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Credit Unions and Caisses Populaires Act, 2020

ONTARIO REGULATION 105/22

GENERAL

Consolidation Period:  From March 1, 2022 to the e-Laws currency date.

Last amendment: 105/22.

Legislative History: 105/22

This is the English version of a bilingual regulation.

CONTENTS

PART I
INTERPRETATION

1.

Definitions

2.

Meaning of “material change”

3.

Widely distributed security

4.

Bodies corporate

PART II
ESTABLISHING A CREDIT UNION

5.

Minimum number of incorporators

6.

Articles of incorporation

7.

Name

8.

Financial years

PART III
MEMBERSHIP

9.

Payments re deceased members

PART IV
CAPITAL STRUCTURE

10.

Number of shares

11.

Disclosure re insurance of membership shares

12.

Membership share certificate

13.

Offering statement

14.

Copy of offering statement

15.

Notice of offering

16.

Application for receipt for offering statement

17.

Application for renewal of receipt

18.

Statement of material change

19.

Transfer of securities issued after receipt for an offering statement

PART V
CAPITAL AND LIQUIDITY

20.

Adequate capital

PART VI
GOVERNING A CREDIT UNION

Directors

21.

Election of board

22.

Directors

23.

Chair

24.

Vacancies

25.

Ceasing to hold office

26.

Removal by board

27.

Circumstances for removal by members

28.

Statement on resignation

29.

Disqualified individuals

Powers and Duties of a Board

30.

Mandatory by-laws

31.

Frequency of board meetings

32.

Disclosure of expenses and remuneration

33.

Limitation on delegation to committees

34.

Gender diversity report

Audit Committees

35.

Audit committee

36.

Duties of audit committee

37.

Notification about certain matters

38.

Power to call a board meeting

Officers

39.

Officers

40.

Remuneration

Miscellaneous

41.

Rights of withdrawing member

42.

Member rights relating to expulsion

43.

Bond for persons handling money

44.

List of members and shareholders

Auditors

45.

Appointment of auditor

46.

Qualification as auditor

47.

Ineligibility as receiver

48.

Replacement of auditor

49.

Removal of auditor

50.

Report to Chief Executive Officer for certain purposes

51.

Duty at meetings

52.

Duty to report contravention, etc.

PART VII
BUSINESS POWERS

Ancillary Businesses

53.

Ancillary businesses

Financial Services

54.

Prohibition re financial services

55.

Financial lease agreements and conditional sales agreements

Networking

56.

Networking

Fiduciary Activities

57.

Fiduciary activities

Guarantees

58.

Guarantees

59.

Limit on amount of guarantee

Restriction on Borrowing from Another Credit Union

60.

Restriction on borrowing from another credit union

Syndicated Loans

61.

Syndicated loans

PART VIII
INVESTMENT AND LENDING

Security Interests in Credit Union Property

62.

Security interests in credit union property

Classes of Loans

63.

Classes of loans

64.

Agricultural loan

65.

Bridge loan

66.

Commercial loan

67.

Institutional loan

68.

Personal loan

69.

Residential mortgage loan

70.

Syndicated loan in Ontario

71.

Syndicated loan outside Ontario

72.

Loan to an unincorporated association

Lending Limits

73.

Lending limits to a person or connected persons

74.

Limits on loans of same class to a person

Eligible Investments

75.

Eligible investments

76.

Prescribed conditions re improved real estate

77.

Definition

78.

Prescribed conditions re body corporate

Restriction on Single Investments

79.

Restriction re single investments

Investment in Subsidiaries

80.

Restriction on investment in subsidiaries

PART IX
MEETINGS

First Meeting

81.

First meeting

82.

Quorum

83.

Business to be dealt with

Financial Statements

84.

Financial statements

Members’ and Shareholders’ Meetings

85.

Notice of meetings

86.

Annual meetings

87.

Notice of proposal

88.

Refusing proposal

89.

Different ways of member voting

PART X
RETURNS, EXAMINATIONS AND RECORDS

90.

Document retention

91.

Maximum fee for by-laws

PART XI
RESTRICTED PARTY TRANSACTIONS

Interpretation

92.

Definition of “restricted party”

93.

Definition of “transaction”

Permitted Transactions

94.

Transactions of nominal value or not material

95.

Issue of shares

96.

Permitted transactions

Restricted Party Transaction Procedures

97.

Restricted party transaction procedures

PART XII
CENTRALS

Application

98.

Application

Capital Structure

99.

Capital structure

Business Powers

100.

Business powers

101.

Permitted activities

102.

Group insurance

103.

Trustee

Investment and Lending

104.

Investment and lending

105.

Exception to restriction re single investments

Subsidiaries

106.

Restriction on investment in subsidiaries

Exemptions from the Act

107.

Exemptions from the Act

PART XIII
DEPOSIT INSURANCE

Deposit Insurance

108.

Insurable deposits

109.

Deposit insurance amount

Annual Premium

110.

Annual premium

111.

Payment of annual premium

112.

Audited statement of deposits

PART XIV
CONTINUING AS OR CEASING TO BE AN ONTARIO CREDIT UNION

Continuing as an Ontario Credit Union

113.

Articles of continuance

114.

Conditions for issue of certificate of continuance

115.

Limits on transition period

Transfer to Another Jurisdiction

116.

Conditions for issue of certificate of continuance

Continuation under Another Ontario Act

117.

Conditions for issue of certificate of continuance

Dissolution

118.

Minimum number of members

PART XV
CONSUMER PROTECTION

Disclosure re Interest Rates, etc.

119.

Disclosure re interest rates, etc.

120.

Disclosure upon renewal

121.

Disclosure in advertising

Consumer Complaints by Members and Depositors

122.

Consumer complaints by members and depositors

123.

Inquiry by Chief Executive Officer

PART XVI
ADMINISTRATIVE PENALTIES

124.

Chief Executive Officer’s authority

125.

Criteria for determining amount of penalty

126.

Deadline for paying penalties

PART XVII
EXTRA-PROVINCIAL CREDIT UNIONS

Registering

127.

Application for registration

128.

Condition for registration

Business Powers

129.

Limited activities

Special Rules

130.

Information required by the Chief Executive Officer

131.

Information required by Authority

132.

Fees

133.

Mortgage Brokerages, Lenders and Administrators Act, 2006

Cancelling the Registration

134.

Cancellation of registration on request

135.

Cancellation of registration, Chief Executive Officer’s order

136.

Cancellation of registration, other jurisdiction

137.

Effect of cancellation

 

Part I
interpretation

Definitions

1. (1) In this Regulation,

“agricultural loan” means an agricultural loan described in section 64; (“prêt agricole”)

“bridge loan” means a bridge loan described in section 65; (“prêt-relais”)

“commercial loan” means a commercial loan described in section 66; (“prêt commercial”)

“guarantee” includes the issuance of a letter of credit; (“garantie”)

“institutional loan” means an institutional loan described in section 67; (“prêt institutionnel”)

“insurer” means an insurer licensed under the Insurance Act; (“assureur”)

“participating share” means a share of a body corporate that carries the right to participate in the earnings of the body corporate to an unlimited degree and to participate in a distribution of the remaining property of the body corporate on dissolution; (“action participative”)

“personal loan” means a personal loan described in section 68; (“prêt personnel”)

“residential mortgage loan” means a residential mortgage loan described in section 69; (“prêt hypothécaire résidentiel”)

“residential property” means an individual condominium residential unit or a building with one to four units where at least one half of the floor area of the building is utilized as one or more private residential dwellings; (“bien résidentiel”)

“total assets” means total assets as determined in accordance with the Authority rules. (“actif total”)

(2) For the purposes of this Regulation, a lodgement of title is not a mortgage.

(3) For the purposes of this Regulation, two or more persons are connected if they satisfy the conditions prescribed in subsection 79 (3), or subsection 105 (2) in the case of a central.

Meaning of “material change”

2. For the purposes of the Act and this Regulation,

“material change” means,

(a) a change in the business, operations, assets, liabilities or capital of a credit union that would reasonably be expected to have a significant effect on the financial position of the credit union or the value of any of the securities of the credit union, or

(b) a decision to implement a change referred to in clause (a) made by the board of directors or other persons acting in a similar capacity or by senior management of the credit union who believe that confirmation of the decision by the board of directors or such other persons acting in a similar capacity is probable.

Widely distributed security

3. (1) A security is widely distributed if,

(a) it is listed or posted for trading on a recognized stock exchange; or

(b) a prospectus relating to the issuance of the security is filed under the laws of a province or a jurisdiction outside Canada.

(2) A debt obligation is widely distributed if no prospectus is required in respect of its distribution under the laws of a province or a jurisdiction outside Canada and either of the following two conditions is met:

1. At least 90 per cent of the maximum authorized principal of the debt obligation is held by one or more persons other than the credit union making the loan and its subsidiaries and,

i. the debt obligation is issued to at least 25 persons other than the credit union and its subsidiaries within six months after the day on which the first of the debt obligations is issued, or

ii. the debt obligations are issued on a continuous basis and there are, on average, at least 25 holders other than the credit union and its subsidiaries.

2. When the debt obligation is issued, it meets at least three of the following criteria:

i. Its initial term is one year or less.

ii. It is rated by a rating agency.

iii. It is distributed through a person authorized to trade in securities.

iv. It is distributed in accordance with an offering circular or memorandum or a similar document relating to the distribution of securities.

Bodies corporate

4. (1) A factoring corporation is a body corporate that is restricted to acting as a factor in respect of accounts receivable, raising money for the purpose of acting as a factor and lending money while acting as a factor.

(2) A financial leasing corporation is a body corporate that is restricted to,

(a) engaging in financial leasing of personal property;

(b) entering into and accepting assignments of conditional sales agreements in respect of personal property;

(c) administering financial lease agreements and conditional sales agreements on behalf of a person; and

(d) raising money for the purpose of financing its activities and investing the money until it is used for those activities.

(3) An investment counselling and portfolio management corporation is a body corporate whose principal activities are either of the following:

1. Offering advice or advising about investments.

2. Investing or controlling money, property, deposits or securities that it does not own and that are not deposited with it in the ordinary course of business, which must involve the exercise of discretion and judgment.

(4) A mutual fund corporation is a body corporate or entity restricted to investing its funds. It may also be a body corporate that issues securities entitling the holder to receive, on demand or within a specified period, an amount computed by reference to the value of a proportionate interest in all or part of its net assets (including a separate fund or a trust account).

(5) A mutual fund distribution corporation is a body corporate whose principal activities are acting as an agent selling and collecting payment for interests in a mutual fund. Purchasers must be told about the existence of any sales commission or service fee before buying an interest in the mutual fund. The sales proceeds, less sales commissions and service fees, must be paid to the fund.

(6) A securities dealer is a body corporate that trades in securities in the capacity of principal or agent. “Trade” has the same meaning as in the Securities Act.

Part II
establishing a credit union

Minimum number of incorporators

5. For the purposes of subsection 10 (1) of the Act, the minimum number of individuals required to incorporate a credit union is 20.

Articles of incorporation

6. (1) The following information must be set out in the articles of incorporation of a credit union:

1. The name of the credit union.

2. The address of the credit union’s head office and the name of the municipality or township in Ontario where the credit union’s principal place of business is located.

3. The minimum and maximum number of directors.

4. The full name, date of birth, citizenship or permanent resident status and residential address of each director.

5. The classes and maximum number, if any, of shares other than membership shares that the credit union is authorized to issue.

6. The rights, privileges, restrictions and conditions, if any, attaching to each class of shares.

7. The board’s authority with respect to any class of shares that may be issued in series.

(2) Articles filed when a credit union is first incorporated must also set out the full name, date of birth and residential address of each incorporator.

(3) Articles approved by the Minister before March 1, 1995 shall be deemed to comply with subsections (1) and (2).

Name

7. Central 1 Credit Union, Canadian Credit Union Association and an extra-provincial credit union registered under clause 273 (6) (a) of the Act are prescribed persons for the purposes of section 18 of the Act.

Financial years

8. (1) For the purposes of section 27 of the Act, the financial year of a credit union must end on December 31.

(2) The following apply if, on the day this section comes into force, a credit union’s financial year ends on a date other than December 31:

1. The credit union’s financial year need not be changed.

2. If the credit union’s financial year is changed, it must be changed so that it ends on December 31.

(3) Subsection (2) does not apply to a credit union formed by the amalgamation of two or more credit unions after the day this section comes into force; in such a case, the financial year of the amalgamated credit union must end on December 31.

Part III
Membership

Payments re deceased members

9. (1) For the purposes of paragraph 1 of subsection 38 (2) of the Act, the prescribed amount is $50,000.

(2) For the purposes of paragraph 2 of subsection 38 (2) of the Act, the prescribed amount is $50,000.

part IV
Capital STructure

Number of shares

10. Despite any limit set out in the by-laws of a credit union, the limit on the number of membership shares that may be issued to a member of the credit union is the sum of,

(a) the minimum number of membership shares required under the by-laws of the credit union; and

(b) the number of membership shares that would be issued by the credit union for an additional consideration of $1,000, as determined at the time the membership shares are issued.

Disclosure re insurance of membership shares

11. Prior to issuing any membership share, a credit union shall disclose to the member that membership shares are not insured by the Authority.

Membership share certificate

12. For the purposes of subsection 44 (4) of the Act, a membership share certificate must include the following information and statements on its face:

1. The name of the credit union as it appears in the articles.

2. The name of each person to whom the certificate is issued.

3. A statement indicating that the credit union is governed by the Credit Unions and Caisses Populaires Act, 2020.

4. A statement indicating that the certificate represents membership shares in the credit union and indicating the number of shares.

5. A statement indicating that there may be a lien on the shares in favour of the credit union for indebtedness to it.

6. A statement indicating that the shares are not guaranteed or insured by the Authority or another public agency.

7. A statement indicating that the certificate is not transferable.

Offering statement

13. (1) For the purposes of subsection 70 (2) of the Act, the following information is prescribed as information that an offering statement must contain:

1. The name of the credit union.

2. The credit union’s date of incorporation as set out in the articles or, in the case of an amalgamated credit union, its date of amalgamation as set out in its certificate of amalgamation.

3. The address of the credit union’s head office.

4. The name of each of the credit union’s directors and officers, the municipality in which each resides, the principal occupation of each of them and the title of each officer.

5. The details of the capital structure of the credit union.

6. A description of the material characteristics of the securities being offered.

7. The maximum amount of the subscription, if any.

8. The details of the use to which the proceeds from the sale of the securities will be put.

9. If the offering is being made in connection with a plan of reorganization, a purchase and sale or an amalgamation, a description of the general effect of these proposed changes and when they will be made.

10. The details of the method of selling the securities and of any commission payable or discount allowable on the sale. If the securities are being sold through an underwriter, the underwriter’s name and the details of the underwriter’s obligation to take up and pay for the securities. If the securities are being sold by another method, separate descriptions of the method of distribution of securities underwritten, securities under option and securities being sold on a best efforts basis and the amount of any minimum subscription.

11. A description of the market on which the securities may be sold, and if there is no market, a description of how the securities will be redeemed.

12. The name of each transfer agent and registrar and the location of each register of transfer.

13. The details of any securities or other obligations ranking ahead of the securities being offered.

14. A description of the business carried on by the credit union and its subsidiaries, if any, including the following:

i. The nature and results of any material reorganization of the credit union or its subsidiaries.

ii. The acquisition or disposition of any material amount of assets other than in the ordinary course of business.

iii. Material changes in the services provided by the credit union or its subsidiaries.

iv. Material changes in the way the credit union or its subsidiaries conduct business.

15. A description of any material legal proceeding to which the credit union or its subsidiary is a party.

16. A description of any material interest of a director, an officer or an employee of the credit union or its subsidiary in the operations of the credit union generally or in the securities being offered, including the following:

i. Particulars of any options to purchase shares of the credit union that are held by a director or officer and the name of any director or officer who holds such options.

ii. Particulars of any options to purchase shares of the credit union that are held by other employees, without naming the employees.

17. A description of every material contract entered into during the two-year period before the date of the offering statement and a description of any contract entered into at any time, if the contract has a bearing on the securities issue.

18. A description of the risk factors of the credit union and the risks associated with the securities being offered.

19. A description of the credit union’s operating results during the three-year period before the date of the offering statement, and a description, to the extent reasonably practicable, of any substantial variations in the operating results of the credit union during that period and the financial statements that show the variations.

20. The amount of any dividends, patronage returns, allocations or other distributions paid, declared or accumulated but unpaid by the credit union during the five-year period before the date of the offering statement.

21. A statement that the amount a person pays to subscribe for securities of a credit union will be held in escrow until the closing date of the offering, and the name and address of the escrow agent.

22. The name and address of the credit union’s auditor.

23. A description of any other material facts, and if there are no other material facts, the offering statement must contain the following statement: “There are no other material facts relating to this issue of securities”.

24. The first page of the offering statement must set out the information described in subsection (3).

25. The offering statement must include the financial performance indicators set out in subsection (4).

(2) For the purposes of paragraph 6 of subsection (1), the description of the material characteristics of the securities being offered must include the following:

1. If shares,

i. dividend rights,

ii. voting rights,

iii. liquidation or distribution rights,

iv. conversion rights,

v. calls and redemption provisions, with all of the terms and conditions of any calls and redemptions clearly listed in bold type,

vi. retraction provisions,

vii. sinking fund provisions,

viii. provisions for modifications, amendments or variations of rights or provisions,

ix. the maximum amount of the issue in the class or series, if any, and a description of how an oversubscribed issue will be allocated,

x. the minimum amount of the issue,

xi. the maximum number of shares any one individual is permitted to hold, and

xii. any other material rights, privileges, restrictions and conditions that attach to the shares.

2. If securities other than shares,

i. redemption and retraction provisions, with all of the terms and conditions of any redemption clearly listed in bold type,

ii. conversion rights,

iii. any terms of subordination,

iv. sinking fund provisions,

v. provisions on interest rate and maturity,

vi. provisions permitting or restricting the issuance of additional securities and negative covenants such as restrictions or deferrals on payment of service obligations,

vii. provisions for modifications, amendments or variations of rights or provisions,

viii. the maximum amount of the issue, if any, and a description of how an oversubscribed issue will be allocated,

ix. the minimum amount of the issue,

x. the maximum number or value of securities that any one individual is permitted to hold, and

xi. any other material rights, privileges, restrictions and conditions that attach to the securities.

(3) For the purposes of paragraph 24 of subsection (1), the first page of an offering statement must set out the following:

1. The date of the offering statement.

2. A notice to purchasers of their right to rescind the purchase of securities within two business days.

3. A statement that purchasers may only sell or transfer their shares to another member of the credit union or a prescribed person and that all other sales or transfers are prohibited.

4. A statement recommending that prospective purchasers carefully review the offering statement and documents referenced in it, and in particular the risk factors, and consult their financial and tax advisors.

5. A reference to the description of the risk factors of the credit union and the risks associated with the securities being offered and the page number of the offering statement on which that description begins.

(4) For the purposes of paragraph 25 of subsection (1), the offering statement must include the following financial performance indicators for the credit union:

1. The following profitability indicators:

i. Total assets in dollars.

ii. Return on average assets.

iii. Financial margin to average assets.

2. The following information with respect to compliance with capital requirements:

i. Leverage ratio.

ii. Total capital ratio.

iii. Total capital in dollars.

iv. Total supervisory capital.

v. Regulatory capital.

3. The following information with respect to asset quality:

i. Total loss allowance as a percentage of total loans.

ii. Total loss allowance as a percentage of total loans by category of loan.

iii. Bad debt expense to average assets.

(5) The offering statement must include the following documents:

1. The audited financial statements of the credit union that were placed before the members at the most recent annual meeting and signed by the chair of the board and the chief executive officer of the credit union.

2. Interim unaudited financial statements, reviewed by a person licensed under the Public Accounting Act, 2004, for the period ending not more than 90 days before the date on the offering statement, if the audited financial statements required under paragraph 1 are in respect of a period ending more than 90 days before the date on the offering statement.

3. If a report, opinion or statement prepared by a person is used in the offering statement, a document signed by the person indicating that the person consents to the use of the report, opinion or statement.

4. A copy of the board resolution approving the offering, certified by the corporate secretary to be a true copy.

5. Comparative financial statements for the previous three financial years and a copy of the credit union’s most recent audited financial statements and interim financial statement for the period ending 90 days before the date of the offering statement.

(6) If the credit union was incorporated within 90 days before the date of the offering statement, the offering statement must include pro forma financial statements, including projected balance sheets and income statements of the credit union for at least the first three fiscal years of the credit union instead of the financial statements required under paragraphs 1 and 2 of subsection (5).

(7) If the credit union was amalgamated within 90 days before the date of the offering statement, the offering statement must include, instead of the financial statements required under paragraphs 1 and 2 of subsection (5),

(a) the audited financial statements of each predecessor credit union that were placed before its members at the most recent annual meeting of the predecessor credit union;

(b) a statement of the assets and liabilities of the amalgamated credit union as of the date of the certificate of amalgamation; and

(c) pro forma financial statements, including projected balance sheets and income statements of the amalgamated credit union for at least the first three fiscal years after the amalgamation.

(8) The offering statement must include the following statements in conspicuous, bold type on the front cover, in the same language as is used in the statement:

1. No official of the Government of the Province of Ontario has considered the merits of the matters addressed in the offering statement.

2. The securities being offered are not guaranteed by the Financial Services Regulatory Authority of Ontario or any similar public agency.

(9) If there is no market on which the securities may be sold, the offering statement must include a statement to that effect in bold type on the front cover.

Copy of offering statement

14. A credit union shall inform prospective purchasers in writing of their right under subsection 74 (2) of the Act to request and receive a copy of the offering statement.

Notice of offering

15. (1) A credit union may give any person or entity a notice respecting an offering after the offering statement is filed and before the Chief Executive Officer issues a receipt.

(2) The notice must contain the following information:

1. A detailed description of the security that the credit union proposes to issue.

2. The price of the security, if the price has been determined.

3. The name and address of a person from whom the securities may be purchased.

(3) The notice must include the following statements in conspicuous, bold type on the front cover, in the same language as is used in the offering statement:

1. This is not an offer to sell the securities described in this document.

2. The securities described in this document cannot be sold until after the Chief Executive Officer of the Financial Services Regulatory Authority of Ontario issues a receipt for an offering statement. You are advised to read the offering statement approved by the Chief Executive Officer, because the terms and conditions may be changed significantly.

3. The Chief Executive Officer may refuse to issue a receipt, in which case the securities described in this document will not be offered for sale.

Application for receipt for offering statement

16. An application for a receipt for an offering statement must include a document that cross-references the particulars of the securities to be issued with specific terms and conditions of the credit union’s articles.

Application for renewal of receipt

17. (1) An application for a renewal of a receipt for an offering statement must include a comparison statement that cross-references any changes in the offering statement.

(2) The comparison statement described in subsection (1) must be signed by the following individuals:

1. The chair of the board of the credit union.

2. The chief financial officer of the credit union, or if there is no chief financial officer, an officer of the credit union.

3. The chief executive officer of the credit union.

Statement of material change

18. The following information must be set out in a statement of material change respecting an offering statement by a credit union:

1. The name of the credit union.

2. The date on which the receipt for the offering statement was issued.

3. The date on which the material change occurred.

4. A description of the material change.

Transfer of securities issued after receipt for an offering statement

19. For the purposes of subsection 67 (1) of the Act, the Authority and a central are prescribed as persons to whom a security issued under circumstances described in clause 68 (1) (a) of the Act may be transferred.

PART V
Capital and Liquidity

Adequate capital

20. (1) For the purposes of maintaining adequate capital as required under section 77 of the Act, a credit union must satisfy the following conditions:

1. It must maintain a leverage ratio of at least 3 per cent.

2. It must maintain a total capital ratio of at least 8 per cent.

(2) For the purposes of this section, “leverage ratio” and “total capital ratio” have the same meaning as in the Authority rules and shall be determined in accordance with the Authority rules.

PART VI
governing a credit union

Directors

Election of board

21. (1) The by-laws of a credit union may provide for the election and retirement of directors in rotation.

(2) A member who votes at an election of directors shall cast a number of votes less than or equal to the number of directors to be elected but the member may not cast more than one vote for one candidate.

Directors

22. (1) If an election is not held within the period set out in the by-laws of a credit union, the directors continue in office until their successors are elected.

(2) Each of the persons named as first directors in the articles is a director until replaced by a person duly elected or appointed in the first director’s stead.

(3) The by-laws of a credit union shall provide for a maximum number of consecutive terms for directors.

Chair

23. (1) The chair of the board shall hold office for such term as the by-laws of a credit union provide.

(2) The by-laws of a credit union shall provide for a maximum number of consecutive terms for the chair of the board.

Vacancies

24. (1) If a vacancy occurs in the board and a quorum of directors remains, the directors remaining in office may appoint a qualified individual to fill the vacancy until the next annual meeting of the members of the credit union.

(2) If there is not a quorum of directors in office, the remaining directors shall promptly call a general meeting of the members to fill the vacancy; in default of this or if there are no remaining directors, any member may call the meeting.

Ceasing to hold office

25. (1) A director ceases to hold office,

(a) at the end of the annual meeting at which the director’s term of office expires or upon the election of a successor;

(b) when the director dies or resigns;

(c) when the director becomes ineligible to hold office under section 29 of this Regulation or section 83 of the Act;

(d) when the director is removed from office under section 26 of this Regulation or section 94 of the Act;

(e) in the circumstances described in section 27 of this Regulation; or

(f) when the Chief Executive Officer replaces the board and appoints a person to assume the powers of the board under subsection 234 (1) of the Act.

(2) A director’s resignation becomes effective when the credit union receives the director’s written resignation or at the time specified in the resignation, whichever is later.

(3) The credit union shall notify the Chief Executive Officer if, after a director ceases to hold office, there is not a quorum of directors in office.

Removal by board

26. If a director fails to attend three consecutive board meetings without, in the opinion of the board, reasonable cause, or fails to perform any of the duties allotted to the director as a director, the board may, by resolution, declare the director’s position vacant.

Circumstances for removal by members

27. (1) The members of a credit union may remove a director before the director’s term of office expires.

(2) A director is removed from office by a special resolution passed at a general meeting of the members duly called for that purpose.

(3) The notice calling the meeting must state that the purpose of the meeting is to remove the director named in the notice.

(4) At the meeting, the director is entitled to speak to the resolution calling for the director’s removal and may do so personally or through a person authorized under the Law Society Act to represent the director.

(5) If the members remove the director from office, they shall elect another director at the same meeting to hold office in the removed director’s stead for the remainder of the removed director’s term of office.

Statement on resignation

28. (1) A director who resigns is entitled to give the credit union a written statement setting out the director’s reasons for resigning.

(2) The Chief Executive Officer may require the director to provide such information relating to the resignation as the Chief Executive Officer specifies and the director shall promptly do so.

(3) If a director resigns as a result of a disagreement with the other directors or the officers of a credit union, the director shall give the credit union and the Chief Executive Officer a written statement setting out the nature of the disagreement.

(4) The credit union shall, within 30 days after receipt of the statement under subsection (3), advise every member that a copy of the statement is available on request.

(5) The advising of the members under subsection (4) may be by deliveries permitted under subsection 276 (2) of the Act or by such other method as is provided for in the credit union’s by-laws.

(6) The credit union shall give a copy of the statement to every member who requests it.

(7) A credit union and a person acting on its behalf do not incur any liability by reason only of advising the members under subsection (4) or giving a copy of the statement to a member.

Disqualified individuals

29. (1) For the purposes of section 84 of the Act, the following individuals are disqualified from being directors of a credit union:

1. One whose membership in any credit union has been terminated, other than voluntarily.

2. One who has been found under the Substitute Decisions Act, 1992 or under the Mental Health Act to be incapable of managing property or who has been found to be incapable by a court in Canada or elsewhere.

3. One who is an undischarged bankrupt or who has been discharged as a bankrupt in the five years preceding the date on which the individual may be elected as director.

4. One who is unable to obtain proof of bonding insurance that is satisfactory to the Chief Executive Officer.

5. One who is more than 90 days in arrears in the payment of a debt owed to the credit union, unless the credit union has agreed to extend the time for repayment.

6. One who is a listed person within the meaning of the United Nations Suppression of Terrorism Regulations under the United Nations Act (Canada).

7. One who has been convicted, in the five years preceding the date on which the individual may be elected as a director, of an offence described in subsection (3) and who has not received a pardon for the offence.

8. One whose membership in a professional association has been terminated, in the five years preceding the date on which the individual may be elected as director, for professional misconduct.

9. An employee of the credit union or a central in which the credit union is a member or the employee’s spouse, parent or child.

10. A professional advisor who provides services to the credit union in the individual’s professional capacity or who has provided such services in the three years preceding the date on which the individual may be elected as a director.

11. An employee, director or officer of the Authority.

12. A public servant employed under Part III of the Public Service of Ontario Act, 2006 whose employment duties include regulating credit unions.

13. One who has not met the training requirements or qualifications for directors established by the credit union.

14. One who has not met any reasonable condition or qualification set out in the by-laws of the credit union.

(2) An individual is not an employee for the purposes of paragraph 9 of subsection (1) solely because the individual provides, without remuneration, services to the credit union or central that are ordinarily provided by an employee.

(3) An offence referred to in paragraph 7 of subsection (1) is an offence that,

(a) is related to the qualifications, functions or duties of a director of a body corporate;

(b) involves theft or fraud;

(c) involves a contravention of or failure to comply with the Act, a predecessor of the Act or an Act governing a subsidiary of the credit union; or

(d) involves a contravention of or failure to comply with the Securities Act.

Powers and Duties of a Board

Mandatory by-laws

30. The following matters are prescribed for the purposes of subsection 98 (2) of the Act as matters that the by-laws of a credit union shall provide for:

1. The allotment of shares, including the maximum number that may be allotted to a member, the payment for shares, the redemption or transfer of shares and the recording of information about these matters.

2. The procedure for deciding how to distribute the profits of the credit union.

3. The time, place and notice to be given for a members’ meeting, the record date for determining who is entitled to vote at such a meeting, and the quorum for such a meeting.

4. The time, place and notice to be given for a board meeting.

5. The manner of the election of directors to the board.

6. The term for which directors shall hold office.

7. The term for which the chair of the board shall hold office.

Note: On March 1, 2023, the day that is one year after the day subsection 277 (1) of Schedule 7 (Credit Unions and Caisses Populaires Act, 2020) to the Protect, Support and Recover from COVID-19 Act (Budget Measures), 2020 comes into force, section 30 of the Regulation is amended by adding the following paragraph:

7.1 The manner in which a gender diversity report shall be made public.

8. All matters that are required to be included in the by-laws by the Act, regulations or Authority rules.

Frequency of board meetings

31. The board of a credit union shall meet at least quarterly during each financial year of the credit union.

Disclosure of expenses and remuneration

32. For the purposes of subsection 177 (1) of the Act, a credit union’s annual audited financial statements must disclose the total expenses of the board and the total remuneration paid to the directors during the year.

Limitation on delegation to committees

33. The following powers cannot be delegated to a committee of the board:

1. Filling vacancies on the board or the audit committee.

2. Appointing or removing an officer or director of the credit union.

3. Appointing signing officers.

4. Adopting, amending or repealing by-laws.

5. Issuing securities except in the manner and on the terms authorized by the board.

6. Authorizing the payment of a commission upon the sale of shares.

7. Purchasing, redeeming or otherwise acquiring shares issued by the credit union.

8. Approving the financial statements.

9. Authorizing the purchase, sale, lease, exchange or other disposition of material assets.

10. Declaring dividends or patronage returns.

11. Expelling a member.

Gender diversity report

34. For the purposes of subsection 103 (2) of the Act, a gender diversity report must be made public in the manner provided for in the by-laws of the credit union.

Note: On March 1, 2023, the day that is one year after the day subsection 277 (1) of Schedule 7 (Credit Unions and Caisses Populaires Act, 2020) to the Protect, Support and Recover from COVID-19 Act (Budget Measures), 2020 comes into force, section 34 of the Regulation comes into force. (See: O. Reg. 105/22, s. 139 (2))

Audit Committees

Audit committee

35. (1) The audit committee shall have at least three members.

(2) A person ceases to be a member of the audit committee of a credit union when the person ceases to be a director or when the person resigns from the committee or is replaced by the board.

(3) Every member of an audit committee shall satisfy such training requirements or qualifications for audit committee members as are established by the credit union.

(4) The audit committee shall hold a meeting no less frequently than once every quarter during each year and meetings may be called by the credit union’s auditor, a member of the audit committee or any director.

(5) A majority of the members of the audit committee constitutes a quorum.

(6) The audit committee shall keep minutes of its meetings.

(7) The audit committee shall report to the board within 60 days after each committee meeting, or at the next board meeting, whichever is earlier, setting out the results of the meeting.

Duties of audit committee

36. (1) The following are prescribed for the purposes of section 104 of the Act as duties of the audit committee of a credit union:

1. Review and make recommendations to the board about the terms of the engagement letter and the remuneration of the auditor.

2. Review with the auditor the scope and plan of an audit.

3. Discuss with the auditor the audit findings, any restrictions on the scope of the auditor’s work and any problems that the auditor experienced in performing the audit.

4. Review and make recommendations to the board about any management letters, recommendations and reports by the auditor about the business or financial statements of the credit union and any response to them by management of the credit union.

5. Report to the board on any conflict between the auditor and management that the committee is unable to resolve within a reasonable time.

6. Review the annual audited financial statements and make such recommendations to the board as the committee considers appropriate.

7. Review the audited financial statements of each subsidiary of the credit union.

8. Review the effectiveness of the credit union’s internal audit practices and make recommendations to the board to address any deficiencies.

9. Review the organization and assess the degree of independence of the credit union’s internal auditors, if any, including their mandate, work plans and any problems that they experience or issues they raise relating to the performance of audits.

10. Review findings and recommendations of the internal auditors concerning the accounting practices and internal control practices and review the responses by the management of the credit union to any significant or material deficiencies.

11. Report to the board any significant changes in the accounting principles and practices followed by the credit union.

12. Recommend to the board arrangements to safeguard the credit union’s assets, to ensure the timeliness, accuracy and reliability of accounting data, to maintain adherence to the lending and investment policies and procedures and to provide for other matters concerning the financial policies of the credit union.

13. Review any report about the affairs of the credit union made by the Chief Executive Officer, monitor the implementation of any significant recommendations and report to the board on the progress of the implementation.

14. Review the credit union’s policies and procedures governing the way in which it meets the requirements under the Act and any other applicable legislation.

15. Review material legal proceedings to which the credit union is a party.

16. Assess whether the staff of the credit union is adequate to fulfil the credit union’s accounting and financial responsibilities.

17. Monitor the adherence of the credit union’s directors, officers and employees to the credit union’s standards of business conduct and ethical behaviour.

18. Review the credit union’s disaster recovery and business continuity plans.

19. Review, at least annually, the effectiveness of the committee in carrying out its duties.

(2) The audit committee shall report to the members of the credit union at the annual meeting by a report containing the following information for the year to which the report relates:

1. The number of meetings held by the committee during the year.

2. A summary of the significant activities undertaken by the committee during the year, and a description of the actual and expected results.

3. Confirmation that the committee is conducting its affairs in accordance with the Act and the regulations.

4. Information on any failure of the credit union to implement or complete the implementation of any significant recommendation previously made by the audit committee.

5. Details of any other matter that is required to be disclosed pursuant to the Act or the regulations.

(3) The audit committee may, in its annual report, report on such other matters as the committee considers appropriate.

Notification about certain matters

37. (1) The audit committee shall promptly notify the board, the credit union’s auditor and the Chief Executive Officer if any of the following matters come to the attention of the committee:

1. Funds, securities or other property of the credit union have been or may have been misappropriated or misdirected.

2. The board, a director, an officer or an employee of the credit union has contravened or failed to comply with the Act, the regulations, the Authority rules or the by-laws of the credit union and the contravention or failure to comply materially affects the credit union.

(2) Subject to the board’s approval, which shall not be unreasonably withheld, the committee may retain one or more persons to assist it in determining whether a misappropriation or misdirection has occurred.

(3) The committee shall fix the remuneration payable to the persons retained under subsection (2) and the credit union shall pay it.

Power to call a board meeting

38. The audit committee may call a meeting of the board to consider a matter of concern to the committee.

Officers

Officers

39. (1) The directors shall elect or appoint a chair of the board from among themselves.

(2) In addition to the chair of the board, a credit union must have a corporate secretary and a chief executive officer, and may have such other officers as are provided for in the by-laws.

(3) The board may elect or appoint the corporate secretary from among the directors or may appoint an employee of the credit union as corporate secretary.

(4) The corporate secretary shall ensure that the records of the by-laws of the credit union and the minutes of board meetings are kept up to date.

(5) The chief executive officer of a credit union shall be an employee of the credit union appointed by the board.

Remuneration

40. (1) Officers are entitled to receive such remuneration and other payments as the board approves.

(2) A credit union’s annual audited financial statements must disclose the following information about the remuneration paid during a year to the officers and employees of a credit union with respect to each officer and employee of the credit union whose total remuneration for the year was over $175,000:

1. The name of the officer or employee.

2. The title of the officer or position of the employee.

3. The total amount of salary received.

4. The total amount of bonuses received.

5. The monetary value of benefits received.

6. The total amount of any other compensation paid, payable, awarded, granted or given, including taxable allowances, commissions and other similar amounts.

(3) Despite subsection (1), if there are more than five officers and employees of a credit union whose total remuneration for the year was over $175,000, subsection (1) only applies in respect of the five officers and employees with the highest total remuneration for the year.

(4) In this section,

“total remuneration” means, in respect of an officer or employee for a year, the total of the amounts described in paragraphs 3 to 6 of subsection (2) received from the credit union or a subsidiary of the credit union for the year.

Miscellaneous

Rights of withdrawing member

41. The by-laws of a credit union shall set out the rights of a withdrawing member, which shall include the right to receive payment for the member’s membership shares, subject to subsection 54 (3) of the Act, and the return of any money on deposit and property held by the credit union.

Member rights relating to expulsion

42. (1) The by-laws of the credit union shall provide for the following rights:

1. The right of a member to receive advance notice of any meeting of the board at which the board will consider a resolution to expel the member.

2. The right of the member not to be expelled without being given an opportunity to appear at the meeting of the board to make submissions and to be represented at the meeting by a person authorized under the Law Society Act to represent the member.

3. The right of an expelled member to appeal the decision of the board at the next general meeting of the members.

4. The right of the expelled member to be reinstated as a member of the credit union if, at the next general meeting, the members, by a majority of the votes cast at the meeting, set aside the resolution of the board.

5. The right of the expelled member to receive payment for the member’s membership shares, subject to subsection 54 (3) of the Act, and the return of any money on deposit and property held by the credit union.

(2) The by-laws of the credit union shall set out the following:

1. The procedures to be followed by the board to provide the advance notice referred to in paragraph 1 of subsection (1).

2. The procedures to be followed relating to the appeal referred to in paragraph 3 of subsection (1).

(3) If the board passes a resolution expelling a member, the credit union shall, within five days after the resolution is passed, notify the member of the decision of the board by registered letter addressed to the member at the member’s last known address.

Bond for persons handling money

43. (1) For the purposes of subsection 117 (2) of the Act, the minimum amount of the bond is the lesser of $5 million and the amount of the credit union’s total assets as shown on the audited financial statements of the credit union placed before the members at the most recent annual meeting.

(2) For the purposes of subsection 117 (2) of the Act, the bond shall satisfy all of the following conditions:

1. The bond shall be issued by an insurer licensed under the Insurance Act to write surety and fidelity insurance to indemnify the credit union for any loss in respect of assets owned or held by the credit union arising out of a dishonest, fraudulent or criminal act of a director, an officer or an employee of the credit union.

2. The bond shall provide that the bond shall not be cancelled or terminated by the insurer or the insured until at least 30 days after the receipt by the Chief Executive Officer of a written notice from the insurer or the insured, as the case may be, of its intention to cancel or terminate the bond.

List of members and shareholders

44. (1) A member of a credit union may inspect, at all reasonable hours, a list, extracted from the register under section 202 of the Act, of the names of the members and shareholders.

(2) A list of members or shareholders obtained under this section shall not be used by any person except in connection with,

(a) an effort to influence the voting of members or shareholders of the credit union;

(b) an offer to acquire shares of the credit union; or

(c) any other matter relating to the affairs of the credit union.

Auditors

Appointment of auditor

45. (1) At their first general meeting, the members of a credit union shall appoint an auditor to hold office until the close of the first annual meeting, but if the members fail to do so, the board shall promptly make the appointment.

(2) At each annual meeting, the members of a credit union shall appoint an auditor to hold office until the close of the next annual meeting, but if the members fail to do so, the auditor in office continues in office until a successor is appointed.

(3) In the event the office of auditor becomes vacant before the end of the incumbent auditor’s term of office, the board may appoint an auditor to hold office until the close of the next annual meeting.

(4) If no auditor is appointed under subsection (1) or (2), the Chief Executive Officer may require the board to appoint an auditor to hold office until the close of the next annual meeting.

(5) The credit union shall promptly notify the auditor, in writing, of the appointment.

Qualification as auditor

46. (1) An individual or firm of accountants is qualified to be an auditor of a credit union if,

(a) in the case of an individual, the person is an accountant who is,

(i) licensed under the Public Accounting Act, 2004,

(ii) ordinarily resident in Canada, and

(iii) independent of the credit union; and

(b) in the case of a firm of accountants, the member or employee of the firm jointly designated by the firm and the credit union to conduct the audit of the credit union on behalf of the firm is qualified in accordance with clause (a).

(2) For purposes of subsection (1),

(a) independence is a question of fact; and

(b) a person is not independent of a credit union if,

(i) that person, any partner of that person or any member of a firm of accountants of which that person is an employee,

(A) is a director, an officer, a committee member or an employee of the credit union, a subsidiary of the credit union or the Authority,

(B) is a business partner of any director, officer, committee member or employee of the credit union or a subsidiary of the credit union,

(C) beneficially owns or controls, directly or indirectly, a material interest in the shares of a credit union or of any subsidiary of the credit union, or

(D) has been a liquidator, trustee in bankruptcy, receiver or receiver and manager of the credit union or of any subsidiary of the credit union within the two years immediately preceding the person’s proposed appointment as an auditor of the credit union, other than a subsidiary of the credit union acquired pursuant to section 156 of the Act, or

(ii) the firm of accountants of which that person is an employee,

(A) beneficially owns or controls, directly or indirectly, a material interest in the shares of a credit union or of any subsidiary of the credit union, or

(B) has been a liquidator, trustee in bankruptcy, receiver or receiver and manager of the credit union or of any subsidiary of the credit union within the two years immediately preceding the person’s proposed appointment as an auditor of the credit union, other than a subsidiary of the credit union acquired pursuant to section 156 of the Act.

(3) In this section,

“firm of accountants” means,

(a) a partnership, the members of which are accountants engaged in the practice of accounting, or

(b) a body corporate that is incorporated by or under an Act of the legislature of a province or territory and engaged in the practice of accounting.

Ineligibility as receiver

47. The following persons are not eligible to be appointed as a receiver, a receiver and manager or a liquidator of a credit union:

1. A person who is or has been an auditor of the credit union within the two years preceding the proposed appointment.

2. A partner or employer of the person described in paragraph 1.

3. A person who is a spouse, child or parent of the person described in paragraph 1.

Replacement of auditor

48. (1) A person, other than the incumbent auditor, is not eligible to be appointed as auditor unless, at least 15 days before the meeting at which the auditor is to be appointed, a member has given notice to the credit union of an intention to nominate the person for auditor.

(2) The credit union shall send a copy of the member’s notice to the incumbent auditor and to the proposed nominee and shall notify the members of the credit union of the proposed nomination.

(3) The incumbent auditor is entitled to give the credit union written representations concerning the proposal not to reappoint the auditor.

(4) If the incumbent auditor gives the representations to the credit union at least three days before notice of the meeting is to be given, the credit union shall, at its own expense, forward a copy of the representations together with the notice of the meeting to each member entitled to receive the notice.

Removal of auditor

49. (1) The members of a credit union may remove an auditor before the auditor’s term of office expires.

(2) An auditor is removed from office by a resolution passed by a majority of the votes cast at a general meeting of members duly called for that purpose.

(3) The credit union shall, at least 15 days before giving notice of the meeting, give the following material to the auditor before calling the general meeting:

1. Written notice of the intention to call the meeting and of the date on which the notice of the meeting is to be given.

2. A copy of all material proposed to be sent to members in connection with the meeting.

(4) The auditor is entitled to give the credit union written representations concerning the proposal to remove the auditor.

(5) If the auditor gives the representations to the credit union at least three days before notice of the meeting is to be given, the credit union shall, at its own expense, forward a copy of the representations together with the notice of the meeting to each member entitled to receive the notice.

(6) If the members remove the auditor from office, they shall appoint another auditor at the same meeting to hold office for the remainder of the auditor’s term.

(7) The auditor appointed under subsection (6) must be appointed by a resolution passed by a majority of the votes cast at the meeting.

(8) For purposes of paragraph 2 of subsection (3), the material must include a report setting out the circumstances and the reasons for the removal of the auditor.

Report to Chief Executive Officer for certain purposes

50. Within 10 days after the annual meeting, the auditor shall provide a copy of the audited financial statements and the auditor’s report to the Chief Executive Officer for the purpose of assisting the Chief Executive Officer and the Authority in carrying out their duties and powers under the Act, including, without limiting the generality of the foregoing, for the purposes of the following:

1. Determining whether conditions on the deposit insurance of the credit union should be imposed or amended under section 218 of the Act.

2. Determining whether the deposit insurance of the credit union should be cancelled under section 222 of the Act.

3. Determining the annual premium for the credit union under section 225 of the Act.

Duty at meetings

51. If the auditor is present at a meeting of members or shareholders, the auditor shall answer inquiries directed to the auditor concerning the basis for the auditor’s report under section 135 of the Act.

Duty to report contravention, etc.

52. (1) The auditor shall report on,

(a) transactions of the credit union that, in the auditor’s opinion, have not been within the powers of the credit union;

(b) loans made by the credit union to any person the aggregate amount of which exceeds one half of one per cent of the total assets of the credit union and in respect of which, in the auditor’s opinion, loss to the credit union is likely to occur; or

(c) any circumstances that indicate that there may have been a contravention of the Act or the regulations.

(2) If a report is made with respect to loans described in clause (1) (b), it is not necessary to report those loans again unless, in the opinion of the auditor, the amount of the loss likely to occur has increased.

(3) If an auditor reports under this section,

(a) the auditor shall transmit the report, in writing, to the chair of the board and to the audit committee;

(b) the report shall be presented at the first meeting of directors following its receipt;

(c) the report shall be incorporated in the minutes of that meeting; and

(d) the auditor shall, at the time of transmitting the report pursuant to clause (a), provide the Chief Executive Officer with a copy of the report.

Part VII
Business powers

Ancillary Businesses

Ancillary businesses

53. For the purposes of subsection 139 (1) of the Act, a credit union may engage in the following trades or businesses:

1. Operating a post office.

2. Operating a motor vehicle licence bureau.

3. Acting as an agent to receive payments for utility bills, realty tax, personal income tax and for similar transactions.

4. Providing facsimile transmission facilities.

5. Promoting merchandise and services to its members or the holder of any payment, credit or charge card issued by the credit union, its subsidiaries or affiliates.

6. Engaging in the sale of,

i. tickets, including lottery tickets, on a non-profit, public service basis in connection with special, temporary and infrequent non-commercial celebrations or projects that are of local, municipal, provincial or national interest,

ii. transit fares, and

iii. tickets in respect of a lottery sponsored by the federal government or a provincial or municipal government or an agency of any such government.

Financial Services

Prohibition re financial services

54. For the purposes of subsection 139 (4) of the Act, a credit union shall not directly provide the following financial services:

1. Services provided by a factoring corporation described in subsection 4 (1).

2. Services provided by an investment counselling and portfolio management corporation described in subsection 4 (3).

3. Services provided by a mutual fund corporation described in subsection 4 (4).

4. Services provided by a mutual fund distribution corporation described in subsection 4 (5).

5. Services provided by a securities dealer described in subsection 4 (6).

Financial lease agreements and conditional sales agreements

55. (1) For the purposes of subsection 139 (4) of the Act, a credit union or subsidiary must not enter into a financial lease agreement or a conditional sales agreement unless the agreement meets the following requirements:

1. The agreement concerns personal property,

i. selected by the lessee or purchaser and acquired by the credit union or subsidiary at the request of the lessee or purchaser, or

ii. previously acquired by the credit union or subsidiary under another financial lease agreement or conditional sales agreement.

2. The primary purpose of the agreement is to extend credit to the lessee or purchaser.

3. The agreement is for a fixed term.

(2) A credit union or subsidiary must not direct a customer or prospective customer to particular dealers for the sale of personal property under a conditional sales agreement.

(3) A financial lease agreement or conditional sales agreement must yield,

(a) a reasonable rate of return; and

(b) a return that at least equals the investment by the subsidiary in the property that is the subject of the agreement, taking into account in the case of a financial lease agreement,

(i) rental charges payable or paid by the lessee,

(ii) tax benefits to the credit union or subsidiary, and

(iii) the guaranteed purchase or resale price, if any, for the property at the expiry of the agreement or the lesser of the estimated residual value of the property and 25 per cent of the original acquisition cost to the credit union or subsidiary.

(4) The financial lease agreement or conditional sales agreement must set out the responsibilities of the credit union or its subsidiary respecting the benefit of the warranties, guarantees and undertakings made by the manufacturer or supplier of the property.

(5) The aggregate estimated residual value of all property held by a credit union and its subsidiaries under financial lease agreements must not exceed 10 per cent of the aggregate original acquisition cost.

(6) This section does not apply with respect to agreements in which the credit union or its subsidiary is the lessee or conditional purchaser.

Networking

Networking

56. (1) Subject to sections 1 to 12 of Ontario Regulation 104/22 (Sale of Insurance), for the purposes of subsection 139 (5) of the Act, the following are the prescribed persons or entities in respect of which a credit union may act as agent:

1. A financial institution.

2. The Authority.

3. Central 1 Credit Union.

4. Fédération des caisses Desjardins du Québec.

5. A financial leasing corporation described in subsection 4 (2), whether or not it is a subsidiary of the credit union.

6. A mutual fund corporation described in subsection 4 (4), whether or not it is a subsidiary of the credit union.

7. A mutual fund distribution corporation described in subsection 4 (5), whether or not it is a subsidiary of the credit union.

(2) A credit union may act as agent for the Authority only with respect to the administration of deposits under a deposit administration agreement.

(3) For the purposes of subsection 139 (5) of the Act, a credit union may refer its members to a person or entity listed in paragraphs 1 to 7 of subsection (1) for the purpose of obtaining a syndicated loan within the meaning of section 70.

Fiduciary Activities

Fiduciary activities

57. For the purposes of section 142 of the Act, the only fiduciary activity a credit union may undertake is acting as a trustee with respect to,

(a) deposits under registered retirement savings plans, registered retirement income funds, registered education savings plans, registered disability savings plans and tax-free savings accounts under the Income Tax Act (Canada);

(b) trust funds established under the Funeral, Burial and Cremation Services Act, 2002 or any other funds in respect of which a credit union is expressly permitted or required, under an Act or regulation, to act as a trustee; and

(c) loan proceeds and security under loan participation agreements and syndication agreements.

Guarantees

Guarantees

58. For the purposes of subsection 143 (3) of the Act, the following are the prescribed conditions and restrictions on a guarantee:

1. The guarantee must have a fixed term.

2. The credit union shall not guarantee an obligation, other than its own obligation or one of its subsidiary, unless the credit union has received security at least equal to the amount of the obligation guaranteed.

Limit on amount of guarantee

59. For the purposes of subsection 143 (4) of the Act, the prescribed percentage is 10 per cent.

Restriction on Borrowing from Another Credit Union

Restriction on borrowing from another credit union

60. For the purposes of subsection 148 (2), no credit union shall borrow money from another credit union without the written approval of the Chief Executive Officer.

Syndicated Loans

Syndicated loans

61. For the purposes of clause 154 (1) (c) of the Act, a syndicated loan means a syndicated loan in Ontario within the meaning of section 70 of this Regulation, or a syndicated loan outside Ontario within the meaning of section 71 of this Regulation.

Part viii
Investment and Lending

Security Interests in Credit Union Property

Security interests in credit union property

62. (1) This section sets out, for the purposes of section 149 of the Act, the circumstances in which a credit union may create a security interest in property of the credit union.

(2) A credit union may create a security interest in personal property of the credit union if the property, together with any other property of the credit union subject to a security interest under this subsection, has an aggregate value of less than one per cent of the credit union’s total assets, as set out in the audited financial statements of the credit union that were placed before its members at the most recent annual meeting.

(3) A credit union may create a security interest in property of the credit union if the following conditions are satisfied:

1. The security interest is granted to secure a debt, including any obligation of the credit union to an entity listed in paragraph 2 that is a member of the Canadian Payments Association to settle for payment items of the credit union in accordance with the by-laws and rules of the Canadian Payments Association, which together with other debts for which the credit union has granted a security interest does not exceed 15 per cent of the credit union’s total assets, as set out in the audited financial statements of the credit union that were placed before its members at the most recent annual meeting.

2. The debt is owed to,

i. a bank or authorized foreign bank within the meaning of section 2 of the Bank Act (Canada),

ii. a corporation registered under the Loan and Trust Corporations Act, or

iii. a central, Central 1 Credit Union or Fédération des caisses Desjardins du Québec.

3. The security agreement under which the security interest is granted provides that the security interest is granted over specifically identified assets and does not create a general charge against the business and undertaking of the credit union.

4. The security interest is limited by its terms to property with a value, together with the total value of all property subject to a security interest under this subsection, that does not exceed 25 per cent of the value of the credit union’s total assets as set out in the audited financial statements of the credit union that were placed before its members at the most recent annual meeting.

5. The security agreement under which the security interest is granted provides that if the value of the property subject to a security interest under this subsection exceeds at any time the limit established in paragraph 4, the security interest does not apply to the portion of the property, or to the portion of the proceeds from the sale of the property, that exceed the limit, regardless of whether the debt in respect of which the security was granted has been repaid in full at that time.

(4) A credit union may create a general security interest in property of the credit union, except property required to satisfy the requirements of adequate liquidity under section 77 of the Act, if the following conditions are satisfied:

1. The debt is owed to a central, Central 1 Credit Union, Fédération des caisses Desjardins du Québec or any person or entity approved by the Chief Executive Officer.

2. The security agreement under which the security interest is granted provides that if the Chief Executive Officer orders the credit union to be subject to administration under section 233 of the Act or the Chief Executive Officer is appointed as liquidator of the assets of the credit union, the Chief Executive Officer may require that the security agreement be assigned to the Authority, if the Authority delivers one of the following to the secured party:

i. Payment in full of the outstanding balance, as of the close of business on the day of the assignment, of the indebtedness of the credit union secured by the agreement.

ii. A guarantee of payment for the outstanding balance, as of the close of business on the day of the assignment, of the indebtedness of the credit union secured by the agreement.

iii. Partial payment of the outstanding balance of the indebtedness of the credit union secured by the agreement and a guarantee of payment for the portion of the outstanding balance not paid as of the close of business on the day of the assignment.

3. The security agreement under which the security interest is granted provides that despite paragraph 2, the Chief Executive Officer may require the security agreement be assigned to the Authority only if the Authority delivers to the Bank of Canada payment in full of the outstanding balance of the indebtedness of the credit union secured by the agreement, if,

i. the security interest granted by the credit union forms part of the collateral security granted or assigned by Central 1 Credit Union to the Bank of Canada as security for an emergency liquidity assistance facility from the Bank of Canada, and

ii. the Chief Executive Officer orders the credit union to be subject to administration under section 233 of the Act or the Chief Executive Officer is appointed liquidator of the assets of the credit union.

(5) A guarantee of payment made under subparagraph ii or iii of paragraph 2 of subsection (4) must provide the following:

1. The Authority shall pay the outstanding balance of the indebtedness, including interest at the interest rate provided for in the debt instrument that forms a part of the security agreement prior to any default under that instrument, by the fifth anniversary of the guarantee, or such earlier date as the Chief Executive Officer may designate.

2. The secured party is not required to exhaust its right to recourse against the credit union or any other person before being entitled to payment or performance by the Authority under the guarantee.

3. The obligations of the Authority under the guarantee are continuing, unconditional and absolute, and will not be released, discharged, diminished, limited or otherwise affected by a change affecting the credit union.

(6) A credit union may create a security interest in property of the credit union in favour of the Authority without satisfying the requirements of subsection (2), (3) or (4).

Classes of Loans

Classes of loans

63. The following are prescribed as classes of loans:

1. Agricultural loans.

2. Bridge loans.

3. Commercial loans.

4. Institutional loans.

5. Personal loans.

6. Residential mortgage loans.

7. Syndicated loans in Ontario.

8. Syndicated loans outside Ontario.

9. Loans to unincorporated associations.

Agricultural loan

64. An agricultural loan is a loan that is made for the purposes of financing,

(a) the production of cultivated or uncultivated field-grown crops;

(b) the production of horticultural crops;

(c) the raising of livestock, fish, poultry or fur-bearing animals; or

(d) the production of eggs, milk, honey, maple syrup, tobacco, wood from woodlots or fibre or fodder crops.

Bridge loan

65. A bridge loan is a loan to an individual made under the following circumstances:

1. The loan is for the purchase of residential property in which the purchaser will reside.

2. The term of the loan is not greater than 120 days.

3. The funds from the sale of another residential property owned by the individual will be used to repay the loan.

4. The credit union must receive a copy of the executed purchase and sale agreement for both properties before the loan is made.

5. The conditions of each of the purchase and sale agreements must be satisfied before the loan is made.

6. The loan is fully secured by a mortgage on the residential property being sold or, before the loan is made, the borrower’s solicitor has given the credit union an irrevocable letter of direction from the borrower stating that the funds from the sale of the residential property being sold will be remitted to the credit union.

Commercial loan

66. (1) A commercial loan is a loan, other than any of the following types of loans, that is made for any purpose:

1. An agricultural loan, a bridge loan, an institutional loan, a personal loan or a residential mortgage loan.

2. A loan to an unincorporated association.

3. A loan that consists of deposits made by the credit union with a financial institution, Central 1 Credit Union or Fédération des caisses Desjardins du Québec.

4. A loan that is fully secured by a deposit with,

i. a financial institution, including the credit union making the loan, or

ii. Central 1 Credit Union or Fédération des caisses Desjardins du Québec.

5. A loan that is fully secured by debt obligations that are guaranteed by,

i. a financial institution other than the credit union making the loan, or

ii. Central 1 Credit Union or Fédération des caisses Desjardins du Québec.

6. A loan that is fully secured by a guarantee of,

i. a financial institution other than the credit union making the loan, or

ii. Central 1 Credit Union or Fédération des caisses Desjardins du Québec.

7. An investment in a debt obligation that is,

i. fully guaranteed by a financial institution other than the credit union making the loan,

ii. fully secured by deposits with a financial institution, including the credit union making the loan, or

iii. fully secured by debt obligations that are fully guaranteed by a financial institution other than the credit union making the loan.

8. An investment in a debt obligation issued by the Government of Canada, the government of a province or territory of Canada or a municipality or by an agency of such a government or municipality.

9. An investment in a debt obligation guaranteed by, or fully secured by securities issued by, the Government of Canada, the government of a province or territory of Canada, a municipality or by an agency of such a government or municipality.

10. An investment in a debt obligation issued by a central, Central 1 Credit Union or Fédération des caisses Desjardins du Québec.

11. An investment in a debt obligation that is widely distributed.

12. An investment in shares or ownership interests that are widely distributed.

13. An investment in a participating share.

14. An investment in shares of a central, Central 1 Credit Union or Fédération des caisses Desjardins du Québec.

(2) A commercial loan includes the supply of funds for use in automated bank machines that are not owned and operated by the credit union.

Institutional loan

67. An institutional loan is a loan given to,

(a) the Government of Canada;

(b) the government of a province or territory of Canada;

(c) an agency of the Government of Canada;

(d) an agency of the government of a province or territory of Canada;

(e) a school board or college funded primarily by the Government of Canada or by the government of a province or territory of Canada;

(f) any other entity funded primarily by the Government of Canada, the government of a province or territory of Canada or a municipality; or

(g) a municipality or an agency of one.

Personal loan

68. A personal loan is a loan given to,

(a) an individual for personal, family or household use; or

(b) an individual or an entity for any other use if the loan does not exceed $25,000 and if the total outstanding amount of such loans to the individual or it and to connected persons does not exceed $25,000.

Residential mortgage loan

69. A residential mortgage loan is a loan that is secured by a mortgage on residential property and to which any of the following apply:

1. The amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the residential property, does not exceed 80 per cent of the value of the property when the loan is made.

2. The loan is insured under the National Housing Act (Canada), or guaranteed or insured by a government agency.

3. The loan is insured by an insurer licensed to undertake mortgage insurance.

Syndicated loan in Ontario

70. A syndicated loan in Ontario is a loan, including any related credit facilities, to which all of the following conditions apply:

1. The loan is made under a syndicated loan agreement.

2. The syndicating lead is one of the following institutions:

i. A credit union, or a subsidiary of a credit union if that credit union is the only other party, other than the borrower, to the syndicated loan agreement.

ii. A central.

iii. Central 1 Credit Union.

iv. Fédération des caisses Desjardins du Québec.

v. A bank listed in Schedule I to the Bank Act (Canada).

3. The only parties to the syndicated loan agreement are the following entities:

i. The syndicating lead.

ii. A borrower from Ontario.

iii. One or more of the following entities:

A. A credit union or its subsidiary or affiliate.

B. A central.

C. Central 1 Credit Union.

D. Fédération des caisses Desjardins du Québec.

E. A financial institution other than a securities dealer.

F. An extra-provincial credit union registered under clause 273 (6) (a) of the Act.

4. Each of the parties to the syndicated loan agreement, other than the borrower, agrees to contribute a specified portion of the loan and to be bound by the terms and conditions of the syndicated loan agreement.

5. The syndicating lead contributes at least 10 per cent of the loans, including any related credit facilities, and underwrites, disburses and administers them on behalf of the parties to the syndicated loan agreement.

Syndicated loan outside Ontario

71. A syndicated loan outside Ontario is a loan, including any related credit facilities, to which all of the following conditions apply:

1. The loan is made under a syndicated loan agreement.

2. The syndicating lead is one of the following entities:

i. An entity that is incorporated as a credit union or central or federation in a province or territory of Canada other than Ontario under legislation that is comparable to the Act.

ii. A bank listed in Schedule I to the Bank Act (Canada).

3. The parties to the syndicated loan agreement include, but are not limited to, the following entities:

i. The syndicating lead.

ii. A borrower from a province or territory of Canada other than Ontario.

iii. A credit union or a central.

4. Each of the parties to the syndicated loan agreement, other than the borrower, agrees to contribute a specified portion of the loan and to be bound by the terms and conditions of the syndicated loan agreement.

5. The syndicating lead contributes at least 10 per cent of the loans, including any related credit facilities, and underwrites, disburses and administers them on behalf of the parties to the syndicated loan agreement.

Loan to an unincorporated association

72. A loan to an unincorporated association is a loan to an unincorporated association or organization,

(a) that is not a partnership registered under the Business Names Act; and

(b) that is operated on a non-profit basis for educational, benevolent, fraternal, charitable, religious or recreational purposes.

Lending Limits

Lending limits to a person or connected persons

73. (1) Subject to subsections (2), (3) and (6), a credit union may make a loan to a person if, as a result of making the loan, the total amount of all outstanding loans made to the person and any connected persons would not exceed 25 per cent of the credit union’s regulatory capital.

(2) If the person to whom the loan is to be made is listed in clause 67 (c), (d) or (e), the credit union may make the loan if, as a result of making the loan, the total amount of all outstanding loans made to the person and any connected persons would not exceed 50 per cent of the credit union’s regulatory capital.

(3) If the person to whom the loan is made is listed in clause 67 (a) or (b), the lending limit set out in subsection (1) does not apply.

(4) For the purposes of this section, the total amount of all outstanding loans made by a credit union to a person and any connected persons excludes the portion, if any, of a loan that,

(a) is insured under the National Housing Act (Canada) or by an insurer licensed to undertake mortgage insurance;

(b) is guaranteed by,

(i) a federal, provincial or territorial government of Canada,

(ii) an agent of a government described in subclause (i), or

(iii) the Authority; or

(c) is secured by deposits of the borrower with the credit union.

(5) For the purposes of this section, changing the terms and conditions of a loan or refinancing a loan in any other way shall be deemed to be making a loan.

(6) A credit union may adopt the following rules as part of its investment and lending policies under section 153 of the Act:

1. The credit union may make a bridge loan or a residential mortgage loan if,

i. the credit union’s total assets, as set out in the audited financial statements of the credit union that were placed before its members at the most recent annual meeting, are described in a row in Column 1 of the Table to this section, and

ii. as a result of making the loan, the total amount of all outstanding loans made by the credit union to the person and any connected persons would not exceed the amount of the total lending limit set out in the same row of Column 2 of the Table to this section.

2. The credit union may make a loan to a person listed in clause 67 (f) or (g) if,

i. the credit union’s total assets, as set out in the audited financial statements of the credit union that were placed before its members at the most recent annual meeting, are described in one of row 1, 2, 3, 4, 5 or 6 in Column 1 of the Table to this section, and

ii. as a result of making the loan, the total amount of all outstanding institutional loans made by the credit union to the person and any connected persons would not exceed 50 per cent of the amount of the total lending limit set out in the same row of Column 2 of the Table to this section.

Table
Lending Limits to a person or connected persons

 

Item

Column 1
Total assets of credit union

Column 2
Total lending limit to a person or connected persons

1.

Less than $500,000

Greater of 100% of regulatory capital and $60,000

2.

$500,000 or more but less than $1 million

Greater of 100% of regulatory capital and $100,000

3.

$1 million or more but less than $2 million

Greater of 80% of regulatory capital and $125,000

4.

$2 million or more but less than $3 million

Greater of 80% of regulatory capital and $155,000

5.

$3 million or more but less than $5 million

Greater of 70% of regulatory capital and $185,000

6.

$5 million or more but less than $10 million

Greater of 60% of regulatory capital and $235,000

7.

$10 million or more but less than $20 million

Greater of 50% of regulatory capital and $295,000

8.

$20 million or more but less than $30 million

Greater of 40% of regulatory capital and $345,000

9.

$30 million or more but less than $50 million

Greater of 30% of regulatory capital and $400,000

 

Limits on loans of same class to a person

74. (1) A credit union shall establish prudent lending limits for each class of loans that it is authorized by its by-laws to make.

(2) For the purposes of the lending limits established by a credit union,

(a) a loan in an amount that exceeds the lending value of any property that is given as security for the loan, as determined in accordance with the credit union’s lending policies, is an under-secured loan;

(b) a loan in an amount that does not exceed the lending value of the property that is given as security for the loan, as determined in accordance with the credit union’s lending policies, is a fully secured loan; and

(c) a loan to a person includes a loan to two or more persons for which they are jointly and severally liable.

Eligible Investments

Eligible investments

75. (1) For the purposes of section 167 of the Act, a credit union may hold as an investment any asset authorized by its investment policies, other than a prohibited investment, subject to the conditions set out in the Act, this Regulation and the Authority rules.

(2) A credit union shall not invest in a derivative instrument unless it is purchased for the purposes of managing interest rate or foreign exchange risk.

(3) A credit union shall not make a direct investment in, or purchase of, any commodity, including metals, food and grain, that trades on a commodity exchange.

(4) The total book value of all investments by a credit union in the following types of shares, other than shares in its subsidiaries, must not exceed 70 per cent of the credit union’s regulatory capital:

1. Shares of a body corporate or ownership interests in an unincorporated association that are widely distributed.

2. Participating shares of a body corporate.

(5) The total book value of all investments by a credit union and its subsidiaries in improved real estate in Canada must not exceed 100 per cent of the credit union’s regulatory capital.

(6) For the purposes of subsection (5), the total book value does not include the book value of real estate acquired by the credit union and its subsidiaries,

(a) to protect its investment in a mortgage on the real estate; or

(b) in satisfaction of debts previously contracted in the course of the credit union’s business.

Prescribed conditions re improved real estate

76. (1) For the purposes of section 167 of the Act, the following are prescribed conditions that must be satisfied if a credit union invests in improved real estate, either by purchasing it or by way of a loan secured by a mortgage on it:

1. The amount advanced on a mortgage plus all outstanding mortgages with an equal or prior claim against the real estate must not exceed the lending value of the real estate.

2. Despite paragraph 1, the amount may exceed the lending value of the real estate if the loan secured by the mortgage is approved or insured under the National Housing Act (Canada).

3. Despite paragraph 1, the amount may exceed the lending value of the real estate,

i. if the excess amount is guaranteed or insured through an agency of the Government of Canada or of the government of a province or territory of Canada, or

ii. if the excess amount is insured by an insurer licensed to undertake mortgage insurance.

(2) If a credit union or a subsidiary acquires or has the right to possess or sell real estate for either of the following purposes and then sells it and takes back a mortgage on the sale, the investment in the mortgage need not meet the requirements of subsection (1):

1. To protect its investment in a mortgage on the real estate.

2. In satisfaction of debts previously contracted in the course of the credit union’s business.

(3) Subsection (1) does not apply with respect to a mortgage taken back by the credit union on the sale of property held by the credit union for its own use.

(4) A credit union shall not retain real estate acquired under circumstances described in subsection (2) for more than two years without obtaining the approval of the Chief Executive Officer.

(5) For the purposes of subsection (1),

“lending value” means, in respect of real estate, 80 per cent of the market value of the real estate, but if the credit union considers a lesser percentage appropriate in the circumstances under its investment and lending policies, the lending value is that lesser percentage of the market value of the real estate.

Definition

77. For the purposes of sections 75 and 76,

“improved real estate” means real estate,

(a) on which there exists a building capable of being used for residential, financial, commercial, industrial, educational, professional, institutional, religious, charitable or recreational purposes,

(b) on which a building described in clause (a) is being built or is about to be built,

(c) on which farming operations are being conducted, or

(d) that is vacant land restricted by law to being used for commercial, industrial or residential purposes.

Prescribed conditions re body corporate

78. (1) For the purposes of section 167 of the Act, it is a prescribed condition that a credit union not directly or indirectly invest in the shares of a body corporate if, as a result of the investment,

(a) the voting rights attached to the aggregate of any voting shares of the body corporate beneficially owned by the credit union and by any entities it controls would exceed 30 per cent of the voting rights attached to all of the outstanding voting shares of the body corporate; or

(b) the aggregate of any shares of the body corporate beneficially owned by the credit union and by any entities it controls would represent ownership of more than 30 per cent of the shareholders’ equity of the body corporate.

(2) Subsection (1) does not apply to a credit union in respect of an investment in the shares of a body corporate if the Chief Executive Officer approves the credit union’s investment before the investment is made.

(3) For the purposes of section 167 of the Act, it is a prescribed condition that a credit union not directly or indirectly invest in ownership interests in an unincorporated entity if, as a result of the investment, the aggregate of any ownership interests, however designated, into which the entity is divided that would be beneficially owned by the credit union and by entities it controls would exceed 30 per cent of all the ownership interests into which the unincorporated entity is divided, unless the Chief Executive Officer approves the credit union’s investment before the investment is made.

Restriction on Single Investments

Restriction re single investments

79. (1) For the purposes of section 167 of the Act, a credit union shall not directly or indirectly invest, by way of purchases from or loans to one person or more than one person that, to its knowledge, are connected persons, more than 25 per cent of the credit union’s regulatory capital.

(2) The limit set out in subsection (1) does not apply if,

(a) the investment is in the form of deposits with or loans to,

(i) a financial institution that is not a credit union or a securities dealer,

(ii) the Authority, or

(iii) Central 1 Credit Union or Fédération des caisses Desjardins du Québec; or

(b) the investment is in securities issued or guaranteed by the Government of Canada, including mortgages insured under the National Housing Act (Canada), by the government of any province of Canada or by any municipality in Canada.

(3) The following conditions, if satisfied, result in persons being connected persons for the purposes of this section:

1. In relation to a person or entity, if another person or entity is one of the following:

i. A body corporate in which the person or entity holds or beneficially owns, directly or indirectly, at least 35 per cent of the voting securities.

ii. An affiliate of a body corporate described in subparagraph i.

iii. A person or entity that has a 50 per cent interest in a partnership in which the person or entity also has a 50 per cent interest.

iv. A partnership in which the person or entity is a partner.

v. A trust or estate in which the person or entity has a substantial beneficial interest.

vi. A trust or estate in respect of which the person or entity serves as a trustee or in a similar capacity.

vii. A person or entity on whose financial resources the person or entity depends to repay a loan to the credit union.

viii. A person or entity who provides security to the credit union for a loan to the person or entity.

2. In relation to an individual, if another individual is one of the following:

i. A spouse of the individual who is financially dependent on the individual.

ii. A relative by blood, marriage or adoption of the individual or of the individual’s spouse who lives in the same home as the individual and who is financially dependent on the individual or spouse.

Investment in Subsidiaries

Restriction on investment in subsidiaries

80. For the purposes of subsection 168 (6) of the Act, the prescribed percentage of the credit union’s regulatory capital is 100 per cent.

PART ix
meetings

First Meeting

First meeting

81. (1) The first meeting of a credit union shall be convened by a majority of the incorporators.

(2) Written notice of the meeting shall be delivered to each incorporator at least seven days before the date of the meeting.

(3) The notice must state the date, time, place and purpose of the meeting.

Quorum

82. At the first meeting of a credit union, a majority of the incorporators constitutes a quorum.

Business to be dealt with

83. The following business shall be transacted at the first meeting of a credit union:

1. The directors shall be elected.

2. The mandatory by-laws required under subsection 98 (2) of the Act shall be enacted.

3. The auditor shall be appointed.

Financial Statements

Financial statements

84. (1) For the purposes of subsection 177 (1) of the Act, the prescribed matters to be shown on the financial statements of a credit union are the following:

1. The amount and composition of Tier 1 and Tier 2 capital and the percentage of regulatory capital held for determining compliance with the Authority rules.

2. The amount of each type of asset held for liquidity purposes as determined under the Authority rules.

3. The amount of outstanding loans in each of the loan classes described in section 63.

4. The amount of impaired loans, the allowance for impairment and the charge for impairment.

5. The value of investments in marketable securities that are designated as amortised cost, fair value through other comprehensive income or fair value through profit or loss.

(2) The following time periods are prescribed, for the purposes of subsection 177 (1) of the Act, as the time periods to which the prescribed matters must relate:

1. The most recently completed financial year.

2. The financial year immediately before the most recently completed financial year.

Members’ and Shareholders’ Meetings

Notice of meetings

85. (1) Notice of the time and place for holding a meeting of the members of a credit union shall be given at least 10 days before the date of the meeting but not more than 50 days before the date of the meeting.

(2) Notice of a meeting at which a special resolution is to be voted on shall include a summary of the special resolution, including, for a special resolution to confirm a by-law, a summary of the by-law.

(3) For greater certainty, this section applies with necessary modifications to meetings of holders of shares of the credit union other than patronage shares.

Annual meetings

86. (1) Unless otherwise authorized by the Chief Executive Officer, the annual meeting of the members of a credit union shall be held no later than 120 days after the end of the credit union’s last completed financial year.

(2) On application by a credit union, the Chief Executive Officer may authorize the credit union to hold its annual meeting of members on a day that is more than 120 days after the end of the last completed financial year if the Chief Executive Officer considers the extension of time to be reasonable in the circumstances, and the Chief Executive Officer may impose such conditions as the Chief Executive Officer considers appropriate.

(3) At an annual meeting, the board shall place before the members,

(a) the audited financial statements of the credit union;

(b) the report of the auditor;

(c) the report of the audit committee; and

(d) such further information respecting the financial position of the credit union and the results of its operations as the by-laws require.

(4) The notice of an annual meeting of the members must,

(a) specify that copies of the audited financial statements, the auditor’s report and the audit committee report will be available for inspection, by any member, at the meeting and at the offices of the credit union and electronically at least 10 days before the meeting; and

(b) set out any matters to be dealt with at the annual meeting in addition to the business described in subsection (3) in sufficient detail to permit members to form a reasonable judgment on the matter.

Notice of proposal

87. (1) Any proposal of a member submitted for consideration at a meeting must be attached to the notice of the meeting.

(2) If the member submitting the proposal so requests, a statement by the member in support of the proposal and the name and address of the member must be attached to the notice of the meeting.

(3) The statement must not be longer than 200 words.

(4) A proposal is not required to be attached to the notice of the meeting if,

(a) the proposal is not submitted at least 90 days before the anniversary date of the previous annual meeting;

(b) it clearly appears that the proposal is submitted primarily for the purpose of,

(i) enforcing a personal claim or redressing a personal grievance against the credit union or its directors, officers, members or security holders, or

(ii) promoting general economic, political, racial, religious, social or similar causes;

(c) a proposal by the member had been attached to another notice of a meeting within the preceding two years and the member did not present the proposal at the meeting;

(d) substantially the same proposal was submitted to the members at a meeting held within the preceding two years and the proposal was defeated; or

(e) the right conferred is being abused to get publicity.

(5) The two-year period referred to in clauses (4) (c) and (d) ends when the proposal is given to the credit union.

(6) No credit union or person acting on behalf of a credit union incurs any liability from circulating a proposal or statement in compliance with this section.

Refusing proposal

88. (1) If a credit union does not intend to include a proposal in a notice of a meeting, it shall, within 10 days after receiving the proposal, notify the member submitting it of the intention to omit the proposal from the notice and send to the member reasons for the refusal.

(2) Any member who disagrees with a refusal to include a proposal may apply to the court for an order restraining the holding of the meeting at which the proposal is sought to be presented.

(3) A credit union, or any person who objects to a proposal, may apply to the court for an order allowing the credit union to omit the proposal from the notice of meeting, and the court, if it is satisfied that subsection 87 (4) applies, may make the order.

(4) On an application under subsection (2) or (3), the court may grant the order applied for or any other order that it considers appropriate.

Different ways of member voting

89. (1) A member of a credit union may vote in person or, unless the articles or by-laws of the credit union provide otherwise, by mail, by telephone or by electronic means.

(2) The by-laws or articles of a credit union may set out conditions that apply to voting in the different ways allowed under subsection (1).

Part x
returns, examinations and records

Document retention

90. (1) A credit union shall keep and maintain the following in accordance with section 203 of the Act:

1. A copy of its articles of incorporation and any amendments to them or, if applicable, its other incorporating document and any amendments to it.

2. A copy of its articles of continuance, if applicable.

3. The by-laws and resolutions, including special resolutions, of the credit union.

4. The register of members, shareholders and security holders required by section 202 of the Act to be kept by the credit union.

5. A register of the directors, members of the audit committee and any other committees established by the board and all officers of the credit union, setting out their names, residential addresses, including the street and number, if any, their occupations and the several dates on which they have become or ceased to be a member of the board or committee.

6. A register of all securities held by the credit union.

7. Books of account and accounting records of the credit union.

8. The minutes of all proceedings at meetings of members, shareholders, directors and committees.

9. The audited financial statements of the credit union placed before the members at the most recent annual meeting.

(2) Despite paragraph 8 of subsection (1), a credit union may dispose of minutes of committee proceedings that were held more than six years before the disposition.

Maximum fee for by-laws

91. For the purpose of subsection 205 (3) of the Act, the prescribed amount is $25.

Part XI
restricted party transactions

Interpretation

Definition of “restricted party”

92. (1) For the purposes of the Act,

“restricted party” means, in relation to a credit union, a person who is or has been in the preceding 12 months,

(a) a director or officer of the credit union,

(b) a spouse of a director or officer of the credit union,

(c) a relative by blood, marriage or adoption of a person described in clause (a) or (b), if the relative lives in the home of a person described in clause (a) and is financially dependent on a person described in clause (a) or (b),

(d) the auditor of the credit union, if the auditor is an individual,

(e) a corporation in which a director or officer of the credit union beneficially owns, directly or indirectly, more than 10 per cent of the voting shares,

(f) a corporation controlled by a person described in clause (a), (b), (c) or (d), or

(g) an affiliate of the credit union, other than a subsidiary.

(2) For the purposes of subsection (1),

“officer” includes a person who has not yet assumed the office.

Definition of “transaction”

93. (1) For the purposes of the Act,

“transaction”, as between a credit union and a restricted party, includes,

(a) a guarantee given by the credit union on behalf of the restricted party,

(b) an investment by the credit union in securities issued by the restricted party,

(c) a loan from the credit union to the restricted party,

(d) an assignment taken or acquisition made by the credit union of a loan made by a third party to the restricted party, and

(e) a security interest taken by the credit union in securities issued by the restricted party.

(2) The performance of a condition of a transaction forms a part of the transaction and does not constitute a separate transaction.

(3) The payment of dividends to a restricted party does not constitute a transaction between a credit union and the restricted party.

Permitted Transactions

Transactions of nominal value or not material

94. A credit union may enter into a transaction with a restricted party if the value of the transaction is nominal or if the transaction is not material when measured by criteria established by the board.

Issue of shares

95. (1) A credit union may issue to a restricted party shares that are fully paid for with money or that are issued,

(a) upon the conversion of other issued and outstanding securities of the credit union;

(b) as a share dividend;

(c) as a patronage return;

(d) in accordance with an amalgamation agreement;

(e) in exchange for shares of another body corporate; or

(f) in exchange for other property.

(2) A credit union may issue shares under clause (1) (e) or (f) only with the prior written approval of the Chief Executive Officer.

Permitted transactions

96. (1) A credit union or its subsidiary may enter into any of the following transactions with a restricted party if the transaction is authorized in advance by at least two-thirds of the members of the board of the credit union:

1. A written contract for the purchase of goods or services, other than management services, required by the credit union or the subsidiary to carry on business. The term of the contract and of each potential renewal must not exceed five years. The contract must state the consideration to be paid and the consideration must not exceed fair market value.

2. A written contract for the provision of management services to or by the credit union or subsidiary. It must be reasonable that the credit union or subsidiary supply the services. The amount to be paid must not exceed fair market value.

3. A written lease of personal property for the credit union or subsidiary to use in carrying on business. The term of the lease and of each potential renewal must not exceed five years. The amount to be paid must not exceed fair market value.

4. A written lease of real property for the credit union or subsidiary to use in carrying on business. The term of the lease and of each potential renewal must not exceed 10 years. The amount to be paid must not exceed fair market value.

5. A contract of employment with an officer of the credit union or a subsidiary.

6. A written contract for employment benefit plans and pension plans and for other reasonable commitments incidental to the credit union or subsidiary employing individuals.

7. A loan. The credit union or subsidiary must be otherwise authorized under the Act to make the loan. The terms of the loan must be no more favourable than those offered in the ordinary course of business by the credit union to its members.

(2) A credit union or a subsidiary may enter into any of the following transactions with a restricted party:

1. A contract of employment with an individual who is not a director or officer of the credit union or subsidiary.

2. A deposit made by the credit union for clearing and settlement purposes with a financial institution with a settlement account at the Bank of Canada under the rules and by-laws of the Canadian Payments Association.

3. A contract to borrow money from the restricted party.

4. The receipt of deposits from the restricted party.

5. The issuance of debt obligations to the restricted party.

(3) The by-laws of the credit union may require the transactions described in subsection (2) to be authorized by a process specified in the by-laws.

(4) A credit union may make residential mortgage loans or personal loans to directors or officers of the credit union on terms more favourable than those offered in the ordinary course of business by the credit union to its members if two-thirds of the members of the board have approved the policies and procedures governing the making of such loans.

Restricted Party Transaction Procedures

Restricted party transaction procedures

97. (1) A credit union shall establish procedures to ensure that it complies with the restrictions governing restricted party transactions.

(2) The procedures form part of the investment and lending policies of the credit union for the purposes of section 153 of the Act.

(3) The procedures must include review and approval procedures to be followed by directors, officers and employees.

(4) The procedures must require that a restricted party disclose to the credit union, in writing, the party’s interest in a transaction or a proposed transaction with the credit union or its subsidiary.

(5) The disclosure to be made by a director or officer must be made in the manner set out in sections 111 and 112 of the Act, with necessary modifications.

PART XII
Centrals

Application

Application

98. This Regulation applies with respect to a central as if it were a credit union, except to the extent modified by this Part.

Capital Structure

Capital structure

99. For the purposes of subsection 67 (1) of the Act, the following are prescribed persons to whom a security of a central issued under circumstances described in clause 68 (1) (a) of the Act may be transferred:

1. A member of the central issuing the securities.

2. A member of a credit union that is a member of the central issuing the securities.

3. The Authority.

Business Powers

Business powers

100. For the purposes of subsection 214 (4) of the Act, a central may engage in or carry on the following business activities and provide the following services:

1. Accepting deposits and making loans.

2. Guaranteeing loans.

3. Providing administrative, advisory, educational, managerial, promotional and technical services to credit unions.

4. Arranging for one or more pension plans for the directors, officers, employees and members of credit unions, their subsidiaries and subsidiaries of the central.

5. Arranging for group bonding for directors, officers and employees of a credit union, its subsidiaries and subsidiaries of the central.

6. Providing credit counselling to members of credit unions who are repaying loans made by the credit unions.

Permitted activities

101. For the purposes of section 138 of the Act, a central may provide investment counselling and portfolio management services to its members, depositors, subsidiaries and affiliates.

Group insurance

102. (1) A central may administer a group insurance policy for its employees, its members, the employees of its members or subsidiaries and credit unions that are not members and their employees.

(2) Group accident and sickness insurance and group life insurance administered by a central must be restricted to the central’s employees, its members, the employees of its members or subsidiaries and credit unions that are not members and their employees.

Trustee

103. For the purposes of section 142 of the Act, a central is authorized to act as trustee with respect to an escrow agreement relating to share offerings by a credit union.

Investment and Lending

Investment and lending

104. Section 74 does not apply with respect to a loan made by a central to a credit union or to a subsidiary of the central.

Exception to restriction re single investments

105. (1) For the purposes of section 167 of the Act, a central shall not directly or indirectly invest, by way of purchase from or loans to one person or more than one person that, to its knowledge, are connected persons, more than 10 per cent of the central’s regulatory capital or such other amount that is approved by the Chief Executive Officer.

(2) The following conditions, if satisfied, result in persons being connected persons for the purposes of this section:

1. Another person or entity is one of the following:

i. A body corporate in which the member or customer holds or beneficially owns, directly or indirectly, at least 20 per cent of the voting securities.

ii. An affiliate of a body corporate described in subparagraph i.

iii. A person or entity that has a 50 per cent interest in a partnership in which the member or customer also has a 50 per cent interest.

iv. A partnership in which the member or customer is a partner.

v. A trust or estate in which the member or customer has a substantial beneficial interest.

vi. A trust or estate in respect of which the member or customer serves as trustee or in a similar capacity.

vii. A person or entity on whose financial resources the member or customer depends to repay a loan to a central.

viii. A person who provides security to a central for a loan to the member or customer.

2. Another individual is one of the following:

i. A spouse who is financially dependent on the member or customer.

ii. A relative by blood, marriage or adoption of the member or customer or of the member’s or customer’s spouse who lives in the same home as the member or customer, who is financially dependent on the member, customer or spouse.

Subsidiaries

Restriction on investment in subsidiaries

106 For the purposes of subsection 168 (6) of the Act, the prescribed amount is 20 per cent of the central’s regulatory capital and deposits.

Exemptions from the Act

Exemptions from the Act

107. Centrals are exempted under subsection 215 (2) of the Act from the following provisions of the Act:

1. Section 40 (withdrawal of members).

2. Section 41 (expulsion of members).

3. Section 170 (investment in another credit union).

4. Section 180 (requisition for members’ meetings).

Part XIII
Deposit insurance

Deposit Insurance

Insurable deposits

108. (1) In this section,

“deposit”, for the purpose of deposit insurance, means the unpaid balance of the aggregate of monies received, or held by a credit union, including interest thereon, from or on behalf of a person in the usual course of its deposit-taking business, for which the credit union,

(a) has given or is obligated to give credit to that person’s account or has issued or is obligated to issue a receipt, certificate, debenture, transferable instrument, draft, certified draft or cheque, prepaid letter of credit, money order or other instrument in respect of which it is liable, and

(b) is obligated to repay the monies on a fixed day, on demand by the person or within a specified period of time following demand by the person.

(2) For the purposes of the Act, each of the following is one insurable deposit:

1. A person’s deposit with the credit union that is not otherwise described in this section.

2. A joint deposit with the credit union of two or more persons, not in trust for a named beneficiary. Each unique combination of depositors gives rise to a separate insurable deposit.

3. A deposit with the credit union of a person, in trust for one named beneficiary.

4. A joint deposit with the credit union of two or more persons, in trust for one named beneficiary. Each unique combination of depositors gives rise to a separate insurable deposit.

5. The interest of each named beneficiary in a deposit with the credit union by a person, in trust for more than one named beneficiary.

6. The interest of each named beneficiary in a joint deposit with the credit union of two or more persons, in trust for more than one named beneficiary. Each unique combination of depositors gives rise to separate insurable deposits.

7. A deposit with the credit union, not in trust for a named beneficiary, to any of a person’s registered retirement savings plans within the meaning of the Income Tax Act (Canada).

8. A deposit with the credit union, in trust for a named beneficiary, to any of a person’s registered retirement savings plans within the meaning of the Income Tax Act (Canada).

9. A deposit with the credit union, not in trust for a named beneficiary, to any of a person’s registered retirement income funds within the meaning of the Income Tax Act (Canada).

10. A deposit with the credit union, in trust for a named beneficiary, to any of a person’s registered retirement income funds within the meaning of the Income Tax Act (Canada).

11. A deposit with the credit union, not in trust for a named beneficiary, to any of a person’s tax-free savings accounts within the meaning of section 146.2 of the Income Tax Act (Canada).

12. A deposit with the credit union, in trust for a named beneficiary, to any of a person’s tax-free savings accounts within the meaning of section 146.2 of the Income Tax Act (Canada).

13. A deposit with the credit union, not in trust for a named beneficiary, to any of a person’s registered disability savings plans within the meaning of the Income Tax Act (Canada).

14. A deposit with the credit union, in trust for a named beneficiary, to any of a person’s registered disability savings plans within the meaning of the Income Tax Act (Canada).

15. A deposit with the credit union, not in trust for a named beneficiary, to any of a person’s registered education savings plans within the meaning of the Income Tax Act (Canada).

16. A deposit with the credit union, in trust for a named beneficiary, to any of a person’s registered education savings plans within the meaning of the Income Tax Act (Canada).

Deposit insurance amount

109. For the purposes of paragraph 2 of subsection 218 (2) of the Act and subsection 220 (3) of the Act, the Authority shall,

(a) for an insurable deposit under paragraphs 1 to 6 of subsection 108 (2) of this Regulation, not insure the amount of the insurable deposit that exceeds $250,000; and

(b) for an insurable deposit under paragraphs 7 to 16 of subsection 108 (2) of this Regulation, insure the full amount of the insurable deposit.

Annual Premium

Annual premium

110. (1) For the purposes of paragraph 1 of subsection 225 (1) of the Act, the Authority shall determine the credit union’s annual premium in accordance with this section.

(2) The Authority shall determine the differential premium score of each credit union and central in accordance with subsection (3) and with the rules set out in the Differential Premium Score Determination published by the Authority on the Authority’s website, as it may be amended from time to time.

(3) The differential premium score of a credit union or central at a particular time is determined with reference to the following components:

1. Capital: the level of regulatory capital of a credit union or central.

2. Corporate governance: the effectiveness of the governance practices of the credit union or central, as determined with reference to the Act and the Authority rules.

(4) The annual premium payable by a credit union or central for a financial year that begins on or after January 1, 2022 is calculated as follows:

1. If the differential premium score of a credit union or central is 90 or over, its annual premium is $0.75 per $1,000 of the funds described in subsection (5) for a credit union and in subsection (6) for a central.

2. If the differential premium score of a credit union or central is 0, its annual premium is $2.25 per $1,000 of those funds.

3. If the differential premium score of the credit union or central is between 0 and 90, its annual premium is the rate per $1,000 of those funds calculated using the formula,

A = 0.75 ($1.75 – [B / 90 × $0.75])

in which,

“A” is the rate, and

“B” is the credit union or central’s differential premium score.

(5) The calculation of the annual premium for a credit union is based on Canadian funds on deposit with the credit union, and no premium is payable with respect to that portion of a deposit that is uninsured by virtue of section 218 of the Act.

(6) The calculation of the annual premium for a central is based on Canadian funds on deposit with the central for a person that is not a credit union, and no premium is payable with respect to that portion of a deposit that is uninsured by virtue of section 218 of the Act.

(7) The Authority may estimate the amount of funds on deposit with the credit union or central using the quarterly financial return of the credit union or central and may adjust the premium upon receiving the audited financial statements.

(8) The annual premium payable by a credit union or central that carries on business for less than one year shall be reduced by an amount proportionate to the period during which it did not carry on business.

(9) Despite subsections (4) and (8), the minimum annual premium payable by a credit union or central is $250.

(10) The Authority may use approximate figures in determining or calculating an amount under this section.

Payment of annual premium

111. A credit union or central shall pay its annual premium within 30 days after the date of the invoice for the premium.

Audited statement of deposits

112. A credit union or central shall file an audited statement of its deposits with the Authority at such time as the Authority directs and respecting such period as the Authority directs.

PART XIV
CONTINUING AS OR CEASING TO BE AN ONTARIO CREDIT UNION

Continuing as an Ontario Credit Union

Articles of continuance

113. The following are prescribed, for the purposes of subsection 257 (3) of the Act, as documents that must accompany the articles of continuance:

1. A copy of the incorporating document of the body corporate, together with all amendments to the document, certified by the officer of the incorporating jurisdiction who is authorized to so certify.

2. A letter of satisfaction, certificate of continuance or other document issued by the authorized officer of the incorporating jurisdiction that indicates that the body corporate is authorized under the laws of the jurisdiction in which it was incorporated or continued to apply for articles of continuance.

Conditions for issue of certificate of continuance

114. The following are prescribed as conditions for the purposes of subsection 257 (5) of the Act:

1. The Chief Executive Officer shall not issue a certificate of continuance unless the body corporate satisfies the Chief Executive Officer that the matters set out in paragraphs 1 to 5 of subsection 13 (2) of the Act are satisfied.

2. The Chief Executive Officer shall not issue a certificate of continuance unless the body corporate satisfies the Chief Executive Officer that the body corporate would meet all the requirements of the Act if it were continued as a credit union.

Limits on transition period

115. (1) The prescribed maximum period for the purposes of paragraph 1 of subsection 257 (12) of the Act is two years beginning on the date the articles of continuance became effective.

(2) The prescribed maximum extension period for the purposes of paragraph 2 of subsection 257 (12) of the Act is seven years beginning on the date the articles of continuance became effective.

Transfer to Another Jurisdiction

Conditions for issue of certificate of continuance

116. The following are prescribed as conditions for the purposes of subsection 258 (5) of the Act:

1. The Chief Executive Officer shall not issue a certificate of approval of continuance unless the credit union satisfies the Chief Executive Officer as to the following:

i. The shareholders or members who voted against the special resolution to apply for the certificate of continuance will be entitled to be paid the value of their membership, patronage and other shares, calculated in accordance with subsection 54 (2) of the Act.

ii. The credit union will proceed with the continuation before the certificate of approval of continuation expires, unless the directors, with the authorization of the shareholders or members, abandon the application.

2. The Chief Executive Officer shall not issue a certificate of approval of continuance unless the credit union satisfies the Chief Executive Officer that after the credit union is continued under the laws of the other jurisdiction, the laws of that jurisdiction provide in effect that,

i. the continued body corporate will possess all the property, rights, privileges and franchises and be subject to all the liabilities, including civil, criminal and quasi-criminal, and all contracts, disabilities and debts of the credit union,

ii. a conviction against, or a ruling, an order or a judgment in favour of or against, the credit union may be enforced by or against the continued body corporate, and

iii. the continued body corporate will continue as a party in any civil action commenced by or against the credit union.

3. The Chief Executive Officer shall include, in each certificate of approval of continuance, a condition that the certificate expires if the credit union has not been continued within six months after the certificate was issued.

Continuation under Another Ontario Act

Conditions for issue of certificate of continuance

117. The following are prescribed as conditions for the purposes of subsection 259 (5) of the Act:

1. The Chief Executive Officer shall not issue a certificate of approval of continuance unless the credit union satisfies the Chief Executive Officer that the shareholders or members who voted against the special resolution to apply for the certificate of continuance will be entitled to be paid the value of their membership, patronage and other shares, calculated in accordance with subsection 54 (2) of the Act.

2. The Chief Executive Officer shall not issue a certificate of approval of continuance unless the credit union satisfies the Chief Executive Officer that, after the credit union is continued,

i. the continued body corporate will possess all the property, rights, privileges and franchises and be subject to all the liabilities, including civil, criminal and quasi-criminal, and all contracts, disabilities and debts of the credit union,

ii. a conviction against, or a ruling, an order or a judgment in favour of or against, the credit union may be enforced by or against the continued body corporate, and

iii. the continued body corporate will continue as a party in any civil action commenced by or against the credit union.

3. The Chief Executive Officer shall include, in each certificate of approval of continuance, a condition that the certificate expires if the credit union has not been continued within six months after the certificate was issued.

Dissolution

Minimum number of members

118. For the purposes of clause 241 (1) (c) of the Act, the prescribed minimum number of members is 20.

PART XV
consumer protection

Disclosure re Interest Rates, etc.

Disclosure re interest rates, etc.

119. (1) A credit union shall disclose to a prospective depositor the applicable rate of interest for the person’s account and the manner of calculating the interest payable.

(2) Whenever there is a change in the rate of interest or in the manner of calculating the amount of interest that applies to a deposit account, the credit union shall disclose the change by means of,

(a) delivering a written statement to a person in whose name the account is maintained;

(b) displaying and making available copies of a written statement at each branch of the credit union where the accounts are held; or

(c) displaying a general notice at each branch of the credit union where the accounts are kept.

Disclosure upon renewal

120. If a credit union renews a term deposit account, the credit union shall disclose to the depositor the rate of interest for the account and the manner of calculating the interest payable.

Disclosure in advertising

121. (1) In an advertisement about an interest-bearing deposit or a debt obligation, a credit union shall disclose how the interest is to be calculated and any circumstances that will affect the rate of interest.

(2) An advertisement about an interest-bearing deposit must state how the balance of a deposit account will affect the rate of interest.

Consumer Complaints by Members and Depositors

Consumer complaints by members and depositors

122. (1) A credit union shall designate an officer or employee of the credit union to receive and attempt to resolve complaints made by members and depositors.

(2) A credit union shall advise its members and depositors, in a manner that it considers appropriate, of the name and contact information of the officer or employee designated under subsection (1).

(3) If a person makes a written complaint to the credit union about the business activities of the credit union, the credit union shall give the person a written response to the complaint setting out the credit union’s proposed resolution of the complaint.

(4) A credit union shall also inform the person who made the complaint that, if the person is not satisfied with the proposed solution and if the person believes that the complaint relates to a contravention of the Act, a regulation or an Authority rule, the person may refer the complaint to the Chief Executive Officer.

(5) A credit union shall keep a copy of every complaint it receives, every response it issues and any other document that relates to a complaint for six years from the date of the complaint and shall make them available if requested to do so by the Chief Executive Officer.

(6) The officer or employee designated under subsection (1) shall report at least once annually to the board about the complaints received and how they were disposed of in a form that is satisfactory to the board.

Inquiry by Chief Executive Officer

123. (1) If, as a result of receiving a complaint, the Chief Executive Officer addresses an inquiry to a credit union or an officer about the conduct of the credit union’s business, the credit union or officer shall promptly reply, in writing, to the inquiry.

(2) If requested to do so by the Chief Executive Officer, the credit union shall give a copy of the Chief Executive Officer’s inquiry and the reply to each director of the credit union and the inquiry and reply shall form part of the minutes of the next board meeting.

PART XVI
Administrative Penalties

Chief Executive Officer’s authority

124. The Chief Executive Officer is authorized to determine the amount of a penalty imposed under section 269 of the Act, subject to the limits set out in section 271 of the Act.

Criteria for determining amount of penalty

125. (1) The Chief Executive Officer shall consider only the following criteria when determining the amount of an administrative penalty to be imposed under section 269 of the Act for a purpose set out in subsection 268 (1) of the Act:

1. The degree to which the contravention or failure to comply was intentional, reckless or negligent.

2. The extent of the harm or potential harm to others resulting from the contravention or failure to comply.

3. The extent to which the person or entity tried to mitigate any loss or to take other remedial action.

4. The extent to which the person or entity derived or reasonably might have expected to derive, directly or indirectly, any economic benefit from the contravention or failure to comply.

5. Any other contraventions or failures to comply with a requirement established under the Act or with any other financial services legislation of Ontario or of any jurisdiction during the preceding five years by the person or entity.

(2) If, after determining the amount of an administrative penalty, the Chief Executive Officer determines that the amount is, by its magnitude, punitive in nature having regard to all the circumstances, the Chief Executive Officer shall reduce the amount of the administrative penalty to an amount that is consistent with either or both of the purposes listed in subsection 268 (1) of the Act.

Deadline for paying penalties

126. (1) A person or entity on whom a penalty has been imposed under section 269 of the Act shall pay the penalty no later than 30 days after the person or entity is given notice of the order imposing the penalty or such longer time as may be specified in the order.

(2) If a person or entity requests a hearing on the notice of proposal to impose the order in accordance with subsection 269 (4) of the Act, the person or entity shall pay the penalty no later than 30 days after the matter is finally determined or such longer time as may be specified in the order.

Part XVII
Extra-Provincial Credit Unions

Registering

Application for registration

127. An application for registration in the Extra-Provincial Credit Unions Register under clause 273 (6) (a) of the Act must be in a form approved by the Chief Executive Officer and include any materials requested by the Chief Executive Officer.

Condition for registration

128. Only an entity that is incorporated as a credit union in a province or territory of Canada other than Ontario under legislation that is comparable to the Act may be registered in the Extra-Provincial Credit Unions Register under clause 273 (6) (a) of the Act.

Business Powers

Limited activities

129. The activities of an extra-provincial credit union registered under clause 273 (6) (a) of the Act are limited to participating in a syndicated loan.

Special Rules

Information required by the Chief Executive Officer

130. Section 198 of the Act applies to an extra-provincial credit union registered under clause 273 (6) (a) of the Act.

Information required by Authority

131. Section 199 of the Act applies to an extra-provincial credit union registered under clause 273 (6) (a) of the Act.

Fees

132. Section 290 of the Act applies to an extra-provincial credit union registered under clause 273 (6) (a) of the Act.

Mortgage Brokerages, Lenders and Administrators Act, 2006

133. An extra-provincial credit union registered under clause 273 (6) (a) of the Act is deemed to be a credit union for the purposes of the Mortgage Brokerages, Lenders and Administrators Act, 2006.

Cancelling the Registration

Cancellation of registration on request

134. The Chief Executive Officer may cancel the registration of an extra-provincial credit union under clause 273 (6) (b) of the Act at the request of the extra-provincial credit union.

Cancellation of registration, Chief Executive Officer’s order

135. (1) The Chief Executive Officer may make an order cancelling the registration of an extra-provincial credit union under clause 273 (6) (b) of the Act if, in the Chief Executive Officer’s opinion, one of the following conditions is satisfied:

1. The extra-provincial credit union is failing to comply with sections 129 to 132 of this Regulation.

2. The extra-provincial credit union is doing anything that constitutes a practice that might prejudice or adversely affect the interests of a member, depositor or shareholder of a credit union as defined in section 1 of the Act.

3. The extra-provincial credit union is not carrying on business or is not in operation.

(2) Section 209 of the Act applies with respect to an order under this section.

(3) The Chief Executive Officer shall set out the reasons for the Chief Executive Officer’s decision in the order.

(4) The extra-provincial credit union that is subject to an order under this section may appeal the order to the Tribunal in accordance with section 212 of the Act.

Cancellation of registration, other jurisdiction

136. The registration of an extra-provincial credit union under clause 273 (6) (a) of the Act is automatically and immediately cancelled if,

(a) its incorporation in a province or territory of Canada other than Ontario has ceased; or

(b) its registration as a credit union in a province or territory of Canada other than Ontario has ceased.

Effect of cancellation

137. An extra-provincial credit union whose registration is cancelled must not participate in a syndicated loan in Ontario except to the extent necessary to wind up its participation in a syndicated loan in Ontario.

Part XVIII (OMITTED)

138. Omitted (provides for amendments to this Regulation).

139. Omitted (provides for coming into force of provisions of this Regulation).

 

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