Canada: New Framework For Federal Credit Unions Taking Shape

On July 5, 2012, the Finance Minister announced the release of guidelines and a package of five proposed regulations to implement the regulatory framework applicable to federal credit unions. The release and publication of these proposed guidelines and regulations constitute next-to-final steps taken by the Canadian government to establish the framework it had initially proposed in the 2010 federal budget to allow, under the Bank Act, provincial credit unions to be continued federally as a new form of credit union bank and new federal credit unions to be established.

The proposed guidelines and regulations were published in the Canada Gazette on July 7, 2012, in draft form and are subject to a 30-day review and comment period. They include consequential amendments to the Bank Act regulations and the following:

  • Guidelines Respecting Control in Fact for the Purposes of Section 377.2 of the Bank Act;
  • Prospectus (Federal Credit Unions) Regulations;
  • Regulations Amending the Canadian Payments Association Election of Directors Regulations;
  • Disclosure on Continuance Regulations (Federal Credit Unions);
  • Federal Credit Union Conversion Regulations; and
  • Regulations Amending Certain Regulations Made Under the Bank Act.

We understand that the Canadian credit unions, together with the "legal godfather" of the Canadian credit union movement, Joe Dierker, had substantial input on the regulations and that they believe the regulations will further the objective of the Canadian credit unions to strengthen their role as important financial services providers to millions of Canadians.

Each of the draft guidelines and regulations are discussed in greater detail below.

Disclosure on Continuance Regulations (Federal Credit Unions)

A provincial credit union making an application to be continued as a federal credit union must, according to this draft regulation, comply with detailed notification requirements prior to the members' vote authorizing such application. A notice must be given by the applicant credit union to each of its members and customers. The draft Disclosure on Continuance Regulations (Federal Credit Unions) specifies the process, content and publication requirements applicable to this notification requirement.

Guidelines Respecting Control in Fact for the Purposes of Section 377.2 of the Bank Act

The proposed guidelines were released for review and comment concurrently with the regulations package. The Guidelines Respecting Control in Fact for the Purposes of Section 377.2 of the Bank Act sets out the policy objectives and factors that the Finance Minister is to consider in deciding on whether an acquisition would lead to an investor obtaining control in fact in a transaction where the purchaser acquires a significant minority interest in a federal credit union.

The Finance Minister's decision as to whether a purchaser acquires control in fact must be made on a case-by-case basis. The factors to be considered according to the proposed guidelines include the types of relationships, agreements, undertakings or arrangements that could lead to control in fact. The impact analysis statement of the guidelines mentions that no individual factor or combination of factors should be determinative in the Finance Minister's decision and that each factor must be examined in light of the policy objectives listed in the guidelines. These include policy objectives such as the preservation of the federal credit union's mode of operations on a co-operative basis and its ability to manage its operations and develop its strategic vision by taking into account its best interest.

Prospectus (Federal Credit Unions) Regulations

The Prospectus (Federal Credit Unions) Regulations sets out the prospectus and minimum disclosure requirements applicable to federal credit unions before proceeding to a distribution of securities. This proposed regulation references provincial prospectus requirements and exemptions and makes them applicable to federal credit union.

Regulations Amending the Canadian Payments Association Election of Directors Regulations

This proposed regulation amends the provisions of the Canadian Payments Associations Election of Directors Regulations on the election process of directors for the Canadian Payment Association Board by members of the Canadian Payment Association (CPA). The proposed amendments to this regulation are consequential amendments to reflect changes made to the banking and co-operative classes of CPA members made to paragraphs 9(3)(a) and (b) of the Canadian Payments Act. Similar draft amendments to By-law No. 1 (General) made under the Canadian Payments Act have also been released concurrently with this regulation. The level of participation of credit unions as members in the governance of the CPA remains unchanged as a result of these proposed amendments.

Federal Credit Union Conversion Regulations

This proposed regulation sets out the requirements applicable to the "demutualization" process of a federal credit union into a bank with share capital. This regulation specifies the information that must be included to the conversion proposal to be approved by the Superintendent of Financial Institutions (Superintendent) and members of the federal credit union, and to the subsequent conversion application. It also grants the Superintendent certain powers that may be exercised prior to the approval of the conversion proposal. These powers include the possibility for the Superintendent to order various measures to the converting credit union to facilitate the members and shareholders' decision on conversion approval.

This proposed regulation also provides certain requirements meant to ensure that the conversion process is conducted in an even-handed manner. This includes the equal treatment of members, the analysis of the conversion's impact and certain restrictions imposed on management to prevent certain parties from benefiting in certain ways from the conversion process.

Regulations Amending Certain Regulations Made Under the Bank Act

This draft regulation makes consequential amendments to existing Bank Act regulations to allow them to apply to federal credit unions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
26 Oct 2018, Other, Vancouver, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

30 Oct 2018, Other, Toronto, Canada

Please join us for discussions on recent updates and legal developments in pension and employee benefits as well as employment law issues.

12 Nov 2018, Other, Toronto, Canada

Stories aren’t falsehoods. Stories are the root of all effective human communications: they motivate, animate and clarify. If you aren’t telling stories, you probably aren’t getting your point across.

Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions