O. Reg. 265/02: ELIGIBLE INVESTMENTS

 

ontario regulation 265/02

made under the

municipal act

Made: September 18, 2002
 Filed: September 20, 2002
Printed in The Ontario Gazette: October 5, 2002

Amending O. Reg. 438/97

(Eligible Investments)

1. (1) Subparagraph 3 iii of section 2 of Ontario Regulation 438/97 is amended by striking out “Credit Union and Caisses Populaires Act” and substituting “Credit Unions and Caisses Populaires Act, 1994”.

(2) Section 2 of the Regulation is amended by adding the following paragraphs:

7. Asset-backed securities, as defined in subsection 50 (1) of Regulation 733 of the Revised Regulations of Ontario, 1990 made under the Loan and Trust Corporations Act.

8. Negotiable promissory notes or commercial paper, other than asset-backed securities, maturing one year or less from the date of issue, if that note or commercial paper has been issued by a corporation that is incorporated under the laws of Canada or a province of Canada.

9. Bonds, debentures, promissory notes and other evidences of indebtedness of a corporation incorporated under section 142 of the Electricity Act, 1998.

2. (1) Clause 3 (1) (a) of the Regulation is revoked.

(2) Section 3 of the Regulation is amended by adding the following subsections:

(3) A municipality shall not invest in an asset-backed security under paragraph 7 of section 2 that matures more than one year from the date of issue unless the security is rated,

(a) by Dominion Bond Rating Service Limited as “AAA”;

(b) by Moody’s Investors Services Inc. as “Aaa”; or

(c) by Standard and Poor’s Inc. as “AAA”.

(4) A municipality shall not invest in an asset-backed security under paragraph 7 of section 2 that matures one year or less from the date of issue unless the security is rated,

(a) by Dominion Bond Rating Service Limited as “R-1(high)”;

(b) by Moody’s Investors Services Inc. as “Prime-1”; or

(c) by Standard and Poor’s Inc. as “A-1+”.

(5) A municipality shall not invest in a security under paragraph 8 of section 2 unless the promissory note or commercial paper is rated,

(a) by Dominion Bond Rating Service Limited as “R-1(mid)” or higher;

(b) by Moody’s Investors Services Inc. as “Prime-1”; or

(c) by Standard and Poor’s Inc. as “A-1+”.

(6) If an investment made under paragraph 7 or 8 of section 2 falls below the standard required under subsection (3), (4) or (5), as the case may be, the municipality shall sell the investment within 30 days after the day the investment falls below the standard.

(7) A municipality shall not invest in a security under paragraph 9 of section 2 unless, at the time the investment is made and as long as it continues, the investment ranks, at a minimum, concurrently and equally in respect of payment of principal and interest with all unsecured debt of the corporation.

(8) A municipality shall not invest in a security under paragraph 9 of section 2 unless, at the time the investment is made, the total amount of the municipality’s investment in debt of any corporation incorporated under section 142 of the Electricity Act, 1998 that would result after the proposed investment is made does not exceed the total amount of investment in debt, including any interest accrued on such debt, of the municipality in such a corporation that existed on the day before the day the proposed investment is to be made.

(9) Any investment made under paragraph 9 of section 2, including any refinancing, renewal or replacement thereof, may not be held for longer than a total of 10 years from the date such investment is made.

3. The Regulation is amended by adding following section:

4.1 (1) A municipality shall not invest in a security under paragraph 7 of section 2 or in a promissory note or commercial paper under paragraph 8 of section 2 unless, on the date that the investment is made,

(a)   all of the municipality’s long-term debt obligations are rated,

(i) by Dominion Bond Rating Service Limited as “AA(low)” or higher,

(ii) by Moody’s Investors Services Inc. as “Aa3” or higher, or

(iii) by Standard and Poor’s Inc. as “AA–” or higher; or

(b) the municipality has entered into an agreement with the Local Authority Services Limited and the CHUMS Financing Corporation to act together as the municipality’s agent for the investment in that security, promissory note or commercial paper.

(2) The investment under clause (b) must be made in the public sector group of funds of the Local Authority Services Limited and the CHUMS Financing Corporation with,

(a) another municipality;

(b) a public hospital;

(c) a university in Ontario that is authorized to operate under section 3 of the Post-secondary Education Choice and Excellence Act, 2000;

(d) a college established under section 5 of the Ministry of Training, Colleges and Universities Act;

(e) a school board; or

(f) any agent of an institution listed in clauses (a) to (d).

4. Section 7 of the Regulation is amended by adding the following subsections:

(2) In preparing the statement of the municipality’s investment policies and goals under subsection (1), the council of the municipality shall consider,

(a) the municipality’s risk tolerance and the preservation of its capital;

(b) the municipality’s need for a diversified portfolio of investments; and

(c) obtaining legal advice and financial advice with respect to the proposed investments.

(3) Before a municipality makes an investment under clause 4.1 (1) (b), the municipality shall require a statement from the treasurer as to whether, in his or her opinion, the investment guidelines of the Local Authority Services Limited and the CHUMS Financing Corporation comply with the statement of the municipality’s investment policies and goals under this section.

(4) In preparing the statement of the municipality’s investment policies and goals under subsection (1) for investments made under paragraph 9 of section 2, the council of the municipality shall consider its plans for the investment and how the proposed investment would affect the interest of municipal taxpayers.

5. Section 8 of the Regulation is amended by adding the following subsection:

(3)  Upon disposition of any investment made under paragraph 9 of section 2, the council of the municipality shall require the treasurer of the municipality to prepare and provide to the council a report detailing the proposed use of funds realized in the disposition.

6. Clause 9 (1) (a) of the Regulation is revoked.

40/02