TERMINATION OF BUSINESS IN CANADA OF AN AUTHORIZED FOREIGN BANK

Document Properties

  • Type of Publication: Transaction Instructions
  • Revised: December 2017
  • Index A No: 9.1
  • Category: Non Deemed Approval

Legislative Authorities

  • Section 599 of the Bank Act (the “Act”)

Definitions

In this document,

“liabilities” means any actual or contingent liabilities of the applicant in respect of its business in Canada.  These include, without limitation, amounts owing to vendors, service providers and landlords in Canada, salary and employment obligations in Canada, legal expenses and outstanding litigation in Canada, expenses incurred in connection with the termination of the applicant’s business in Canada, Canadian regulatory expenses, tax liabilities in Canada, and unfunded retirement benefits provided by the applicant to its former employees in Canada. These do not include, however, amounts due to head office appearing on an applicant’s balance sheet in respect of its business in Canada.

Information Requirements

The applicant is generally expected to provide:

  1. proof of publication of the notice described in paragraph 599(2)(b) of the Act (the “Notice”);

  2. details regarding the level of internal approval required to make application for the release of the applicant’s assets in CanadaFootnote 1 (e.g., senior management), based on the applicant’s policies, as well as a confirmation that the application was approved at that level;

  3. details regarding whether the applicant requires approval from its home regulator for, or must notify its home regulator about, the proposed termination of the applicant’s business in Canada (and where any such requirement applies, confirmation that it has been met, together with the details of any related response);

  4. audited financial statements in respect of the applicant’s business in Canada, as at a date no more than three months prior to the application for the release of its assets in Canada, showing nominal or no liabilities, together with the related report from the auditor of the applicant for its business in Canada confirming that the statements present fairly the financial position of the applicant’s business in Canada (the “Audited Statements”);

  5. where the Audited Statements show nominal liabilities:

    1. a description of the nature and amount of each of these liabilities (where this description is not contained in the Audited Statements), and

    2. a confirmation from the principal officer that the applicant has discharged, or provided for the discharge of, the liabilities – or has transferred the liabilities to a bank, another authorized foreign bank in respect of its business in Canada, or a company to which theTrust and Loan Companies Act applies – together with a description of how it has done so;

  6. confirmations from the principal officer that:

    1. the applicant will promptly inform OSFI of the nature and amount of any liabilities that arise after the date of the Audited Statements, until the Superintendent has authorized the release of the applicant’s assets in Canada (the “Release Order”)Footnote 2,

    2. in the period since the applicant has ceased to carry on business in Canada, no liabilities have been removed from the applicant’s records in respect of its business in Canada due to having become, without the written consent of the relevant creditor(s), liabilities in respect of the applicant’s business outside Canada, and

    3. the applicant has not received any objections related to the Notice or otherwise with regard to the proposed release of its assets in Canada, or has addressed any objection received (together with a description of the objection and the manner in which it was addressed); and

  7. where liabilities referred to in item 6(a) above arise, a confirmation from the principal officer that the applicant has discharged, or provided for the discharge of, the liabilities – or has transferred the liabilities to a bank, another authorized foreign bank in respect of its business in Canada, or a company to which the Trust and Loan Companies Act applies – together with a description of how it has done so.

Administrative Guidance

  1. An applicant must continue to comply with the Act (e.g., record keeping, reporting, appointment of principal officer and auditor) until the Release Order is made.

  2. Subsection 599(3) of the Act states that the Superintendent must be satisfied that an applicant has discharged, provided for the discharge of, or transferred, all of its liabilities.  The Superintendent is generally satisfied that an applicant has:

    1. discharged a liability where it has carried out its obligations in respect of the liability (e.g., where the applicant has prepaid a future payment obligation);

    2. provided for the discharge of a liability where it has:

      1. entered into a written agreement with a person in Canada acceptable to OSFI whereby that person has undertaken to discharge, or has guaranteed the discharge of, the liability; or

      2. established a trust in Canada acceptable to OSFI for the benefit of the creditor where the amount vested is equal to the amount owed to that creditor.
    3. transferred a liability to a bank, another authorized foreign bank in respect of its business in Canada, or a company to which the Trust and Loan Companies Act applies where where the applicant has, with the written consent of the relevant creditor(s), assigned the liability to that entity.

  3. The applicant must provide a completed OSFI 298 Form to OSFI’s Securities Administration Unit to obtain the release of its remaining assets in Canada.

  4. The following is an example of a Notice (a French language example of this Notice is available in the French language version of this document):

    [Name of the applicant and, if applicable, other name under which it is authorized to carry on business in Canada]

    RELEASE OF ASSETS

    Pursuant to section 599 of the Bank Act (Canada) (the “Act”), notice is hereby given that [name of the applicant] intends to apply to the Superintendent of Financial Institutions (Canada) on [date that is at least six weeks after the date of the notice] for an order authorizing the release of the assets that it maintains in Canada in accordance with the Act.

    Any depositor or creditor in respect of [name of the applicant]’s business in Canada opposing that release is invited to file an opposition by mail to the Office of the Superintendent of Financial Institutions (Canada), Legislation and Approvals Division, 255 Albert Street, Ottawa, Ontario K1A 0H2, or by email at approvalsandprecedents@osfi-bsif.gc.ca, on or before [same date as above].

    [Date of the notice (note: for the four consecutive weeks, the date remains the date of the first publication)]

  5. The following email address should be used for the initial submission of documents in support of requests for approval(s) that are addressed in this document: approvalsandprecedents@osfi-bsif.gc.ca. Once the initial submission has been received, a case officer will be assigned to the matter. Thereafter, all case-related documents and correspondence should be directed to the case officer.

  6. This request for approval is not subject to a user pay fee.

The information requirements and administrative guidance are intended to satisfy typical applications. They have been derived from OSFI’s experience in assessing applications. Applicants who provide all information and material requested can generally expect a more timely assessment of their applications. As appropriate to the circumstances, OSFI may request additional information, take into account other matters, impose terms and conditions, or require undertakings.

Footnotes

Footnote 1

These are assets maintained under paragraph 534(3)(a) or subsection 582(1) of the Act.

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Footnote 2

Pursuant to subsection 599(5) of the Act, the orders permitting the applicant to establish a branch in Canada and approving the applicant’s commencement and carrying on of business in Canada are deemed to be revoked when the Release Order is made.

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