The British Columbia ("BC") legislature has introduced
amendments to expressly identify transferable licences as personal
property under the BC Personal Property Security Act (the "BC
PPSA"). These amendments (the "Amendments")
received Royal Assent on November 24, 2011 and are expected to come
into force by regulation in 2012. As a result of the Amendments,
the BC PPSA will expressly permit the creation of security
interests in transferable licences. In BC, this will facilitate the
provision of credit on the security of licences provided as
The Amendments will expand the definition of "licence"
under the BC PPSA to include any transferrable grant of rights
entitling the holder of such rights to deal with or acquire
personal property or provide services. The expanded definition is
intended to capture transferable licences generally, including
liquor, fishing and forestry licences, whether issued under a
regulatory regime or by private contract.
By expanding the definition of "licences", the
Amendments will provide outcomes similar to the 2008 Supreme Court
of Canada decision in Saulnier v. Royal Bank of Canada
("Saulnier"), in which a licence to participate in the
fishery coupled with a proprietary interest in the fish harvested
thereunder was ruled to be a "bundle of rights"
sufficient to fit within the extended definitions of "personal
property" in the Nova Scotia Personal Property Security
The Personal Property Security Acts ("PPSAs") of most
other Canadian provinces and territories (including Ontario) do not
have a definition for the term, "licence"; debtors and
creditors in those jurisdictions must rely on the applicability of
the factors in Saulnier to their particular circumstances in
respect of any licences purported to be provided as collateral. The
PPSAs of Saskatchewan, the Northwest Territories and Nunavut have
definitions of the term, "licence" that are similar to
that in the Amendments.
The Amendments will also provide that a licence provided as
collateral may be disposed of, retained or held only in accordance
with the terms and conditions of such licence and the terms and
conditions applicable by law or contract to such licence. The
Amendments will require any secured party who wishes to seize a
licence on default to provide notice of such seizure to the
relevant minister if the licence was granted pursuant to
legislation or, in any other case, to the grantor of the licence;
notice of seizure to the debtor will continue to be required, as is
the case under the current BC PPSA.
It will be interesting to see if the inclusion of the defined
term, "licence" in the PPSAs of BC, the Northwest
Territories, Nunavut and Saskatchewan leads other Canadian
jurisdictions to enact similar legislation.
Joshua Lam practices commercial law and focuses
on finance transactions, including syndicated lending, acquisition
finance, project finance, asset-based lending and asset-backed
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The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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