Substantial Investments - Appendix A.4
Information
Table of contents
Appendix A.4 – Fraternal Benefit Societies Permitted Entities
This document has been prepared for convenience of reference only and has no official sanction. For all purposes of interpreting and applying the law, users should consult the ICA and relevant regulations.
Notes:
- In this Appendix,
- ERIRs stands for Exemption from Restrictions on Investments Regulations; and
- Society refers to a fraternal benefit society.
- Other abbreviations in this Appendix have the meaning ascribed to them on pages 1 and 2 of the Advisory.
- Unless otherwise stated, references in this Appendix to (a) regulations are to regulations made under the ICA and (b) provisions are to provisions of the ICA.
- Classes of entities 2 to 5 below comprise OEs only (i.e., 554(2) entities only).
- A single OE can fall within more than one OE class listed below, depending on its business activities.
- The control and approval requirements and business restrictions listed below refer to the ones imposed by the ICA’s investment regime.
| Classes of Entities | Control Requirement? | Approval Requirement? | Business Restrictions? | |
|---|---|---|---|---|
|
1. REs This class comprises entities listed in 554(1). |
a. Federally regulated insurance company or society [554(1)(a)] |
Control in fact. [554(4)(a)] |
Minister’s approval. [554(5)] In the case of a federally regulated insurance company, the Minister’s approval is also required under the ICA’s ownership provisions. |
No. |
| b. Provincially regulated insurance company [554(1)(b)] |
Same as above. | |||
| c. Foreign regulated insurance companyFootnote 1 [554(1)(c)] |
Control in fact, except where the foreign law does not permit control. |
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| 2. Financial Agents and Investment Funds |
Includes OEs that engage in the following activities:
[554(2)(a)] Also includes a:
each as defined in 490(1). |
No. | Minister’s approval. [554(5)] |
A financial agent is subject to the same restrictions as:
In addition, a financial agent cannot engage in deposit-taking or in financial intermediary activities that expose the financial agent to material market or credit risk. [554(3)] A financial agent is also subject to the same restrictions as property and casualty companies in the areas of:
|
|
3. Investment holding entities This class comprises OEs whose business includes acquiring or holding shares of, or ownership interests in, entities that a Society is permitted to hold or acquire. |
Entity that acquires or holds shares of, or ownership interests in, entities that a Society is permitted to acquire or hold under:
|
Control in fact, except:
|
Minister’s approval. [554(5)] |
An investment holding entity is subject to the same restrictions as:
In addition, such an entity cannot engage in deposit-taking or financial intermediary activities that expose the entity to material market or credit risk. |
| 4. Non-financial services entities | a. Entity that engages in information processing activities (i.e., activities referred to in 441(1)(c) and(d)) [554(2)(a)] |
No. | Minister’s approval. [554(5)] |
A non-financial services entity is subject to the same restrictions as:
In addition, such an entity cannot engage in deposit-taking or financial intermediary activities that expose the entity to material market or credit risk. |
| b. Entity that engages in information technology activities (i.e., activities referred to in 441(1)(d.1)) [554(2)(a)] |
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c. Entity that engages in the following activities that a property and casualty company is permitted to engage under 441:
[554(2)(a)] |
No. | Minister’s approval. [554(5)] |
See above. | |
| d. Entity that provides services to certain entities, so long as it provides those services to the Society or members of the Society’s group, as defined in 540(2). [554(2)(c)] |
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| e. Entity that engages in activities relating to promotion, sale delivery or distribution of financial services or products provided by certain entities. [554(2)(d)] |
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5. Prescribed entities A Society may acquire control of, or acquire or increase a substantial investment in, an entity that engages in prescribed activities. |
Prescribed activities are set out in subsection 2(1) of the Information Technology Activities (Canadian Societies) Regulations (collectively, the “IT Activities”). Prescribed activities are also set out in section 4 of the Ancillary Activities Regulations (the “Ancillary Activities”). |
Neither the ICA nor the Information Technology Activities (Canadian Societies) Regulations impose control requirements with respect to the IT Activities. Neither the ICA nor the Ancillary Activities Regulations impose control requirements with respect to the Ancillary Activities. |
Minister’s approval is required with respect to both the IT Activities and the Ancillary Activities. [554(5)] |
In the case of an entity that engages in the IT Activities, the entity:
[subsection 2(3) and section 3 of the Information Technology Activities (Canadian Societies) Regulations] In the case of the Ancillary Activities, no business restrictions except where specified in the Minister’s approval. |
Footnotes
- Footnote 1
-
OSFI is of the view that this class refers to foreign regulated entities that are subject to regulatory regimes that are substantially similar to the ones applicable to equivalent Canadian entities listed in classes 1(a) or (b) above. For example, in order to be a class 1(c) entity, a foreign entity that primarily engages outside Canada in a business that, if carried on in Canada, would be the business of insurance, would have to be regulated in a substantially similar manner as an entity referred to in 554(1)(a) or (b).