These Regulations define when a natural person is affiliated with a bank and set related terms for indebtedness, not-in-good-standing loans, and significant borrower thresholds.
Regulations Specifying the Circumstances Under Which a Natural Person is Affiliated With a Bank His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 162 of the Bank Act*, is pleased hereby to make the annexed Regulations specifying the circumstances under which a natural person is affiliated with a bank, effective June 1, 1992. S.C. 1991, c. 46 These Regulations may be cited as the Affiliated Persons (Banks) Regulations. In these Regulations, Act means the Bank Act; (Loi) indebtedness includes indebtedness in respect of commercial paper, acceptances, lines of credit to the extent drawn on and margin loans made to a director or officer of a bank; (dette) not in good standing, in respect of a loan, means a loan in respect of which any payment of principal or interest is 90 days or more overdue, interest is not being accrued on the books of the lender because it is doubtful whether the principal or interest will be paid or recovered, or the rate of interest is reduced by the lender because the borrower is financially weak; (en souffrance) significant borrower, in respect of a bank, means a natural person who has indebtedness for money borrowed from the bank or from an affiliate of the bank, other than a loan secured by a mortgage on the principal residence of that person, the total principal of which exceeds the greater of $200,000, and one fiftieth of one per cent of the regulatory capital of the bank, or an entity that has indebtedness for money borrowed from the bank or from an affiliate of the bank the total principal of which exceeds the greatest of $500,000, one twentieth of one per cent of the regulatory capital of the bank, and twenty-five per cent of the value of the assets of the entity. (emprunteur important) For the purposes of section 162 of the Act, a natural person is affiliated with a bank where the person is an officer or employee of the bank or of an affiliate of the bank; has a significant interest in a class of shares or in membership shares of the bank; has a substantial investment in an affiliate of the bank; is a significant borrower in respect of the bank; is an officer or employee of an entity that is a significant borrower in respect of the bank; controls one or more entities of which the total indebtedness to the bank or to an affiliate of the bank would cause those entities, if treated as a single entity, to be a significant borrower of the bank; provides goods or services to the bank, or is a partner or an employee in a partnership that provides goods or services to the bank or an officer or employee of, or a person who has a substantial investment in, a body corporate that provides goods or services to the bank, if the total annual billings to the bank in respect of the goods and services provided exceeds ten per cent of the total annual billings of the person, partnership or body corporate, as the case may be; has a loan that is not in good standing from the bank or from an affiliate of the bank or is a director, an officer or an employee of, or a person who controls, an entity that has a loan that is not in good standing from the bank or from an affiliate of the bank; or is the spouse or common-law partner of a person described in any of paragraphs (a) to (h).