Definitions and interpretation

1  (1)  In this Act:

"actuary" means a fellow of the Canadian Institute of Actuaries;

"affiliate" means a corporation that is affiliated with another corporation within the meaning of subsection (2) (a);

"associate", if used to indicate a relationship with a person, means

(a) a corporation of which that person beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to all shares of the corporation for the time being outstanding carrying voting rights that are at that time capable of being exercised,

(b) a partner of that person,

(c) a trust or estate in which that person has a substantial beneficial interest or for which that person serves as trustee or in a similar capacity,

(d) a spouse, son or daughter of that person, or

(e) a relative of that person or of that person's spouse, other than a relative referred to in paragraph (d), who has the same home as that person;

"auditor" means

(a) a person who is a member, or a partnership whose partners are members, in good standing of the Institute of Chartered Accountants of British Columbia or The Certified General Accountants Association of British Columbia, or

(b) a person who is certified by the Auditor Certification Board continued under section 221 of the Business Corporations Act;

"commissioner" means the Commissioner of Income Tax appointed under the Income Tax Act;

"dealing in securities" means acting as a principal or as an agent for a nonresident in making or offering to make with another nonresident an agreement for acquiring, disposing of, subscribing for or underwriting securities;

"factoring" means buying outright and without recourse from a resident or nonresident accounts that are receivable from a nonresident;

"financial institution" means

(a) a bank, trust company, investment dealer or insurer, or

(b) a corporation that comes within a prescribed class of corporation;

"financial leasing" means granting to a nonresident for use outside Canada a lease of equipment, machinery or other personal property with the object of receiving in return from the nonresident payments that recoup to the lessor its entire investment in the equipment, machinery or other personal property;

"insurer" means an insurance company;

"international financial activity" means an activity referred to in section 5 (1);

"international financial business" means a business

(a) that is carried on by a licensed corporation,

(b) all the activities of which are international financial activities permitted under the corporation's licence, and

(c) the management of the international financial activities of which is conducted in an international financial office;

"international financial office" means a branch or office, within the Greater Vancouver Regional District, of a licensed corporation;

"investment dealer" means a person registered under the Securities Act as a dealer or underwriter;

"licence" means a licence granted under section 4;

"licensed corporation" means a corporation licensed under section 4;

"nonresident" means

(a) a person, or

(b) a trust

that is not resident in Canada under the Income Tax Act (Canada), but does not include a person who is a nonresident under that Act only because of section 33.1 (1) of that Act;

"parent corporation", if used to indicate a relationship with a licensed corporation or a corporation that applies for a licence, means the financial institution of which the corporation is a wholly owned subsidiary;

"providing fiduciary services" means acting

(a) as trustee of a trust that, at all relevant times, is a nonresident,

(b) as an executor or administrator of the estate of a nonresident, all the beneficiaries of which are at all relevant times nonresidents,

(c) as guardian of the estate of a minor who is a nonresident, or

(d) as committee of the estate of a mentally incompetent person who is a nonresident;

"resident" means a person other than a nonresident;

"security" means any security, as defined in the Securities Act, of or issued by a nonresident;

"subsidiary" means a corporation that, in respect of another corporation, is controlled, directly or indirectly, by the other corporation;

"superintendent" means the person designated by the minister to exercise the powers and perform the duties of the superintendent under this Act, and, in relation to a power or duty that the Lieutenant Governor in Council has, under section 16, delegated to another person, includes that other person;

"wholly owned subsidiary" means a corporation all the issued share capital of which, except directors' qualifying shares, is owned by the financial institution of which it is a subsidiary.

(2)  For the purposes of this Act,

(a) one corporation is affiliated with another corporation if

(i)  one of them is the subsidiary of the other, or both are subsidiaries of the same corporation,

(ii)  each of them is controlled by the same person or the same group of persons, or

(iii)  one of them is controlled by one person and the other is controlled by one or more partners of that person, other than a limited partner, or by one or more related persons within the meaning of sections 251 (2) to (6) and 252 of the Income Tax Act (Canada),

(b) an affiliate of a corporation is affiliated with all other corporations with which the corporation is affiliated,

(c) a corporation is controlled by a person if the votes carried by shares held, other than by way of security only, by or for the benefit of the person are sufficient, if exercised, to elect a majority of the directors of the corporation,

(d) a person is beneficially interested in a trust if the person has a right to receive any of the income or capital of the trust either directly from the trust or indirectly through one or more other trusts,

(e) a trust is deemed to be a person, and

(f) an activity carried on for, with or on behalf of a nonresident in respect of a fixed place of business in Canada of the nonresident is deemed to have been carried on for, with or on behalf of a resident.

 Application of Business Corporations Act

2  (1)  Divisions 4 and 8 of Part 9 and section 203 (2) and (3) of the Business Corporations Act do not apply to a licensed corporation.

(2)  One director of every licensed corporation must be ordinarily resident in British Columbia.

 Application for a licence

3  (1)  A corporation may apply to the superintendent for a licence to carry on an international financial business if

(a) it is a company within the meaning of the Business Corporations Act,

(b) it is a wholly owned subsidiary of a financial institution,

(c) it has not previously carried on business,

(d) it proposes to carry on an international financial activity from a branch or office within the Greater Vancouver Regional District, and

(e) it meets any other prescribed requirements.

(2)  An application for a licence must

(a) contain the prescribed information and verifications, and

(b) be accompanied by the prescribed documents and fees.

(3)  The superintendent may

(a) request any additional information or documents, or

(b) make any inquiries

the superintendent considers necessary for the evaluation of the application.

(4)  After making inquiries and evaluating the application, the superintendent must forward the application to the minister and must advise the minister as to whether or not a licence should be granted to the corporation.

 Grant of licence

4  After considering the application and the advice of the superintendent, the minister may, subject to any regulation made under section 20 (2) (a) (ii), grant a licence to a corporation that applies under section 3, if the minister is satisfied that

(a) the corporation will have both the financial and the managerial capacity to carry on the international financial activity it proposes to carry on,

(b) it is not contrary to the public interest to grant a licence to the corporation,

(c) the parent corporation has given to the government an acceptable undertaking that it will maintain the solvency of the corporation, and

(d) if the parent corporation is incorporated, formed or otherwise constituted elsewhere than in Canada, the parent corporation is adequately supervised by a recognized supervisory authority of the country, state or place in which it is incorporated, formed or otherwise constituted.

 Permitted activities

5  (1)  The minister may restrict the activities that a corporation may carry on under its licence to one or more of the following:

(a) accepting deposits in any currency from nonresidents or from a person carrying on a business that comes within a prescribed class of business;

(b) making loans in any currency to nonresidents or to a person carrying on a business that comes within a prescribed class of business;

(c) for or on behalf of nonresidents

(i)  negotiating, confirming, amending, issuing and accepting documentary letters of credit and standby letters of credit,

(ii)  advising of the issue, the terms and any amendments to the terms of documentary letters of credit and standby letters of credit,

(iii)  handling documentary collections, or

(iv)  financing or refinancing documentary letters of credit and standby letters of credit,

if the ultimate obligation of payment rests with a nonresident;

(d) providing fiduciary services;

(e) dealing in securities, other than securities of the capital stock of the financial institution dealing in the securities or of the capital stock of an affiliate of the financial institution;

(f) insuring or reinsuring prescribed risks

(i)  of, or relating to, nonresidents, and

(ii)  relating to property located or events occurring outside Canada;

(g) acting as a financial adviser to nonresidents;

(h) dealing in foreign exchange for or on behalf of nonresidents;

(i) managing investments for or on behalf of nonresidents;

(j) preparing stock market or other financial research for the exclusive use of nonresidents;

(k) factoring;

(l) financial leasing;

(m) any activity designated as an international financial activity by regulation of the Lieutenant Governor in Council.

(2)  The minister must specify in a licence the international financial activities the corporation is permitted to carry on under its licence.

 Effect of licence

6  (1)  Subject to section 15 (2), the Financial Institutions Act and the Securities Act do not apply to a licensed corporation in respect of the international financial activities specified in its licence.

(2)  The Lieutenant Governor in Council may, by regulation, declare

(a) that a provision of an Act referred to in subsection (1) applies to, or

(b) that

(i)  an Act not referred to in subsection (1), or

(ii)  a provision of, or a regulation made under, an Act not referred to in subsection (1)

does not apply to

a licensed corporation that comes within a prescribed class of licensed corporation in respect of the international financial activities specified in its licence.

 International financial office

7  A corporation that is granted a licence must, within 90 days after the licence is granted, establish and then maintain throughout the licence period an international financial office.

 Prohibited activities

8  (1)  A licensed corporation must not

(a) carry on an international financial activity, other than one that is described in section 5 (1) (a) or (b) and is carried on with a person referred to in that section, unless it has made reasonable inquiries and has no reasonable grounds to believe that the person for or with whom or on whose behalf the activity is to be carried on is a resident, or

(b) carry on any business other than international financial business.

(2)  No act of a licensed corporation is invalid for the sole reason that the act contravenes subsection (1).

 Conditions, suspension, refusal and revocation

9  (1)  After giving a licensed corporation an opportunity to be heard, the superintendent may report to the minister on whether any of the following applies:

(a) the corporation has contravened section 7 or 8 (1) or a restriction or condition of its licence;

(b) the corporation has

(i)  supplied false or misleading returns, information or records to the superintendent under this Act or to the commissioner under the International Financial Business (Tax Refund) Act, or

(ii)  failed to supply returns, information or records when they are required under this Act, the International Financial Business (Tax Refund) Act or the regulations under either Act;

(c) the corporation no longer has the managerial or financial capacity to properly carry on the activities permitted by its licence;

(d) the corporation is carrying on its business in a manner likely to be detrimental to the interests of its customers, creditors or the public;

(e) it is contrary to the public interest for the corporation to continue to be licensed;

(f) the parent corporation has breached an undertaking given under section 4 (c);

(g) the corporation

(i)  has committed an act of bankruptcy,

(ii)  has become insolvent,

(iii)  has made a general assignment in favour of its creditors,

(iv)  has made, or proposes to make, a compromise or arrangement with its creditors,

(v)  has gone, or proposes to go, into liquidation, or

(vi)  has been wound up or otherwise dissolved or has ceased to carry on its business;

(h) the parent corporation has done, in Canada or elsewhere, anything referred to in paragraph (g) or any similar thing;

(i) a petition or application is filed, in Canada or elsewhere, for a receiving order or a similar order against the corporation or the parent corporation, or there is appointed, in Canada or elsewhere, a receiver, receiver manager or trustee of all or part of the property or undertaking of the corporation or the parent corporation.

(2)  On receiving the report of the superintendent the minister may, after or without a hearing, do one or more of the following:

(a) impose conditions on the corporation's licence,

(b) suspend or revoke the corporation's licence,

(c) refuse to renew the corporation's licence, or

(d) direct the superintendent to make one or more orders under section 10 (1) or an application under section 11 (1).

(3)  If the minister considers that the length of time that would be required to give a corporation an opportunity to be heard under subsection (1) would be prejudicial to the public interest, the minister may, without a hearing,

(a) impose conditions on or suspend the licence of the corporation, or

(b) direct the superintendent to make

(i)  one or more orders under section 10 (1), or

(ii)  an application under section 11 (3),

but the minister must immediately serve on the corporation a notice of the decision and the reasons for it.

(4)  If the minister makes a decision under subsection (3) (a) or (b) (i), the superintendent must, after giving the corporation an opportunity to be heard, make a report to the minister under subsection (1) within 49 days after the date of the minister's decision.

(5)  The minister may,

(a) after or without a hearing, and

(b) without conditions or on the conditions the minister considers appropriate,

reinstate a licence or cancel a condition, suspension or refusal to renew a licence or direct the superintendent to revoke or modify an order under section 10 (1).

(6)  The minister and the superintendent have for the purposes of a hearing under this section the protection, powers and privileges of sections 12, 15 and 16 of the Inquiry Act given to a commissioner appointed under Part 2 of that Act.

(7)  Notice of the imposition of a condition on or of a suspension of a licence under subsection (2) or (3), or of the revocation or refusal to renew a licence under subsection (2) or of a reinstatement or cancellation under subsection (5) must be

(a) given to the corporation by the superintendent,

(b) published by the superintendent in the Gazette at the cost of the corporation, and

(c) published by the corporation as required by the regulations.

 Order to freeze property

10  (1)  On receiving a direction under section 9 (2), (3) or (5) respecting a corporation, the superintendent must, in accordance with the direction, make, in writing, one or more of the following orders:

(a) that a person having on deposit, under control or for safekeeping any funds, securities or other property of the corporation hold those funds, securities or other property;

(b) that the corporation refrain from withdrawing any funds, securities or other property from any person having them on deposit, under control or for safekeeping;

(c) that the corporation hold all funds, securities or other property of clients or others in its possession or control in trust for an interim receiver, custodian, trustee, receiver manager, receiver or liquidator or under the Bankruptcy Act (Canada), the Company Act, the Business Corporations Act, the Winding-up Act (Canada) or the Supreme Court Act.

(2)  An order under subsection (1) remains in force until the superintendent, in writing, revokes or modifies the order or consents to release all or a part of a particular fund, security or other property from the order.

(3)  An order of the superintendent under subsection (1) to a savings institution applies only to the offices, branches or agencies of the savings institution that are named in the order.

(4)  An order of the superintendent under subsection (1) does not apply to funds, securities or other property in a stock exchange clearing house or to securities in process of transfer by a transfer agent unless the order expressly so provides.

(5)  The superintendent may, in writing, notify a land title office or gold commissioner that proceedings are being or are about to be taken that may affect land or mining claims belonging to a person named in an order under subsection (1).

(6)  A notice sent under subsection (5) or a copy of a written revocation or modification under subsection (7) must be registered or recorded against the lands or claims mentioned in it and has the same effect as the registration or recording of a certificate of pending litigation or a caveat.

(7)  The superintendent may, in writing, revoke or modify a notice given under subsection (5) and if a notice is revoked or modified, the superintendent must send a copy of the written revocation or modification to the land title office or gold commissioner, as the case may be.

 Appointment of receiver, etc.

11  (1)  On receiving a direction under section 9 (2) respecting a corporation, the superintendent must apply to the Supreme Court for the appointment of a receiver, receiver manager or a trustee of all or a part of the property of, or in the possession or control of, the corporation.

(2)  On application under subsection (1), the court may, by order, appoint a receiver, receiver manager or trustee of all or part of the property of, or in the possession or control of, the corporation, if it is satisfied that the appointment of a receiver, receiver manager or trustee is in the best interests of any of the following:

(a) the corporation's creditors;

(b) persons whose property is in the possession or under the control of the corporation;

(c) the security holders of or subscribers to the corporation.

(3)  On receiving a direction under section 9 (3), the superintendent may make an application under this section without notice to anyone, and in that event the court may make a temporary order under subsection (2) appointing a receiver, receiver manager or trustee for a period of up to 15 days.

(4)  A receiver, receiver manager or trustee appointed under this section

(a) is the receiver, receiver manager or trustee of all or any part of the property belonging to the corporation or held by the corporation on behalf of or in trust for any other corporation, and

(b) may, if authorized by the court, wind up or manage the business and affairs of the corporation and may exercise powers necessary or incidental to the winding up or management.

(5)  Sections 105 and 106 of the Business Corporations Act apply to a receiver or a receiver manager appointed under this section.

 Effect of suspension or revocation

12  (1)  If the licence of a corporation is suspended under section 9 (2) or (3),

(a) the corporation must not, during the period of suspension, undertake any new business but must confine its activities solely to the business in hand on the date notice of suspension was served on it, and

(b) the corporation's registration under section 3 of the International Financial Business (Tax Refund) Act is, for the purposes of section 5 of that Act, deemed to be suspended.

(2)  If the licence of a corporation is revoked under section 9 (2),

(a) the corporation must, on the date notice of revocation is served on it, cease to carry on business except for the purpose of winding up its affairs and complying with this Act and any other applicable law, and

(b) the corporation's registration under section 3 of the International Financial Business (Tax Refund) Act is, for the purposes of section 5 of that Act, deemed to be cancelled.

(3)  The suspension or revocation of a licence does not prejudice the enforcement by a person of a right or claim against the corporation or by the corporation of a right or claim against a person.

 Auditors and actuaries

13  (1)  A licensed corporation must

(a) appoint annually an auditor approved by the superintendent, and

(b) if it carries on an activity referred to in section 5 (1) (f), appoint annually

(i)  an actuary approved by the superintendent, or

(ii)  another person with suitable actuarial qualifications who has been approved by the superintendent.

(2)  If a licensed corporation fails to comply with subsection (1) or the superintendent considers it desirable that another auditor, actuary or person should act with the auditor, actuary or person appointed under that subsection, the superintendent may appoint an auditor, actuary or other person, as the case may be.

(3)  The Lieutenant Governor in Council may set the remuneration and expenses a licensed corporation must pay to an auditor, actuary or other person appointed by the superintendent under subsection (2), whether or not the appointment has terminated.

 Returns, information and inspections

14  (1)  A licensed corporation must do the following:

(a) submit to the superintendent a return in a form and at the intervals the superintendent may specify showing the financial position of the corporation and any prescribed information;

(b) submit to the superintendent within the time specified and in the manner required by the superintendent any further information the superintendent considers necessary for a proper understanding of its international financial business;

(c) if it carries on an activity referred to in section 5 (1) (f), submit an actuarial statement prepared

(i)  by an actuary approved by the superintendent, or

(ii)  by another person with suitable actuarial qualifications who has been approved by the superintendent;

(d) if the superintendent requires a return submitted under paragraph (a) or information submitted under paragraph (b) or (c) to be accompanied by a certificate of an auditor, actuary or other person, submit a certificate of an auditor, actuary or other person appointed under section 13 (1) or of the auditors, actuaries or other persons appointed under section 13 (1) and (2), as the case may be, as to whether or not, in the opinion of the person certifying,

(i)  the return presents fairly the financial position of the corporation,

(ii)  the information presents fairly the aspect of the international financial business about which the information is requested, or

(iii)  the statement presents fairly the valuation of the claim liabilities of the corporation;

(e) if the superintendent wishes at any time to inspect the books, accounts and transactions of the corporation,

(i)  give the person carrying out the inspection access to all facilities and information that may be required to conduct the inspection,

(ii)  give the person carrying out the inspection access to the books and accounts, to documents of title to the assets and other documents, to all securities held by the corporation and to its cash, and

(iii)  produce to the person carrying out the inspection the books, accounts, documents, securities, cash or other information the person may require;

(f) on the written demand of the superintendent, satisfy the superintendent by the production of the documents or information the superintendent requires, that the corporation is not contravening section 8 (1).

(2)  On written demand of the minister, an affiliate, associate or parent corporation of a licensed corporation must provide to the minister within the period and in the manner specified in the demand, any information the minister considers necessary for the proper understanding of the activities of the licensed corporation or for determining its solvency.

 Investigation

15  (1)  The superintendent may, by order, appoint a person to make whatever investigation the superintendent considers appropriate for the administration of this Act and in the order must determine the scope of the investigation.

(2)  Sections 143 (2) to (5) and 144 to 146 and 150 of the Securities Act apply to an investigation and to a person appointed under subsection (1), except that a reference to the commission is deemed to be a reference to the superintendent.

 Delegation of powers

16  (1)  The Lieutenant Governor in Council may, by regulation, delegate any of the superintendent's powers and duties under sections 3, 9 (1), 13 (1) and (2), 15 (1) and 17 (2) and (3) and the regulations.

(2)  A delegation under subsection (1) may be to a person designated by name or by position.

 Confidentiality

17  (1)  A person who has custody or control over information or records under this Act must not disclose the information or records to any other person except

(a) in the course of administering or enforcing this Act,

(b) in court proceedings relating to this Act, or

(c) as provided in subsections (2), (3) and (4).

(2)  On the request of the commissioner, the superintendent must disclose to the commissioner any information or records relating to a licensed corporation if, in the opinion of the commissioner, the information or records are required for the purposes of the International Financial Business (Tax Refund) Act.

(3)  If the parent corporation of a licensed corporation is incorporated, formed or otherwise constituted elsewhere than in Canada, the superintendent may, if the superintendent considers it in the interest of the customers of the licensed corporation, disclose to a recognized supervisory authority of the country, state or place in which the parent corporation is incorporated, formed or otherwise constituted, information relating to the licensed corporation.

(4)  The superintendent may disclose the name of a licensed corporation to any person.

 Service of notices

18  If service of a notice or other document on a corporation is required or authorized under this Act or the regulations, the notice or document is conclusively deemed to have been served if served in accordance with section 9 (1) of the Business Corporations Act.

 Offences

19  (1)  A person who commits an offence if the person

(a) makes a statement in any return, information or record required to be submitted, provided or filed under this Act or the regulations or in a book of account or other record required to be maintained under this Act or the regulations that, at the time and in light of the circumstances under which the statement is made,

(i)  is false or misleading with respect to a material fact, or

(ii)  omits a statement of material fact, the omission of which makes the statement false or misleading,

(b) contravenes section 8 (1), 12 (1) or (2), 13 (1) or 14 (1),

(c) fails to comply with an order of the superintendent under section 10 or with a demand of the minister under section 14 (2),

(d) contravenes section 143 (5) of the Securities Act as applied by section 15 (2) of this Act, or

(e) contravenes section 17 (1).

(2)  If a corporation commits an offence under subsection (1), every officer, director, employee or agent of the corporation who directed, authorized, assented to, acquiesced in or participated in the commission of the offence also commits the offence.

(3)  A person does not commit an offence under subsection (1) (a) if the person did not know that the statement was false or misleading and, by the exercise of reasonable diligence, could not have known that the statement was false or misleading.

(4)  A corporation convicted of an offence under subsection (1) (a), (b) or (c) is liable to a fine of not more than $100 000.

(5)  An individual convicted of an offence under subsection (1) (a), (b), (c) or (2) is liable either to a fine of not more than $100 000 or to imprisonment for not more than 5 years less one day.

(6)  A person convicted of an offence under subsection (1) (d) is liable to a fine of not more than $2 000.

(7)  Section 5 of the Offence Act does not apply to this Act or to the regulations.

 Power to make regulations

20  (1)  The Lieutenant Governor in Council may make regulations referred to in section 41 of the Interpretation Act.

(2)  Without limiting subsection (1), the Lieutenant Governor in Council may make regulations as follows:

(a) respecting

(i)  the expiry of licences, and

(ii)  requirements for the granting, renewal or reinstatement of licences and the circumstances in which the minister may refuse to grant, renew or reinstate a licence;

(b) respecting the qualifications of directors of licensed corporations;

(c) respecting the content and form of an undertaking required under section 4 (c);

(d) respecting the maintenance by licensed corporations of books, accounts and other records;

(e) prescribing application fees and annual licence fees to be paid by applicants or licensees;

(f) defining any word or expression used in this Act, whether or not the word or expression is defined in this Act;

(g) for the purpose of prohibiting licensed corporations from investing in specified classes of assets and prescribing limits, in dollar amounts or in percentages of total assets, on investments in specified classes of assets;

(h) for the purpose of prohibiting a licensed corporation from

(i)  entering into an amalgamation agreement,

(ii)  acquiring 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

(iii)  altering its articles,

without first obtaining the consent of the minister;

(i) respecting fees and charges that may be imposed on a person investigated under this Act;

(j) governing

(i)  the imposition of duties of disclosure on persons who, in relation to a licensed corporation, are related persons,

(ii)  prohibited or permitted transactions between a licensed corporation and related persons, and

(iii)  remedies for prohibited transactions;

(k) for the purpose of prohibiting or regulating advertising by licensed corporations;

(l) for any purpose for which regulations are contemplated by this Act.

(3)  A regulation made under subsections (1) or (2) may

(a) be made applicable to one or more classes of licensed corporations, financial institutions, applicants or other persons, and

(b) provide for different requirements, standards, limitations, restrictions and fees for different classes of licensed corporations, financial institutions, applicants or other persons.