General Adjustment Assistance Regulations

Regulations Respecting General Adjustment Assistance to Manufacturers These Regulations may be cited as the General Adjustment Assistance Regulations. In these Regulations, Board means the General Adjustment Assistance Board established by section 3; (Commission) consulting assistance means technical and professional services, including advice from a consultant acceptable to the Board, in respect of the operations of a manufacturer or other person eligible for assistance under these Regulations; (aide consultative) letter of credit means a letter, document or other instrument issued by a private lender prior to January 1, 1978 to secure or guarantee the financial aspects of a trade transaction; (lettre de crédit) manufacturer means a person, firm or corporation in Canada engaged in a manufacturing or processing activity; (fabricant) manufacturing or processing activity means an activity whereby any goods, products, commodities or wares are made, fabricated or refined out of any raw material or other substance, or combination thereof, are converted or rebuilt, but not repaired, or are made by causing any raw material or other substance to undergo a significant chemical, biochemical or physical change including change that preserves or improves the keeping qualities of that raw material or other substance but excluding change by growth or decay; (travaux de fabrication ou de traitement) private lender means any lender approved by the Board other than the Government of Canada, the government of any province of Canada, an agency of any government referred to in paragraph (a) or (b) or any company that in the opinion of the Board is effectively controlled by any such government or any agency thereof, or any municipal corporation; (prêteur privé) restructure and restructuring means a change that, in the opinion of the Board, is significant in the operations of a manufacturer or other person eligible for assistance under these Regulations, with respect to its or the person's products, methods of production, markets or management procedures and, if directly related to such operations, may refer to the acquisition of working capital or the acquisition, construction, or conversion of machinery, equipment, buildings, land or other facilities; (restructuration) stock option means an agreement pursuant to which Her Majesty acquires an unconditional assignable option to purchase shares in the capital stock of a corporation upon terms and conditions set forth in the agreement, and Her Majesty's rights under that agreement. (option sur le capital-actions) A committee is hereby established to be known as the General Adjustment Assistance Board consisting of three members, not being members of the Public Service within the meaning of the Public Service Employment Act, to be appointed by the Governor in Council, one of whom shall be designated by the Governor in Council as Chairman of the Board and one of whom shall be designated by the Governor in Council as Vice-Chairman of the Board; and four members who are members of the Public Service within the meaning of the Public Service Employment Act, one member to be designated by each of the Ministers of Industry, Trade and Commerce, Finance, Employment and Immigration and Regional Economic Expansion, from a senior position within his Department. The Chairman and any other three members of the Board constitute a quorum for the purpose of carrying out any duty or performing any function assigned to the Board under these Regulations. The Vice-Chairman of the Board may exercise and perform all or any of the duties and functions of the Chairman in the event of the absence or incapacity of the Chairman, if the office of the Chairman is vacant, or at the request of the Chairman. Each of the Ministers of Industry, Trade and Commerce, Finance, Employment and Immigration and Regional Economic Expansion shall designate one person holding a senior position in his Department to exercise all powers, duties and functions of the member designated by him pursuant to paragraph (1)(b) in the event of the absence or temporary inability to act of such member. The Governor in Council shall determine the emolument to be paid and the expenses to be allowed to the members of the Board who are not members of the Public Service. The Board shall administer the insurance available to a private lender, the loans, the grants for consulting assistance and the stock options under these Regulations. In carrying out its duties and functions, the Board shall use the existing staff and facilities of the Department of Industry, Trade and Commerce and, to the extent deemed necessary by the Board, may use such other services of the Government of Canada as are available. The Board may authorize the formation of a subcommittee to be known as the Executive Committee, consisting of three members of the Board, one of whom shall be the Chairman or the Vice-Chairman of the Board, one of whom shall be the member of the Board designated by the Minister of Industry, Trade and Commerce and one of whom shall be the member of the Board designated by the Minister of Finance. The Executive Committee established pursuant to subsection (3) may determine whether a manufacturer or other person or group of persons is eligible for insurance on a loan or a letter of credit under these Regulations; determine whether insurance on a loan or a letter of credit made or issued to a manufacturer or other person or group of persons may be provided pursuant to these Regulations; authorize the making of loans not exceeding $250,000 pursuant to subsections 9(3) and (4); authorize the providing of insurance of loans not exceeding $250,000 pursuant to subsections 14(5) and (6); in the event of default on the part of a borrower call any loan made pursuant to section 9, consent to the calling by a private lender of any loan insured pursuant to section 14, and direct a private lender to call a loan insured pursuant to section 14 or to take other appropriate action to protect Her Majesty's interest in the assets securing such a loan; authorize amendments to be made to the provisions of securities obtained to secure repayment of a loan made pursuant to section 9, a loan insured pursuant to section 14, or a letter of credit insured pursuant to section 14 for the purpose of improving or protecting Her Majesty's interest therein; and authorize the payment of grants for consulting assistance pursuant to section 18. The Board may, on behalf of Her Majesty, enter into and execute such agreements as the Board considers necessary to give effect to these Regulations. The Board may, in respect of any loan, insurance of a loan, insurance of a letter of credit, grant for consulting assistance or stock option made, effected or obtained under these Regulations, require such information and documentation and make such stipulations as it deems appropriate in relation to the loan, insurance of a loan, insurance of a letter of credit, grant for consulting assistance or stock option. Subject to these Regulations, the Board may make such rules as may be necessary for the conduct of its meetings, the management of its affairs and the performance of its duties. The Board shall do everything that in its opinion is necessary or appropriate to facilitate the efficient operation of the program contemplated by these Regulations and to minimize any loss suffered or threatened to be suffered by Her Majesty arising out of any insurance provided or any loan made by the Board. The Board shall keep such records and books and make such reports on its activities from time to time as the Minister of Industry, Trade and Commerce may require. Where, in the opinion of the Board, a manufacturer requires a loan in order to adapt efficiently to competition from goods imported at such prices, in such quantities or under such conditions as to cause or threaten to cause him serious injury, and is unable to obtain sufficient financing on reasonable terms from other sources for the purposes of making the necessary adjustments, a loan may be made to the manufacturer by the Board on behalf of Her Majesty for the purpose of assisting the manufacturer to restructure his operations. requires a loan in order to adjust to changes in conditions affecting his access to foreign markets, which conditions are attributable to the imposition by a country other than Canada of a temporary import surtax or to the taking by such country of other actions having a like effect, and is unable to obtain sufficient financing on reasonable terms from other sources for the purpose of assisting the manufacturer to adjust to the changes described in paragraph (a), a loan may be made to the manufacturer by the Board on behalf of Her Majesty for the purpose of assisting the manufacturer to make such changes. Where a loan has been made or insured or a letter of credit has been insured pursuant to these Regulations and a trustee, receiver, receiver-manager or other person has been authorized by law to carry on the business of the borrower, a loan may be made by the Board on behalf of Her Majesty to such trustee, receiver, receiver-manager or other person, for the purpose of protecting Her Majesty's interest in the assets securing the loan previously made or insured or letter of credit insured. Where a loan has been made or insured or a letter of credit has been insured pursuant to these Regulations, a loan may be made by the Board on behalf of Her Majesty to the borrower or person to whom the letter of credit has been issued for the purpose of protecting Her Majesty's interest in the assets securing the loan previously made or insured or letter of credit insured. Where, pursuant to these Regulations, the Board has authorized the provision of insurance on a loan by a private lender not exceeding $200,000 to a manufacturer or other person in Canada, the Board may, on behalf of Her Majesty, make a loan in an amount not exceeding, in the aggregate, 50 per cent of the amount of the loan to the manufacturer or other person on the following conditions: a loan may be made pursuant to this subsection only when a private lender has agreed to make the loan on which the Board has authorized the provision of insurance on the terms and conditions under which the Board authorized such insurance; a loan made pursuant to this subsection shall be subject to interest at a rate of not less than the aggregate of the interest to be charged by the private lender on the insured loan and the insurance fee thereon; a loan may be made pursuant to this subsection only where, in the opinion of the Board, such loan is essential to prevent a serious delay in implementing the project for which insurance on the loan by the private lender was authorized under these Regulations; a loan made pursuant to this subsection shall be repaid on the date of the first disbursement of the loan advanced by the private lender or on such earlier date as the Board may determine; and the Board shall specify the date on which the loan shall be repaid in the event that a disbursement to repay the loan advanced hereunder has not been made by the private lender within a reasonable time as established by the Board. A manufacturer or other person who requires a loan under these Regulations shall make application therefor to the Board and shall provide such information relating to the application as the Board may require. Where an application for a loan is approved by the Board, the applicant shall enter into a loan agreement with Her Majesty and that agreement shall, subject to these Regulations, be in such form and contain such provisions as the Board considers necessary. The amount of a loan made under these Regulations shall be advanced to the manufacturer or other person upon the requisition of the Board. Subject to subsection 9(5)(b), the rate of interest for any loan made under these Regulations shall be determined as of the day the application is approved by the Board and shall be that rate within the prescribed range described in subsection (2) that the Board deems reasonable in the circumstances. The prescribed range of rates of interest for loans made under these Regulations shall be not less than the rate of interest charged by the Government of Canada to crown corporations for loans of a similar term nor more than 2 1/4 per cent above that rate. A loan made under these Regulations shall be for such term, not exceeding 20 years, as maybe fixed by the Board. The whole or any part of a loan made under these Regulations may, in such manner as may be prescribed by the Board, be repaid in advance of the due date of repayment without notice or bonus. Where, in the opinion of the Board, it is advisable to obtain security for the repayment of a loan made under these Regulations, the Board shall obtain and hold such security as it deems proper. The Board may surrender, retransfer or reconvey any security obtained by it under subsection (1) in exchange for other security. Where, in the opinion of the Board, it is advisable to obtain a stock option as a condition of the making of a loan under these Regulations, the Board shall obtain that stock option upon such terms and conditions as it deems proper. Where a stock option for the purchase of capital stock in a corporation was acquired by the Board in connection with the provision of insurance on a loan or a letter of credit made to that corporation pursuant to these Regulations, the Board may exercise or assign such option on behalf of Her Majesty if, in the opinion of the Board, the value of the capital stock of the corporation has increased as a result of the assistance provided under these Regulations; and the exercising or assignment of such option would permit Her Majesty to benefit from the increased value of the capital stock of the corporation. Where capital stock in a corporation has been acquired by the Board on behalf of Her Majesty pursuant to subsection (4), the Board shall sell or dispose of such capital stock as soon thereafter as it is in the economic interest of Her Majesty to do so on the following conditions: the capital stock shall be sold at such price and upon such terms as will provide maximum benefit to Her Majesty; and when the Board receives a bona fide offer to purchase the capital stock that the Board is willing to accept, the Board shall give notice of such offer to the person from whom the capital stock was acquired pursuant to the exercise of the option by the Board and that person shall have the assignable right, during the next 7 business days after the Board has given such notice, to elect to purchase the shares for the same price and upon the same terms and conditions as set out in the said offer. Where a stock option has been acquired by Her Majesty pursuant to subsection (3) or (4) and the Board wishes to assign such option, the Board shall, prior to assigning such option, give notice of the intended assignment to the person from whom the option was acquired and that person shall have the assignable right during the next 7 business days after the Board has given such notice to acquire that option upon the same terms and conditions as the intended assignment. Where, in the opinion of the Board, a manufacturer or a person who is about to engage in a manufacturing or processing activity in Canada requires a loan in order to take advantage of a new opportunity for the production of goods in Canada which will face significant international trade competition, or restructure his operations in a manner that will significantly improve his position in meeting international trade competition, and is unable to obtain sufficient financing on reasonable terms unless the loan is insured by the Board, the Board may, on behalf of Her Majesty, provide insurance on a loan made to such manufacturer or person by a private lender for the purposes stated in this subsection. adjust to changes in conditions affecting his access to foreign markets, which conditions are attributable to the imposition by a country other than Canada of a temporary import surtax or to the taking by such country of other actions having a like effect, or adapt efficiently to competition from goods imported at such prices, in such quantities or under such conditions as to cause or threaten to cause him serious injury, and the Board may, on behalf of Her Majesty, provide insurance on a loan made to such manufacturer by a private lender for the purposes stated in this subsection. Where, in the opinion of the Board, a person engaged or about to engage in a business in Canada to provide services directly or indirectly to manufacturers in Canada requires a loan to establish or restructure operations in order to significantly improve the ability of manufacturers in Canada in meeting international trade competition, and the Board may, on behalf of Her Majesty, provide insurance on a loan made to such person by a private lender for the purposes stated in this subsection. Where a person established to provide directly or indirectly marketing, financial or other services that, in the opinion of the Board, are essential to the operation of a manufacturer who is entitled to assistance under these Regulations requires a loan in order to establish or restructure his operations, has submitted a comprehensive plan setting out the services to be provided, and is unable to obtain such a loan on reasonable terms without the insurance provided for in this subsection, the Board may, on behalf of Her Majesty, provide insurance on such a loan to such person by a private lender. Where a general contractor, consulting engineer, builder, architect or manufacturer in Canada or any group of such persons requires a letter of credit as a bid or performance surety in connection with a contract to be performed outside Canada or the United States by that contractor, engineer, builder, architect manufacturer or group, and is unable to obtain sufficient financing on reasonable terms without the insurance provided for in this subsection, the Board may, on behalf of Her Majesty, if such contract involves, in the opinion of the Board, a significant amount of Canadian content, provide insurance on such letter of credit issued to that contractor, engineer, builder, architect, manufacturer or group by a private lender. requires insurance on a loan for the repayment of any financial obligations incurred under a letter of credit previously insured by the Board, and is unable to obtain sufficient financing on reasonable terms for the purpose referred to in paragraph (a), the Board may, on behalf of Her Majesty, provide insurance of a loan made to that contractor, engineer, builder, architect, manufacturer or group by a private lender for that purpose. For the purposes of subsection (5), the amount of Canadian content shall in no event be less than the amount of insurance provided by the Board. The amount of insurance provided under subsection (1), (2), (3), (4), (5) or (6) shall not exceed 90 per cent of the amount of the loan to be insured. Where a loan has been made or insured or a letter of credit has been insured pursuant to these Regulations and a trustee, receiver, receiver-manager or other person has been authorized by law to carry on the business of the borrower, the Board may, on behalf of Her Majesty, provide insurance on the full amount of any loan made to such person by a private lender for the purpose of protecting Her Majesty, provide insurance on the full amount of any loan made to such person by a private lender for the purpose of protecting Her Majesty's interest in the assets securing the loan previously made or insured or the letter of credit previously insured. Where a loan has been made or insured or a letter of credit has been insured pursuant to these Regulations, the Board may, on behalf of Her Majesty, provide insurance on the full amount of any further loan made or letter of credit issued to the borrower for the purpose of protecting Her Majesty's interest in the assets securing the loan previously made or insured or a letter of credit previously insured or letter of credit issued. A private lender who wishes the Board to provide insurance on a loan or letter of credit in accordance with these Regulations shall make application therefor to the Board and shall submit to the Board such information relating to the application as the Board may require. The amount of any insurance provided by the Board under these Regulations may be reduced at the request of the private lender at such times and in such manner as is specified by the Board. The insurance fee payable by a private lender shall be one per cent per annum of the amount of insurance in force from time to time and shall be paid in advance to Her Majesty in semi-annual instalments. If the amount of a loan by a private lender to a manufacturer or to a person or group of persons described in subsection 14(3), (4), (5) or (6) is advanced in periodic advances, the Board may, if required by the private lender, approve interim insurance and the insurance fee payable by the private lender shall be one per cent per annum of the amount of such interim insurance payable at the time such interim insurance is provided by the Board. Where, in the opinion of the Board, it is advisable to obtain a stock option for the purchase of capital stock in a corporation in connection with the provision of insurance on a loan or a letter of credit made to that corporation pursuant to these Regulations, the Board may, in addition to the insurance fee, obtain a stock option for the acquisition of shares in that corporation upon such terms and conditions as the Board deems proper. Where a private lender has demanded repayment of a loan or moneys paid by it pursuant to a letter of credit, in respect of which insurance has been provided under these Regulations, the amount payable by Hear Majesty to the private lender shall not exceed the lesser of the amount of insurance in effect on the date of such demand and 90 per cent of the loss incurred by the private lender in the case of a loan insured pursuant to subsections 14(1), (2), (3), (4) and (5) or letter of credit insured pursuant to subsection 14(5); or 100 per cent of the loss incurred by the private lender, in the case of a loan insured pursuant to subsection 14(9) or (10). Where a manufacturer or other person described in subsection 14(3), (4), (5) or (6) or any group of such persons to whom a loan has been made or insured or may be made or insured, or to whom a letter of credit has been issued and insured, under these Regulations requires the services of qualified consultants in order to develop a satisfactory proposal for a loan or insurance or a loan or insurance on a letter of credit for the purposes described in sections 9 and 14, the Board may authorize a grant to be paid to him or them in an amount not exceeding 50 per cent of the cost of the services required if the sales of the manufacturer or other person described in subsection 14(3), (4), (5) or (6) or any group of such persons exceeded $5 million in the year immediately preceding his application for that grant, or 80 per cent of the cost of the services required if the sales of the manufacturer or other person described in subsection 14(3), (4), (5) or (6) or any group of such persons did not exceed $5 million in the year immediately preceding his application for that grant, if, in the opinion of the Board, the cost of those services would be a significant burden on the resources of the manufacturer or other person described in subsection 14(3), (4), (5) or (6) or any group of such persons. Notwithstanding subsection (1), where a loan has been made pursuant to section 9, or insurance of a loan has been provided pursuant to section 14 and the Board is of the opinion that the services of a qualified consultant are required in order to protect Her Majesty's interest in the assets securing the loan made or the loan or letter of credit insured by the Board, the Board may authorize a grant to be paid to the consultant up to the full amount of the cost of such consulting services. The Board may authorize a grant to be paid to a consultant pursuant to subsection (2) in respect of any consulting services required after April 1, 1971 for the purposes described in that subsection. If, as a result of an adjustment in its operations financed by a loan made by the Board or by a private lender in accordance with these Regulations, a lay-off of 20 or more employees for a period of two or more months is likely to occur, a manufacturer shall give at least three-months notice of the lay-off to the Board and to the employees who are to be laid off.