Interpretation

1  In this regulation:

"Act" means the International Financial Business Act;

"capital base" means assets less liabilities.

 Application for a licence

2  A corporation applying for a licence must provide the superintendent with the following:

(a) information, in a form acceptable to the superintendent, on all its directors and officers;

(b) the name of its parent corporation and the name of the country, state or place in which the parent corporation is incorporated, formed or otherwise constituted;

(c) audited financial statements of its parent corporation for the 2 most recent fiscal years preceding the date of application;

(d) a copy of the most recent interim financial statements for the parent corporation;

(e) an undertaking, in a form acceptable to the superintendent, from its parent corporation stating that the parent corporation will maintain the solvency of the corporation;

(f) projections in the form of balance sheets and income statements for a period of 3 years beyond the date of application showing the anticipated financial position of the corporation at the end of each of those years;

(g) a list of the international financial activities that the corporation proposes to carry on;

(h) the location of its proposed international financial office or offices;

(i) the written investment and lending policies required under section 9 (2);

(j) any other information requested by the superintendent.

 Permitted activities

3  (1)  For the purposes of section 5 (1) (a) and (b) of the Act, the following are prescribed classes of business:

(a) any international financial business of any financial institution registered under the International Financial Business (Tax Refund) Act;

(b) an international banking centre business within the meaning of section 33.1 of the Income Tax Act (Canada);

(c) an international financial business within the meaning of Title VII.2 of the Taxation Act (Québec).

(2)  For the purposes of section 5 (1) (f) of the Act, "prescribed risks" means any risks that fall within any class of insurance within the meaning of the Insurance Act except life, sickness or accident insurance.

(3)  For the purposes of section 5 (1) (m) of the Act, the following are designated as international financial activities:

(a) borrowing from non-residents or from persons carrying on businesses that come within a class of business prescribed under subsection (1);

(b) making deposits in any currency with non-residents or with persons carrying on businesses that come within a class of business prescribed under subsection (1);

(c) a financial activity permitted under Canadian law that is conducted exclusively with non-residents and from which the registered financial institution earns fee income.

(4)  For the purposes of paragraph (b) of the definition of "financial institution" in the Act, a corporation registered under the Securities Act shall be deemed to be a financial institution.

 Restrictions on amalgamations, acquisitions and changes to articles

4  A corporation shall not

(a) enter into an amalgamation agreement,

(b) acquire an interest in or an asset of another corporation if the acquisition would have the effect of transferring to the licensed corporation the whole or a substantial part of the undertaking carried on by the other corporation, or

(c) file a resolution under section 219 of the Company Act

without first obtaining the consent of the minister.

 Expiry of licence

5  Every licence granted under the Act expires 90 days after the end of the licensed corporation's fiscal year.

 Renewal of licence

6  (1)  A corporation applying to have its licence renewed must provide the superintendent with

(a) information, in a form acceptable to the superintendent, on all its directors and officers, if different from the most recent information filed with the superintendent,

(b) the name of its parent corporation, if different from the most recent information filed with the superintendent,

(c) its audited financial statements for the most recent fiscal year,

(d) the most recent audited financial statements of its parent corporation,

(e) an undertaking, in a form acceptable to the superintendent, from its parent corporation stating that the parent corporation will maintain the solvency of the corporation,

(f) the written investment and lending policies required under section 9 (2),

(g) where it carries on an activity referred to in section 5 (1) (f) of the Act, an actuarial statement prepared in accordance with section 14 (1) (c) and (d) of the Act, and

(h) any other information requested by the superintendent.

(2)  The minister shall renew a corporation's licence if he is satisfied that the conditions outlined in section 4 (a) to (d) of the Act will continue to be met.

 Fees

7  (1)  The fee for application for a licence under the Act is $10 000 and must be paid at the time of application.

(2)  The annual fee for a licence under the Act is $5 000 and must be paid within 30 days after notification that a licence has been granted or renewed.

 Capital

8  A licensed corporation shall ensure that its capital base is at all times adequate in relation to the business it carries on.

 Investment and loan standards

9  (1)  A licensed corporation shall adhere to prudent standards in making investment and lending decisions, in writing down the value of investments and loans on its books and in managing its investments and loans.

(2)  A licensed corporation shall establish written investment and lending policies that are consistent with prudent standards.

(3)  The written investment and lending policies required under subsection (2) shall set out the powers and duties of any committees or officers to whom the power to make loans or investments is delegated from the board of directors of the licensed corporation and any conditions to which the delegations are subject.

(4)  For the purposes of this regulation, prudent standards are those which, in the overall context of an investment and loan portfolio, a prudent person would apply to investments and loans made on behalf of another person to whom there is owed a fiduciary duty, without undue risk of loss or impairment and with a reasonable expectation of fair return or appreciation.