Office of the Superintendent of Financial Institutions
In this document,
“obligations” means any actual or contingent financial obligations of the applicant. These include, without limitation, amounts owing to vendors and service providers, rent obligations, salary and employment obligations, legal expenses, outstanding litigation, Canadian regulatory expenses, tax liabilities, and unfunded retirement benefits provided by the applicant to its former employees. For greater certainty, these do not include actual or contingent financial obligatons that have, with the written consent of the relevant creditor(s), been transferred to another party.
In the circumstances underlying most requests for approval under the Legislative Authorities above, these authorities provide two regulatory steps for an applicant to obtain letters patent of dissolution (i.e., the two-step process). The first requires obtaining the Minister’s approval of an application for letters patent dissolving the applicant (the “Initial Approval”), which is based on a detailed plan for the voluntary liquidation provided by the applicant. The second requires obtaining from the Minister letters patent dissolving the applicant (“Letters Patent”), after the applicant has carried out the liquidation process.
In limited cases where the applicant has no property or obligations, the Legislative Authorities above provide that an applicant may apply to the Minister for the issuance of Letters Patent without obtaining the Initial Approval (i.e., the one-step process).
The information requirements that follow are set out accordingly.
A. Initial Approval
The applicant is generally expected to provide the following information in support of its application for the Initial Approval:
a certified copy of the special resolution authorizing the applicant to apply to the Minister for Letters PatentFootnote 1;
a detailed plan for the voluntary liquidation of the applicant, including information on the proposed:
notification of the Initial Approval to be sent to each of the applicant’s known claimants (except policyholders where the applicant is governed by the ICA) and creditors,
collection of its assets, where applicable,
disposition of its assets that are not to be distributed in kind to its shareholders and/or members,
discharge, or provision for the payment or discharge, of its obligations,
distribution of its remaining property, either in money or in kind, to its shareholders and/or members, after it has satisfied the Superintendent that it is appropriate to do so, and
management of the liquidation process, and the resources required to do so; and
where the applicant is a company governed by the ICA, a confirmation from the applicant that (a) it is not a mutual company, and (b) it does not have participating policyholders or policyholders who are entitled to vote at annual meetings of shareholders and policyholdersFootnote 2.
B. Letters Patent
Following receipt of the Initial Approval, and after it has substantially carried out its voluntary liquidation, the applicant is generally expected to provide the following information in support of its application to the Minister for the issuance of Letters Patent:
confirmation that notice of the Initial Approval was sent to each of the applicant’s known claimants (except policyholders where the applicant is governed by the ICA) and creditorsFootnote 3;
proof of publication of the notice described in the applicable Legislative Authority (“Notice”)Footnote 4;
confirmation from the applicant that it has not received any objections related to the Notice or otherwise with regard to the proposed liquidation and dissolution, or has addressed any objection received (together with a description of the manner in which each objection has been addressed);
details regarding whether completion of the liquidation or the proposed dissolution is subject to or will trigger any regulatory approval or notification requirement, other than under the Legislative Authorities (and where any of these requirements apply, confirmation that they have been met, together with the details of the related regulatory response, if any);
a description of the outcome of the liquidation process, including any remaining steps to be taken;
audited financial statements of the applicant, as at a date no more than three months prior to the application for Letters Patent showing nominal or no obligations, together with the related report from the auditor of the applicant confirming that the statements present fairly the financial position of the applicant (the “Audited Statements”);
where the applicant is governed by the ICA, a report of the actuary supporting the valuation of the policy liabilities reported in the Audited Statements;
where the Audited Statements show nominal obligations:
a description of the nature and amount of each of these obligations (where this description is not contained in the Audited Statements), and
confirmation that the applicant has discharged, or provided for the payment or discharge of, the obligations, together with a description of how it has done so;
confirmation that the applicant will promptly inform OSFI of the nature and amount of any obligations that arise after the date of the Audited Statements until Letters Patent are issued (and where such obligations arise, a confirmation that the applicant has discharged them, or has provided for their payment or discharge);
where the Audited Statements show assets:
a description of the nature and amount of each of these assets (where this description is not contained in the Audited Statements), and
confirmation that the applicant has distributed them, in money or in kind, among its shareholders and/or members according to their respective rights; and
if the applicant is a trust company (a “Federal Trust Company”), confirmation that the applicant has transferred all money and other assets held in trust by the applicant to another Federal Trust Company (other than assets held in respect of guaranteed trust money)Footnote 5, together with a description of how it has done so.
The applicant is generally expected to provide:
a certified copy of the special resolutionFootnote 6 authorizing it to apply to the Minister for Letters Patent; and
confirmation that the applicant has:
never conducted any business, and
no assets or obligations.
This Transaction Instruction relates solely to the Legislative Authorities and does not address any provincial or territorial requirements (or Assuris, PACICC or Canada Deposit Insurance Corporation (“CDIC”) requirements, as applicable) that may apply to the liquidation of an applicant. Accordingly, OSFI recommends that (a) applicable provincial and territorial statutes be reviewed, and the agencies that administer them be consulted, in connection with such proposed liquidation, and (b) applicable requirements of Assuris, PACICC or CDIC in respect of termination of membership be reviewed, and that officials of these organizations be consulted accordingly.
An applicant must continue to comply with the requirements of its governing statute (e.g., record keeping, reporting) until Letters Patent are issued. For greater certainty, if carrying out the voluntary liquidiation requires the applicant to obtain approvals from the Superintendent, or additional approvals from the Minister, under its governing statute, those additional approvals must be obtained.
OSFI generally expects the Notice to set out, among other things:
the name of the applicant;
the fact that the Minister has granted the Initial Approval, and the date on which the Initial Approval was granted; and
the statute and related provision under which the Notice is given.
An applicant is encouraged to provide OSFI with a draft version of the Notice and the notification referred to in Item 2(a) of the Information Requirements, with a view to obtain OSFI’s comments regarding these documents.
The Legislative Authorities require an applicant to discharge, or provide for the payment or discharge of, its obligations.
OSFI is generally satisfied that an applicant has discharged:
an obligation where it has carried out the obligation (e.g., where the applicant has prepaid a future payment obligation); and
“claims occurring” policyFootnote 7 obligations, in the case of an applicant that is a property and casualty company, where the Audited Statements show no policy liabilities and the applicant has satisfied the Superintendent that it is reasonable to believe that no claims will be made under those policies, having regard to, among other things, the types of risks insured and the history of claims made under those policies.
OSFI is generally satisfied that an applicant governed by the ICA has provided for the payment or discharge of a policy obligation where it has caused the risks undertaken under the related policy to be reinsured, on an assumption basis.
An applicant with unclaimed deposit liabilities following implementation of its plan to discharge its obligations may wish to refer to Ruling 2003-02: Voluntary liquidation – Outstanding deposit liabilities.
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: firstname.lastname@example.org. 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.
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.
See section 344 of the BA, 349 of the TLCA, 382 of the ICA and 328 of the CCAA.
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See section 378 of the ICA.
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See paragraphs 345(4)(a) of the BA, 350(4)(a) of the TLCA, 383(4)(a) of the ICA and 328(4)(a) of the CCAA.
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The Notice is described in paragraphs 345(4)(b) of the BA, 383(4)(b) and 923(4)(b) of the ICA, 350(4)(b) of the TLCA, and 329(4)(b) of the CCAA. See also item 3 of the Administrative Guidance below for more information.
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See paragraph 350(4)(d) of the TLCA.
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Or where no shareholders exist, a resolution of all the directors. See paragraph 342(1)(a) of the BA, subsection 347(1) of the TLCA, subsection 380(1) of the ICA and subsection 326(1) of the CCAA.
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These are generally “long tail” liability policies that provide coverage based on when the event occurs and that allow claims to be made for a considerable period of time.
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