Government of Canada
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Federally Regulated
Financial Institutions

Approvals and Precedents

The Bank Act, Trust and Loan Companies Act, Insurance Companies Act, and Cooperative Credit Associations Act require federally regulated financial institutions (FRFIs) to seek regulatory approval from the Superintendent of Financial Institutions or the Minister of Finance (after receiving the recommendation of the Superintendent) prior to engaging in certain transactions or business undertakings.

Regulatory approvals are also required by persons wishing to incorporate a FRFI, and by foreign banks or foreign insurance companies wishing to establish a presence or to make certain investments in Canada. OSFI administers a regulatory approval process that is prudentially effective, responsive and transparent. OSFI’s Approvals division is responsible for making recommendations to the Superintendent and to the Minister regarding those matters requiring regulatory approval.

In 2014-2015, OSFI processed 223 applications of which 200 were approved. Individual applications often contain multiple approval requests. The 200 approved applications involved a total of 371 approvals, 286 of which were granted by the Superintendent and 85 by the Minister. This represents an increase relative to last year, when 199 applications were processed. Most applications for 2014-2015 related to property and casualty (P&C) insurers (47%) and banks (41%). (See figure 1)

Figure 1
Approved Applications by Industry 2014-2015

Figure 1: Approved Applications by Industry 2014-2015

*Trust and Loan/Cooperative Associations

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In 2014-2015, OSFI processed 223 applications of which 200 were approved and 23 were withdrawn.

The most common applications received from deposit-taking institutions related to purchases or redemptions of shares or debentures, substantial investments, and transfers of assets in excess of 10%. Applications received from insurance companies related mainly to reinsurance with related unregistered reinsurers, amending orders to commence and carry on business or insuring in Canada of risks, and purchases or redemptions of shares or debentures.

During 2014-2015, letters patent were granted incorporating Esurance Insurance Company of Canada as a Canadian P&C insurer. In addition, orders authorizing the establishment of a foreign insurance branch in Canada were issued to Arch Reinsurance Company, XL Specialty Insurance Company, Technology Insurance Company, and Hannover Re (Ireland) Limited.

Upon request, OSFI also provides advance capital confirmations on the eligibility of proposed capital instruments. A total of 43 such opinions and validations were provided in 2014-2015, compared to seven the previous year.

OSFI has performance standards establishing time frames for processing applications for regulatory approval and for other services, all of which were surpassed during 2014-2015. More information on service performance standards can be found on OSFI’s website.

Guidance and Education

In keeping with the objective of enhancing the transparency of OSFI’s legislative approval process and promoting a better understanding of our interpretation of the federal financial institution statutes, OSFI develops and publishes legislative guidance including advisories, rulings, and transaction instructions. In 2014-2015, OSFI made revisions to the following guidance documents:

  • Guide for Incorporating Banks and Federally Regulated Trust and Loan Companies
  • Advisory on the Legislative Framework for Foreign Banks
  • Advisories on Substantial Investments
  • Transaction Instructions on Related Party Asset Transactions as Part of a Restructuring
  • Transaction Instructions on Related Party Asset Transactions with a Financial Institution