation, any situation where there is or are, with respect to the corporation,

                                           (i)    recurring losses,

                                          (ii)    serious deficiencies in liquidity,

                                         (iii)    inability to obtain financing sufficient for continued operations,

                                         (iv)    insufficient funds to meet liabilities, or

                                          (v)    a plan to significantly curtail or to liquidate operations,

                                     or

                                 (d)    there are circumstances which suggest that the directors or officers are acting imprudently, negligently, fraudulently or incompetently and that their actions may represent a significant risk to the provincial corporation.

(2)  The auditor shall report circumstances which fall within subsection (1)(d) to the Minister only. 

(3)  The auditor is not required to report to the Minister a matter under this section, other than under subsection (1)(d), if he satisfies himself that the provincial corporation has already reported or is required within the next reporting period to report that matter to the Minister.

(4)  Nothing in this section is to be construed as expanding the scope of an audit.

AR 171/92 s8

Restricted Party Transactions

Prescribed securities for purposes of s167(e) of Act

9   For the purposes of section 167(e) of the Act a provincial corporation or its subsidiary may

                                 (a)    sell to or redeem from a restricted party other than a subsidiary the provincial corporation’s or subsidiary’s own subordinated notes, debentures or shares, and

                                 (b)    acquire from or sell to a restricted party the following securities:

                                           (i)    securities that are investments referred to in section 22;

                                          (ii)    bonds, debentures or commercial paper issued by a body corporate incorporated in Canada that have, at the date of acquisition or sale, a rating in accordance with the table in the Schedule.

AR 171/92 s9

Prescribed conditions for purposes of s167(g) of Act

10   A loan or guarantee under section 167(g) of the Act must be fully secured by one or more of the following:

                                 (a)    real estate valued at fair market rate at the time of the loan or guarantee, or securities that have a rating in accordance with the table in the Schedule at the time of the loan or guarantee;

                                 (b)    securities issued or fully guaranteed by the Government of Canada or of a province or by a municipality;

                                 (c)    securities evidencing deposits with an eligible financial institution other than one that is a restricted party;

                                 (d)    bonds, debentures or commercial paper issued by a body corporate incorporated in Canada, other than a financial institution that is a restricted party, that have, at the date of acquisition, a rating in accordance with the table in the Schedule.

AR 171/92 s10

Loan to prescribed employee

11(1)  The prescribed employees for the purposes of section 169 of the Act are the following employees of the provincial corporation:

                                 (a)    chief financial officers;

                                 (b)    branch managers;

                                 (c)    chief credit officers;

                                 (d)    other persons who perform for the corporation functions that are normally performed by any of the persons referred to in clause (a), (b) or (c).

(2)  The prescribed amount of a loan for the purposes of section 169(3) of the Act is

                                 (a)    in the case of a loan secured by a mortgage on the prescribed employee’s principal residence, $150 000, and

                                 (b)    in the case of any other loan, the amount that would cause the aggregate amount owing in principal and interest under all such other loans made by the provincial corporation or subsidiary to the prescribed employee to exceed $50 000.

AR 171/92 s11;251/2001

Prescribed matters re restricted party financial institutions

12(1)  The prescribed purpose of a loan referred to in section 170(1)(a) of the Act is the support of the short-term liquidity needs of the restricted party to whom the loan is made. 

(2)  The following securities are prescribed for the purposes of section 170(1)(a) of the Act:

                                 (a)    securities that are issued or fully guaranteed by the Government of Canada or of a province or by a municipality;

                                 (b)    securities evidencing deposits with an eligible financial institution other than one that is a restricted party;

                                 (c)    bonds, debentures or commercial paper issued by a body corporate incorporated in Canada, other than a financial institution that is a restricted party, that have, at the date of acquisition, a rating in accordance with the table in the Schedule.

(3)  For the purposes of section 170(1)(d) of the Act, a provincial corporation may, subject to section 27(2), enter into

                                 (a)    a swap or a similar agreement, or

                                 (b)    an agreement for the purchase or sale of financial futures, options or forward contracts

with a securities dealer that is a restricted party if the securities dealer is acting as agent, not as principal, and the transaction is at fair market rate. 

(4)  Subject to the Securities Act and any similar applicable legislation of another jurisdiction, a provincial corporation may enter into a transaction with a securities dealer that is a restricted party involving the underwriting of the corporation’s securities or the provision of other services associated with a primary distribution of the corporation’s securities.

(5)  The prescribed purposes for a transaction referred to in section 170(2)(a) of the Act are

                                 (a)    the support of the short-term liquidity needs of the provincial corporation or subsidiary or the restricted party, and

                                 (b)    to enable the clearance of cheques.

(6)  The securities prescribed for the purposes of a transaction referred to in section 170(2)(b) of the Act are any securities in which the provincial corporation or subsidiary could invest under Part 11 of the Act, other than securities issued by a restricted party.

AR 171/92 s12

Restricted party transactions prescribed limits

13   For the purposes of section 171 of the Act,

                                 (a)    the aggregate of

                                           (i)    the outstanding principal and interest owing on all loans to restricted parties,

                                          (ii)    the book value of all current investments in the securities of restricted parties, and

                                         (iii)    the contracted amount of all outstanding guarantees on behalf of restricted parties

                                          made or entered into by a provincial corporation shall not exceed 10% of the provincial corporation’s total assets, and

                                 (b)    a provincial corporation shall not allow the aggregate amount of its liability in respect of deposits received by it from financial institutions that are its restricted parties to exceed 2% of the provincial corporation’s total assets.

AR 171/92 s13

Capacity and Powers

Exception re carrying on fiduciary activities

14   Section 183(1) of the Act does not apply to the following:

                                 (a)    a loan corporation, in respect of its acting as a trustee of

                                           (i)    a self‑directed registered retirement income fund,

                                          (ii)    a self‑directed registered education savings plan, or

                                         (iii)    a self‑directed registered retirement savings plan,

                                          under the Income Tax Act (Canada);

                                 (b)    a body corporate, in respect of its acting as a trustee of a mutual fund trust that it manages and for which a prospectus or simplified prospectus has been filed and a final receipt has been issued under the Securities Act;

                                 (c)    Alberta Treasury Branches in respect of its acting as trustee in accordance with the Alberta Treasury Branches Act and regulations.

AR 171/92 s14;180/96;187/97

Capital adequacy rules

15(1)  In this section,

                                 (a)    “capital” means the sum of permanent capital and non-permanent capital;

                                 (b)    “capital base” means capital less deductions;

                                 (c)    “deductions” means the aggregate of the amounts obtained in subclauses (i) to (ix):

                                           (i)    goodwill and other intangible assets of the provincial corporation;

                                          (ii)    the aggregate of

                                                  (A)    the equity investments of the provincial corporation in a body corporate referred to in section 207(4)(a) of the Act, to the extent necessary to meet that body corporate’s capital base requirement, and

                                                  (B)    the book value of any other investments of the provincial corporation in that body corporate

                                                  less the provincial corporation’s proportionate ownership of the unused capital base of that body corporate;

                                         (iii)    the aggregate of the equity investments of the provincial corporation in a body corporate referred to in section 207(4)(c), (d), (g), (h), (i) or (l) of the Act, plus the book value of any other investments of the provincial corporation in that body corporate;

                                         (iv)    the aggregate of

                                                  (A)    the equity investments of the provincial corporation in a body corporate referred to in section 207(4) of the Act, other than one referred to in subclause (ii) or (iii), and

                                                  (B)    the book value of any other investments of the provincial corporation in that body corporate

                                                  that exceed 2% of the provincial corporation’s total assets;

                                          (v)    the market value deficiency of securities owned by the provincial corporation, except securities issued or guaranteed by the Government of Canada or the government of a province;

                                         (vi)    the market value deficiency of real estate owned by the provincial corporation, except real estate that is occupied by the corporation for its own purposes;

                                        (vii)    the amount of the provincial corporation’s income tax recoverable account;

                                       (viii)    the amount of any deferred foreign currency translation losses of the provincial corporation, after having deducted the impact of hedging transactions with respect to those foreign currency translations;

                                         (ix)    the book value of investments of the provincial corporation to the extent that they exceed the amounts that are permitted under the Act;

                                 (d)    “non-permanent capital” means

                                           (i)    the aggregate of

                                                  (A)    share capital that is cumulative, has purchase or redemption privileges or is convertible into a form other than permanent capital,

                                                  (B)    the amount owing in the form of subordinated notes, subordinated bonds, subordinated debentures and other subordinated debt instruments, and

                                                  (C)    the amount owing under subordinated shareholders’ loans,

                                                  up to a maximum of 50% of the corporation’s permanent capital, plus

                                          (ii)    deferred income taxes;

                                 (e)    “permanent capital” means the aggregate of

                                           (i)    share capital that is non-cumulative, has no purchase or redemption privileges and is either not convertible or is convertible only into other shares that are non‑cumulative or have no purchase or redemption privileges,

                                          (ii)    contributed surplus, and

                                         (iii)    retained earnings;

                                 (f)    “unused capital base” means the amount obtained in the formula

a - b
 c 

                                          where “a” is the aggregate of the authorized borrowings of the body corporate referred to in section 207(4)(a) of the Act, “b” is the actual borrowings of that body corporate and “c” is the capital base of the provincial corporation.

(2)  The equity method of accounting shall be used in the calculation of equity investments for the purposes of subsection (1)(c)(ii), (iii) and (iv).

(3)  Subject to this section, the total amount owing by a provincial corporation in the form of

                                 (a)    deposits with the corporation, investment certificates issued by the corporation and debentures that are effectively deposits that are issued by the corporation,

                                 (b)    borrowings, including overdrafts,

                                 (c)    subordinated bonds, subordinated notes, subordinated debentures and other subordinated debt instruments, and subordinated shareholders’ loans, to the extent that they are not used in the calculation of non‑permanent capital,

                                 (d)    accrued interest on amounts referred to in clauses (a) to (c), and

                                 (e)    unsecured letters of credit, calculated at full face value,

shall not exceed an amount equal to 10 times the provincial corporation’s capital base.

(4)  On application by a provincial corporation the Minister may, subject to any terms and conditions the Minister considers appropriate, increase the corporation’s borrowing multiple limit referred to in subsection (3) to an amount not exceeding 25 times its capital base.

(5)  An application under subsection (4) must be accompanied by a certified copy of a special resolution of the provincial corporation approving the increase.

(6)  A provincial corporation may exceed its borrowing multiple limit authorized under subsection (3) or (4) if

                                 (a)    the Minister approves the exceeding of the limit,

                                 (b)    the board of directors approves the exceeding of the limit by resolution passed on an annual basis,

                                 (c)    an amount equal to the amount by which the limit is exceeded is invested in accordance with subsection (10), and

                                 (d)    the limit is not exceeded for a period of longer than 3 months.

(7)  At least once every calendar year the Minister shall review each provincial corporation’s borrowing multiple limit.

(8)  Subject to subsection (9), if a provincial company is continued as a provincial trust corporation under the Act and immediately before the effective date of the continuance the company was in compliance with its ratio determined under section 108 of the Trust Companies Act,

                                 (a)    that ratio is deemed to be the trust corporation’s borrowing multiple limit for the purposes of this section, and

                                 (b)    if that ratio exceeds the permitted borrowing multiple limit for the corporation calculated under this section, the Minister is deemed to have increased the corporation’s borrowing multiple limit under subsection (4) to an amount equal to that ratio.

(9)  Where subsection (8)(b) applies, the Minister may by notice in writing direct the corporation to comply with subsection (3) within the time specified in the notice, and the corporation shall comply with the notice.

(10)  The permitted investments for the purposes of subsection (6)(c) are the investments referred to in section 18(1)(c)(i)(A) to (F).

AR 171/92 s15

Disclosure of information re subordinated notes

16   Every subordinated note issued by a provincial corporation shall state on its face the following information:

                                 (a)    the fixed maturity term;

                                 (b)    the terms of the subordination of the note;

                                 (c)    all restrictions applicable on redemption or payment of the note;

                                 (d)    that the note is neither guaranteed nor insured.

AR 171/92 s16

Investments

Commercial loan

17   For the purposes of the Act, an oil and gas loan is classified as a commercial loan.

AR 171/92 s17

Liquidity requirement

18(1)  In this section,

                                 (a)    “applicable date” means the date on which the calculation of liquid assets under this section is being made;

                                 (b)    “book value” of assets means the book value of those assets as determined in accordance with generally accepted accounting principles;

                                 (c)    “liquid assets” means

                                           (i)    the aggregate of

                                                  (A)    at book value, cash and demand deposits in an eligible financial institution,

                                                  (B)    at book value, Treasury Bills of the Government of Canada or of a province,

                                                  (C)    at book value, term deposits, bearer deposit notes or other similar instruments issued by an eligible financial institution that mature within 100 days after the applicable date,

                                                  (D)    at book value, banker’s acceptances that mature within one year from the date of issue,

                                                  (E)    at market value, securities, other than securities referred to paragraph (B), that are issued or guaranteed by the Government of Canada, the government of a province or a municipality,

                                                  (F)    at book value, demand loans, other than loans to an individual, that are fully secured by securities referred to in any of paragraphs (B) to (E), and

                                                  (G)    accrued interest on the assets referred to in paragraphs (A) to (E),

                                             less

                                          (ii)    specified borrowings of the corporation;

                                 (d)    “short term liabilities” means

                                           (i)    the aggregate of

                                                  (A)    deposits with the corporation that are payable on demand, within 100 days after the applicable date or on 100 days’ notice or less,

                                                  (B)    bonds, debentures, notes, loans or other similar liabilities payable within 100 days after the applicable date or on 100 days’ notice or less,

                                                  (C)    loans or securities that are guaranteed by the corporation and are payable within 100 days after the applicable date or on 100 days’ notice or less, and

                                                  (D)    accrued interest that is payable by the corporation on the liabilities referred to in paragraphs (A) to (C),

                                             less

                                          (ii)    specified borrowings of the corporation;

                                 (e)    “specified borrowings” means demand loans and loans having an original term to maturity of 7 days or less, including the accrued interest owing on such loans.

(2)  A provincial corporation shall have and keep available unencumbered liquid assets in an amount that is equal to 20% of its short term liabilities.

AR 171/92 s18

Commercial loans

19(1)  The following instruments are prescribed as commercial loans for the purposes of section 200 of the Act:

                                 (a)    revolving term credit accounts;

                                 (b)    commodity sales agreements;

                                 (c)    leases;

                                 (d)    letters of guarantee;

                                 (e)    security agreements within the meaning of the Personal Property Security Act;

                                 (f)    lines of credit;

                                 (g)    advances;

                                 (h)    promissory notes.

(2)  The following are prescribed instruments for the purposes of section 200(1)(g) of the Act:

                                 (a)    securities on which payment is ensured by rates or by the levy of a tax by a school or municipal corporation under a law of Canada or a province on property situated in the territory of the school or municipal corporation;

                                 (b)    first mortgages of the type permitted by section 201(2) of the Act.

(3)  The following are prescribed financial institutions for the purposes of section 200(1)(h) of the Act:

                                 (a)    a bank;

                                 (b)    a credit union within the meaning of the Credit Union Act or a similar body created under another law of Canada or a province;

                                 (c)    a loan or trust corporation wherever incorporated;

                                 (d)    an insurer wherever incorporated in Canada.

(4)  The prescribed aggregate amount for the purposes of section 200(1)(k) of the Act is $250 000.

(5)  The following forms of financing are prescribed for the purposes of section 200(1)(l) of the Act:

                                 (a)    the making of a loan to

                                           (i)    a county or municipal district,

                                          (ii)    an improvement district,

                                         (iii)    a drainage district, or

                                         (iv)    an irrigation district

                                          in Alberta or to a similar entity in another jurisdiction in Canada;

                                 (b)    the making of investments in bodies corporate referred to in section 207(4) of the Act (including shares in the bodies corporate that are beneficially owned by the provincial corporation) that are subordinated to the unsecured debt of those bodies corporate;

                                 (c)    the acquisition of securities on which payment is ensured by rates or by the levy of a tax by a school or municipal corporation under a law of Canada or a province on property situated in the territory of the school or municipal corporation;

                                 (d)    the acquisition of securities on which payment of principal and interest is guaranteed by the grant of a subsidy by the Government of Canada or the government of a province that is payable out of the sums voted each year for that purpose;

                                 (e)    leasing property to the Government of Canada or the government of a province, or any of their agencies, or the leasing of property to any other person where the lease is guaranteed by the Government of Canada or the government of a province, or any of their agencies.

AR 171/92 s19

Personal loans

20(1)  Financing to individuals by way of promissory note, advance, line of credit, revolving term credit or a security agreement within the meaning of the Personal Property Security Act is a personal loan for the purposes of the Act.

(2)  For the purposes of section 199(1) of the Act, the prescribed amount for all unsecured loans made by a provincial corporation is, in the aggregate, an outstanding balance of principal and interest equal to the lesser of $100 000 and 1/10 of 1% of the provincial corporation’s total assets.

AR 171/92 s20

Loans and investments re connected persons

21(1)  Where a provincial corporation makes a loan to or investments in 2 or more persons, those persons are connected for the purpose of section 204 of the Act if

                                 (a)    one person is the spouse or adult interdependent partner or child of the other person,

                                 (b)    one person is a relative (other than a spouse or adult interdependent partner or child) of the other person or of the other person’s spouse or adult interdependent partner and has the same home as that other person,

                                 (c)    one person is a body corporate controlled by the other person, or is an affiliate of such a body corporate,

                                 (d)    one person is a partner of the other person whether or not the partnership relates to the business to which the loan or investment relates, or

                                 (e)    one person is a trust or estate in which the other person has a beneficial interest or in respect of which the other person serves as trustee or in a similar capacity.

(2)  The prescribed amount for the purposes of section 204(1) of the Act is the aggregate of

                                 (a)    the outstanding balance of principal and interest, in the case of loans, and

                                 (b)    the book value of investments

in an amount equal to the greater of $500 000 and 1% of the provincial corporation’s total assets.

(3)  The following are prescribed as investment vehicles for the purpose of section 204(2)(c) of the Act:

                                 (a)    loans to or investments in subsidiaries;

                                 (b)    an investment that is authorized under section 207(4) of the Act;

                                 (c)    an investment referred to in section 22.

AR 171/92 s21;109/2003

Minimum investment limit

22   A provincial corporation shall maintain at least 45% of its total assets in one or more of the following investments:

                                 (a)    securities that are issued or guaranteed by the Government of Canada or the government of a province or by any of their agencies, or issued by a university, a municipality or a hospital or school board in Canada;

                                 (b)    loans to the Government of Canada or the government of a province or to any of their agencies, or to a university, a municipality or a hospital or school board in Canada;

                                 (c)    loans that are guaranteed by the Government of Canada or the government of a province;

                                 (d)    securities on which payment is ensured by rates or by the levy of a tax by a school or municipal corporation under a law of Canada or a province on property situated in the territory of the school or municipal corporation;

                                 (e)    a residential mortgage loan referred to in section 201(2) of the Act;

                                 (f)    a mortgage loan referred to in section 200(1)(b) of the Act;

                                 (g)    securities on which payment of principal and interest is guaranteed by the grant of a subsidy by the Government of Canada or the government of a province that is payable out of sums voted each year for that purpose;

                                 (h)    debt securities including banker’s acceptances, (other than subordinated debt securities) that are issued or guaranteed by a financial institution duly authorized to take deposits in Canada;

                                  (i)    deposits with financial institutions duly authorized to take deposits in Canada;

                                  (j)    cash.

AR 171/92 s22

Maximum investment limit re 3rd and subsequent mortgages

23(1)  A provincial corporation shall ensure that the aggregate amount owing in principal and interest under all 3rd and subsequent mortgages held by the corporation is not more than 2% of the corporation’s total assets. 

(2)  A 3rd or subsequent mortgage that is taken as security in addition to a first or 2nd mortgage is not to be considered for the purposes of subsection (1).

AR 171/92 s23

Investment limits re real estate

24(1)  A provincial corporation shall not acquire real estate if as a result of the acquisition the aggregate outstanding balance of principal and interest owing on all real estate acquired by the provincial corporation would exceed 10% of the sum of

                                 (a)    the total assets of the provincial corporation, and

                                 (b)    the assets of all subsidiaries of the provincial corporation, other than financial institutions.

(2)  Where a provincial corporation acquires a single parcel of real estate the purchase price shall not exceed 1% of the total assets of the corporation.

(3)  Where a subsidiary of a provincial corporation, other than a financial institution, acquires a single parcel of real estate, the purchase price shall not exceed 1% of the total assets of the subsidiary.

(4)  Section 2 applies to the calculation of the total assets of a subsidiary for the purposes of subsection (3) as if the subsidiary were a provincial corporation.

(5)  Subsections (2) and (3) do not apply where the parcel is or is to be used by the provincial corporation or the subsidiary, as the case may be, for its own use.

(6)  The acquisition of a leasehold estate by a provincial corporation or its subsidiary shall not be considered to be an acquisition of real estate for the purposes of this section, but where the provincial corporation or subsidiary as lessee makes leasehold improvements to the leased property, the corporation or subsidiary shall, for the purposes of this section, be deemed to have acquired real estate in an amount equal to the book value of the improvements. 

AR 171/92 s24

Investment limits re securities

25(1)  A provincial corporation shall not make an investment in shares of a body corporate if, after the investment, its holdings of shares in all bodies corporate, other than shares in subsidiaries of the provincial corporation and other than shares that qualify as a commercial loan within the meaning of section 200 of the Act, would exceed 10% of the provincial corporation’s total assets.

(2)  Shares acquired by way of realization of security are not to be considered for the purposes of calculating the investment limits under subsection (1) but a provincial corporation shall dispose of all shares acquired in that manner within 2 years after acquiring them.

AR 171/92 s25

Investment in subsidiaries

26(1)  A provincial corporation shall ensure that the aggregate book value of its investments in bodies corporate referred to in section 207(4) of the Act (including shares in the bodies corporate that are beneficially owned by the provincial corporation) that are subordinated to the unsecured debt of those bodies corporate does not exceed an amount equal to 5% of the total assets of the provincial corporation.

(2)  For the purposes of subsection (1), “bodies corporate” does not include trust or loan corporations that are subsidiaries of the provincial corporation.

AR 171/92 s26

Hedging agreements

27(1)  A provincial corporation may

                                 (a)    enter into a swap or forward contract,

                                 (b)    purchase financial futures or options, and

                                 (c)    engage in short selling

only where the purpose of the transaction is to hedge against interest rates, exchange rates or similar risks associated with specific assets or liabilities or groups of assets or liabilities of the provincial corporation.

(2)  Where a provincial corporation enters into a swap with another party (referred to as the counter-party), the counter-party must be an issuer of and have issued debt securities that are outstanding and have a rating in accordance with the table in the Schedule.

AR 171/92 s27

Duty to comply

28(1)  In this section and section 34,

                                 (a)    “fund” means a common trust fund, but does not include a master trust or pooled fund trust within the meaning of the Income Tax Act (Canada) and regulations whose beneficiaries are restricted to trusts governed by pension plan funds or plans;

                                 (b)    “participant” means any trust or estate, the moneys of which have been invested in a fund.

(2)  A trust corporation that establishes or maintains a fund shall ensure

                                 (a)    that a written plan of operation setting out the particulars of how the fund operates is prepared and maintained,

                                 (b)    that the trust corporation discloses in the financial statements the fees for managing the fund,

                                 (c)    that annual financial statements for the fund are prepared and audited, and

                                 (d)    that a current plan of operation and the latest annual audited financial statements are provided, on request, to the Minister, any participant in the fund and any beneficiary.

AR 171/92 s28;180/96

29 to 33   Repealed AR 180/96 s3.

Notice of passing of accounts

34   The notice referred to in section 212(4)(b) of the Act shall

                                 (a)    contain the following information:

                                           (i)    a statement that an account in respect of the fund has been filed in the Court;

                                          (ii)    the time and place at which the appointment for the passing of the account will be heard;

                                         (iii)    a statement as to the nature and purpose of the appointment and the effect of the approval of the account by the Court;

                                         (iv)    a statement that any person having an interest in the money invested in the fund has a right, at that person’s own expense, to appear personally or by counsel at the appointment;

                                 (b)    be

                                           (i)    published in a daily newspaper in Alberta having general circulation in the area in which the beneficiaries or their authorized representatives reside,

                                          (ii)    published in The Alberta Gazette, or

                                         (iii)    given or sent to each beneficiary or authorized representative in the manner provided in section 321 of the Act for giving a notice to a shareholder.

AR 171/92 s34;180/96;251/2001

Application of Parts 9, 10 and 11 of the Act
to Special Purpose Trust Corporations

Application of Part 9 of Act

35(1)  Section 163 of the Act applies in respect of a provincial corporation that is a special purpose trust corporation.

(2)  Section 175 of the Act applies in respect of a provincial corporation that is a special purpose trust corporation except that section 175(1) shall be read as if “and approval” were deleted.

(3)  Section 176 of the Act applies in respect of a provincial corporation that is a special purpose trust corporation except that in section 176(1) “that involves a material consideration or is entered into with the provincial corporation in its fiduciary capacity” shall be substituted for “for which the approval of the board of directors of the corporation is required”.

(4)  Section 177 of the Act applies in respect of a provincial corporation that is a special purpose trust corporation except that

                                 (a)    references to “this Part” shall be read as references to “section 175 or 176”, and

                                 (b)    section 177(5) shall be read as if it did not contain clause (b).

(5)  Section 162(2) and (3) of the Act apply in respect of a provincial corporation that is a special purpose trust corporation, to the extent necessary to make the provisions adopted in subsections (1) to (4) of this section operative.

AR 171/92 s35

Application of Part 10 of Act

36(1)  Sections 181(1) and (2)(a), 185, 186, 189(2) and 194 of the Act apply in respect of a registered corporation that is a special purpose trust corporation.

(2)  A special purpose trust corporation may borrow only

                                 (a)    by means of a loan from an eligible financial institution, or

                                 (b)    by any other means that is approved by the Minister.

(3)  Section 191(3) to (6) of the Act apply to borrowings of a special purpose trust corporation that are authorized under subsection (2) of this section, except that a reference in those subsections to “corporation’s own assets” shall be read as a reference to “corporation’s own funds” within the meaning of section 191(1)(b).

(4)  No special purpose trust corporation shall

                                 (a)    enter into or acquire agreements as defined in section 39(1)(a), or

                                 (b)    provide or write guarantees, letters of credit or other similar instruments.

AR 171/92 s36

Application of Part 11 of Act

37(1)  In this section, “corporation’s own funds” and “corporation’s own assets” have the same meanings as in section 191(1) of the Act.

(2)  A special purpose trust corporation may invest the corporation’s own funds in only the following investments:

                                 (a)    the acquisition of real estate to be occupied by the corporation for its own use, and other fixed assets necessary for the corporation to carry on its business;

                                 (b)    the acquisition of securities that are issued or guaranteed by the Government of Canada or the government of a province, or any of their agencies;

                                 (c)    the acquisition of debt securities, including banker’s acceptances but excluding subordinated debt securities, that are issued or guaranteed by a financial institution that is authorized to take deposits in Canada;

                                 (d)    deposits in a financial institution referred to in clause (c);

                                 (e)    the acquisition of bonds, debentures or commercial paper issued by a body corporate incorporated in Canada, other than a restricted party of the special purpose trust corporation, that at the time of acquisition have a rating in accordance with the table in the Schedule.

(3)  A special purpose trust corporation shall not acquire real estate under subsection (2)(a) if as a result of the purchase the aggregate outstanding balance of principal and interest owing on all real estate so purchased would exceed 10% of the corporation’s own assets.

(4)  A special purpose trust corporation shall not acquire bonds, debentures or commercial paper under subsection (2)(e) if as a result of the acquisition, the total book value of such bonds, debentures and commercial paper so acquired would exceed 10% of the corporation’s own assets.

(5)  Where, on the date specified in letters patent issued under section 327 of the Act (SA 1991 cL‑26.5) in respect of a special purpose trust corporation, the corporation has an equity investment that would not be permitted under the Act and this Regulation if it were acquired after the coming into force of this Regulation, the corporation shall bring itself into compliance with the Act and this Regulation in that regard within 5 years after that date.

(6)  Where, on the date specified in letters patent issued under section 327 of the Act (SA 1991 cL‑26.5) in respect of a special purpose trust corporation, the corporation has an investment, other than an investment referred to in subsection (5), that would not be permitted under the Act and this Regulation if it were acquired after the coming into force of this Regulation, the corporation may, subject to subsection (7), retain the investment but may not increase the amount of the investment without the prior consent of the Minister.

(7)  Where an investment referred to in subsection (6) was made after August 9, 1991, the corporation may not retain the investment unless it obtains the consent of the Minister.

(8)  Sections 211 and 212 of the Act apply in respect of a provincial corporation that is a special purpose trust corporation.

AR 171/92 s37;251/2001;196/2006

Other Matters

Exemption from s127 of Act

38   Section 127 of the Act does not apply in respect of a provincial corporation where

                                 (a)    all of the voting shares of the corporation are beneficially owned by a financial institution within the meaning of section 1(1)(r)(ii) or (iii) of the Act, and

                                 (b)    the financial institution

                                           (i)    gives an undertaking acceptable to the Minister regarding the provision by the financial institution to the Minister of records and information respecting the functions and duties for which the committees would be responsible had they been appointed, and

                                          (ii)    gives an undertaking to the Minister that it will take all reasonable steps to ensure that those functions and duties are carried out as required by the Act and the regulations.

AR 171/92 s38

Leasing and related agreements

39(1)  In this section and section 40,

                                 (a)    “agreement” means a financial lease agreement or a security agreement within the meaning of the Personal Property Security Act;

                                 (b)    “property” means the personal property to which an agreement relates.

(2)  A provincial corporation may enter into or acquire agreements only if the following requirements are met:

                                 (a)    the corporation must not direct its customers or potential customers to particular dealers in the property;

                                 (b)    the aggregate of the estimated residual values of all property must not exceed 10% of the aggregate of the costs of acquisition of that property to the corporation;

                                 (c)    the estimated residual value of a particular property must not be greater than 20% of the cost of acquisition of that property to the corporation;

                                 (d)    the agreement must be entered into or acquired for the purpose of extending credit to the lessee or purchaser;

                                 (e)    the property that is the subject of the agreement must be selected by the lessee or buyer and

                                           (i)    must be acquired by the corporation at his request, or

                                          (ii)    must have been acquired by the corporation through the operation of an earlier agreement;

                                 (f)    the agreement must yield a return that

                                           (i)    will compensate the corporation for not less than its full investment in the property,

                                          (ii)    is reasonable, taking into account

                                                  (A)    the term of the agreement and the other terms and conditions of it,

                                                  (B)    the technological obsolescence of the property, and

                                                  (C)    the rate of return sought by other lessors in respect of similar agreements in respect of similar property and under the same terms and conditions,

                                             and

                                         (iii)    is calculated by taking into account

                                                  (A)    rental charges paid by the lessee or purchaser,

                                                  (B)    estimated tax benefits of the agreement to the corporation, including tax credits and capital cost allowance claims, and

                                                  (C)    the amount of,

                                                            (I)    where the lessee or purchaser or a third party who is dealing at arm’s length with the corporation has, on or before the commencement of the agreement, contracted to purchase the property or unconditionally guaranteed the resale value of the property at the date of expiry of the agreement, the purchase price or the resale value so guaranteed, or

                                                          (II)    in any other case, but subject to clause (c), the estimated residual value of the property;

                                 (g)    the agreement must contain a provision

                                           (i)    assigning and conveying to the lessee or purchaser the benefit of all warranties, guarantees or other undertakings made by a manufacturer or supplier relating to the property, or

                                          (ii)    setting out the responsibilities of the corporation with regard to the warranties, guarantees or other undertakings referred to in subclause (i);

                                 (h)    the agreement must substantially transfer to the lessee or purchaser the benefits and risks incidental to the operation of the property and must not place responsibility on the part of the corporation to install, promote, service, clean, maintain or repair the property;

                                  (i)    where the lessee or purchaser defaults in the manner set out in the agreement and the default is not waived or the agreement, including any renewals or extensions of it, expires, the corporation must

                                           (i)    liquidate its interest in the property, or

                                          (ii)    enter into a new agreement in respect of that property within 2 years of that default or expiry or, where proceedings in respect of that property have prevented the corporation from complying with that requirement within that period, within 2 years of the completion of those proceedings;

                                  (j)    an agreement may be renewed on its expiry and may be extended during its term.

AR 171/92 s39

Subsidiary financial leasing corporation

40   A provincial corporation shall not beneficially own shares in a financial leasing corporation as permitted under section 207(4) of the Act unless

                                 (a)    the aggregate of

                                           (i)    the book value of all of the property that is subject to agreements held by the financial leasing corporation, and

                                          (ii)    all amounts owing as receivables in respect of such agreements

                                          is equal to at least 80% of the assets of the subsidiary, and

                                 (b)    the financial leasing corporation meets the requirements of section 39 in respect of the agreements.

AR 171/92 s40

Communication to professional body

41   Where the Minister has reasonable grounds to believe that the auditor of a registered corporation

                                 (a)    has failed to perform the duties of auditor as required by the Act or the regulations,

                                 (b)    has contravened the Act or the regulations,

                                 (c)    has been a party to the preparation of or has expressed an opinion on a financial statement that does not fairly present the financial position of the registered corporation,

                                 (d)    is incompetent, or

                                 (e)    has engaged in what may be unprofessional conduct within the meaning of any of the Acts applicable in clauses (f) to (h),

the Minister may communicate any information he has received that is relevant to any of the matters described in clauses (a) to (e) to,

                                 (f)    in the case of a chartered accountant, the Executive Director of the Institute of Chartered Accountants of Alberta,

                                 (g)    in the case of a certified management accountant, the Registrar of the Society of Management Accountants of Alberta, or

                                 (h)    in the case of a certified general accountant, the Registrar of the Certified General Accountants’ Association of Alberta.

AR 171/92 s41

Penalty for late filing

42(1)  The amount of the penalty for the purposes of section 312(1) of the Act is $100 per day. 

(2)  Interest for the purposes of section 312(2) of the Act is payable at the rate of 2% per annum plus the rate that is the average of the Bank of Canada rates applicable on the last Thursday of each month for the 12 completed months prior to the notice date.

AR 171/92 s42;251/2001;196/2006

Maximum deposit transferable on death

43   The prescribed amount of deposits for the purposes of section 324(1) of the Act is the greater of

                                 (a)    $5000, and

                                 (b)    50% of the aggregate of all of the deceased’s deposits with the registered corporation, the 50% figure not to exceed $10 000.

AR 171/92 s43;251/2001

Application

44(1)  Sections 45 to 49 apply only in respect of deposits held by a provincial corporation in its branches in Alberta.

(2)  Sections 45 to 49 apply,

                                 (a)    in respect of cheques, drafts or bills of exchange issued by a provincial corporation, only to a cheque, draft or bill of exchange that is issued, certified or accepted after the date specified in letters patent issued in respect of the corporation under section 327 of the Act (SA 1991 cL‑26.5), and

                                 (b)    in respect of deposits with a provincial corporation, only to

                                           (i)    a deposit that is made after the date specified in letters patent issued in respect of the corporation under section 327 of the Act (SA 1991 cL‑26.5), and

                                          (ii)    a deposit that is made before that date and that

                                                  (A)    is made for a fixed period that expires after that date, or

                                                  (B)    is not made for a fixed period, but on which a transaction takes place or a statement of account is requested or acknowledged within one year after that date by the depositor.

AR 171/92 s44;251/2001;196/2006

Unclaimed balances ‑ significant amounts

45(1)  Where

                                 (a)    a deposit has been made that is payable in Canada in Canadian currency and no transaction has taken place and no statement of account has been requested or acknowledged by the depositor with respect to the deposit during a period of 10 years,

                                           (i)    in the case of a deposit made for a fixed period, from the day on which the fixed period terminated,

                                          (ii)    in the case of a deposit referred to in section 44(2)(b)(ii)(B), from the last day in the one‑year period referred to in that provision on which a transaction took place or a statement of account was requested or acknowledged by the depositor, whichever it later, and

                                         (iii)    in the case of any other deposit, from the day on which the last transaction took place or a statement of account was last requested or acknowledged by the depositor, whichever is later,

                                     or

                                 (b)    a cheque, draft or bill of exchange (including any such instrument drawn by one branch of the corporation on another branch of the corporation but not including such an instrument issued in payment of a dividend on the capital of the corporation) payable in Canada in Canadian currency has been issued, certified or accepted by the corporation and no payment has been made in respect of the cheque, draft or bill of exchange for a period of 10 years after the date of issue, certification, acceptance or maturity, whichever is later,

and the principal amount of the deposit or instrument, plus interest, if any, calculated in accordance with the terms of the deposit or instrument exceeds $100, the corporation shall transfer the amount to the President of Treasury Board and Minister of Finance.

(2)  The transfer of an amount under subsection (1) discharges the corporation from all liability in respect of the deposit or instrument.

(3)  A corporation that makes a transfer under subsection (1) shall provide the following information to the President of Treasury Board and Minister of Finance with the transfer:

                                 (a)    the name and last known address of the depositor or the person entitled to receive payment on the deposit or instrument;

                                 (b)    the amount transferred;

                                 (c)    the type of account or the particulars of the instrument, as the case may be;

                                 (d)    the date of the transfer;

                                 (e)    the branch location of the corporation;

                                 (f)    the date of the last transaction or acknowledgment referred to in subsection (1).

(4)  The maturing of a deposit constitutes the transaction of business for the purposes of subsection (1), but the application of earnings or a service charge to an account by the corporation does not constitute the transaction of business.

(5)  Before the end of each fiscal year the corporation shall identify all amounts that should be transferred to the President of Treasury Board and Minister of Finance under subsection (1).

(6)  The President of Treasury Board and Minister of Finance may pay an amount transferred under subsection (1) to a person claiming to be entitled to it on being furnished with satisfactory proof of the person’s entitlement.

(7)  The President of Treasury Board and Minister of Finance is not liable for the payment of any interest on any amount paid under subsection (6).

(8)  This section does not apply to any money that is

                                 (a)    lawfully retained by the corporation under any lien, right of set‑off or specific charge, or

                                 (b)    retained in a registered savings plan under the Income Tax Act (Canada).

AR 171/92 s45;27/2002;68/2008;31/2012;62/2013

Unclaimed balances - minor amounts

46(1)  Where

                                 (a)    a deposit has been made that is payable in Canada in Canadian currency and no transaction has taken place and no statement of account has been requested or acknowledged by the depositor with respect to the deposit during a period of 2 years,

                                           (i)    in the case of a deposit made for a fixed period, from the day on which the fixed period terminated,

                                          (ii)    in the case of a deposit referred to in section 44(2)(b)(ii)(B), from the last day in the one‑year period referred to in that provision on which a transaction took place or a statement of account was requested or acknowledged by the depositor, whichever is later, and

                                         (iii)    in the case of any other deposit, from the day on which the last transaction took place or a statement of account was last requested or acknowledged by the depositor, whichever is later,

                                     or

                                 (b)    a cheque, draft or bill of exchange (including any such instrument drawn by one branch of the corporation on another branch of the corporation but not including such an instrument issued in payment of a dividend on the capital of the corporation) payable in Canada in Canadian currency has been issued, certified or accepted by the corporation and no payment has been made in respect of the cheque, draft or bill of exchange for a period of 2 years after the date of issue, certification, acceptance or maturity, whichever is later,

and the principal amount of the deposit or instrument, plus interest, if any, calculated in accordance with the terms of the deposit or instrument is $100 or less, the corporation shall

                                 (c)    comply with section 45 in respect of the amount,

                                 (d)    hold the amount for the depositor or the person entitled to receive payment on the instrument, or

                                 (e)    transfer the amount to income of the corporation.

(2)  Section 45(4) and (8) apply to an amount transferred to income under subsection (1)(e) of this section.

(3)  Where an amount that is transferred to income under subsection (1)(e) is subsequently claimed by the person entitled to it, the corporation shall pay to the claimant the amounts transferred, plus interest, if any, calculated in accordance with the terms of the deposit or instrument.

(4)  If an amount transferred to income under subsection (1)(e) is not claimed by the person entitled to it within 5 years after the corporation became entitled to act under subsection (1), the corporation may retain the money and is not liable for any claims for the money made after the expiration of that period.

AR 171/92 s46

Notice of unpaid amount

47(1)  A corporation shall mail to each person, in so far as that person is known to the corporation,

                                 (a)    to whom a deposit referred to in section 45(1)(a) is payable, or

                                 (b)    to whom or at whose request an instrument referred to in section 45(1)(b) was issued, certified or accepted

at that person’s last known address with the corporation, a notice stating that the deposit or instrument remains unpaid.

(2)  A notice required by subsection (1) shall be given during the month of January next following the end of the first 2‑year period, and also during the month of January next following the end of the first 5‑year period,

                                 (a)    in the case of a deposit made for a fixed period, after the fixed period has terminated,

                                 (b)    in the case of any other deposit, in respect of which no transaction has taken place and no statement of account has been requested or acknowledged by the depositor with respect to the deposit, and

                                 (c)    in the case of a cheque, draft or bill of exchange, in respect of which the instrument has remained unpaid.

(3)  For the purposes of subsection (2)(b) as it applies to a deposit referred to in section 44(2)(b)(ii)(B), the calculation of the time periods commences on the last day in the one‑year period referred to in that provision on which a transaction takes place or a statement of account is requested or acknowledged by the depositor.

AR 171/92 s47

Designation of unclaimed accounts

48   Where a corporation gives a notice following the expiry of the 2‑year period under section 47, the corporation shall forthwith designate the amount of the deposit or instrument as an unclaimed balance, or use a similar term, to indicate its special status.

AR 171/92 s48

Extinguishment of rights

49   Where a period of 20 years has elapsed since an amount was transferred to the President of Treasury Board and Minister of Finance under section 45 without any valid claim having been made,

                                 (a)    that money vests in the Government,

                                 (b)    all rights relating to that money by the person entitled to it are extinguished, and

                                 (c)    the Government and the corporation have no further obligations to any person in relation to the amount transferred to the Government.

AR 171/92 s49;27/2002;68/2008;31/2012;62/2013

Appraisals of real estate

50(1)  In this section, “appraiser” means a person whose experience and training in the appraisal of real estate is current and who,

                                 (a)    in a case where the real estate to be appraised is located in Canada, is a member in good standing of the Appraisal Institute of Canada or another appraisal institute recognized by the Minister and is designated as an “Accredited Appraiser Canadian Institute” or a “Canadian Residential Appraiser” or by an equivalent designation recognized by the Appraisal Institute of Canada, or

                                 (b)    in a case where the real estate to be appraised is located outside Canada, has qualifications satisfactory to the Minister.

(2)  An appraisal under section 278 of the Act must be conducted by an appraiser in accordance with the standards of the appraisal institute of which the appraiser is a member.

AR 171/92 s50;251/2001

Duties of audit committee

51   The audit committee of a provincial corporation shall do the following:

                                 (a)    review the financial position and reported results of the corporation in the financial statements of the corporation for the purpose of making any financial report under the Act;

                                 (b)    review and make recommendations to the board on

                                           (i)    the appointment and remuneration of the auditor, and

                                          (ii)    the methods to be adopted by the corporation’s internal auditor in conducting audits and the scope of those audits;

                                 (c)    discuss with the auditor the audit findings, any restrictions on the scope of the auditor’s work and any problems that the auditor experienced in performing the audit;

                                 (d)    review the nature and extent of the auditor’s evaluation of the internal control systems of the corporation;

                                 (e)    review the recommendations made by the auditor to the management of the corporation and the response made by management to the recommendations;

                                 (f)    review the organization and independence of the internal auditor of the corporation, including the internal auditor’s goals and work plans and any problems that the internal auditor experienced in performing the audit, and meet with the head of the internal audit department at least once annually to discuss the scope of its activities and assess its performance;

                                 (g)    review the recommendations respecting the improvement of accounting and internal control practices made by the internal auditors to the management of the corporation and the response made by management to the recommendations;

                                 (h)    review the adequacy of the corporation’s complement of employees to perform its accounting and financial responsibilities;

                                  (i)    review the financial information included in any prospectus issued by the corporation;

                                  (j)    review audit fees;

                                 (k)    report and make such recommendations to the board of directors of the corporation arising from the duties of the audit committee under clauses (a) to (j) as the committee considers appropriate in the circumstances and ensure that any recommendations of the auditor receive the attention of the board;

                                  (l)    report to the board of directors of the corporation any conflict between the auditor and the management of the corporation that the committee has been unable to resolve within a reasonable period of time.

AR 171/92 s51

Duties of investment committee

52(1)  A report or recommendation required under this section must be made to the board of directors of the provincial corporation.

(2)  The investment committee of a provincial corporation shall recommend an investment policy to the board of directors.

(3)  The investment policy shall set out the objectives of the provincial corporation’s investment programs and shall provide for the following:

                                 (a)    the establishment of internal operating procedures describing the responsibility and accountability of the investment committee, the board and management;

                                 (b)    the establishment of procedures for recommending and approving investment decisions;

                                 (c)    the establishment of methods for adopting and implementing investment decisions;

                                 (d)    the classification of investments;

                                 (e)    the establishment of reporting procedures;

                                 (f)    the establishment of asset-liability management programs including matching of maturities and interest rate sensitivities to mitigate risk factors;

                                 (g)    the setting of acceptable ranges for aggregate investments;

                                 (h)    the setting of minimum quality requirements for assets to be invested in;

                                  (i)    the setting of specific positioning limits and control arrangements with respect to the use of hedging instruments such as futures and options;

                                  (j)    the setting of limits on aggregate outstanding loans by reference to the type of loan, the industry, the geographic location of the loan portfolio, the credit rating of the borrower, and individual and related borrowers and position limits.

(4)  The investment committee shall

                                 (a)    recommend any changes to the investment policy of the corporation that the committee considers necessary to meet changes in the investment climate,

                                 (b)    recommend policies concerning security lending arrangements, and

                                 (c)    monitor investment policies as approved by the board and report material deviations in such policies to the board at the next meeting of the board after having become aware of the deviation.

AR 171/92 s52

Meeting between Minister and auditor

53   At the request of and on being given reasonable written notice by the auditor of a provincial corporation, the Minister shall meet the auditor to discuss the financial business and affairs of the provincial corporation relating to the audit of its business and affairs.

AR 171/92 s53

Auditors right to information from Minister

54   The Minister shall, on the written request of the auditor of a provincial corporation, permit the auditor, during normal business hours, to inspect the following documents insofar as they relate to the corporation and are in the Minister’s possession:

                                 (a)    any completed reports sent to the corporation that relate to examinations conducted under section 273 or 274 of the Act;

                                 (b)    copies of orders or directions made by the Minister under the Act;

                                 (c)    any appraisals or information relating to appraisals made under section 278 of the Act.

AR 171/92 s54;251/2001;196/2006

Ministers access to audit papers

55   The auditor of a provincial corporation shall, on the written request of a person conducting an examination under section 273 or 274 of the Act, permit that person, during normal business hours, to inspect working papers maintained by the auditor in respect of any audit of the provincial corporation’s business.

AR 171/92 s55;251/2001


Schedule   

Table of Securities Ratings

Rating Organization             Bonds/Debentures             Commercial Papers

Canadian Bond

Rating Service                         A++; A+; A                                       A-1+; A-1

Dominion Bond

Rating Service                         AAA; AA; A                                               R-1

Moody’s Investor

Services                                  Aaa; Aa; A                                                   P-1

Standard & Poor’s                  AAA; AA; A                                     A-1+; A-1

AR 171/92 Sched.