The bank received security under Section 427 of the Bank
Act1 ("Bank Act Security")
from one of our corporate borrowers, and the bank wishes to renew
the registration. Do we have to file a new notice of intention and
get a new set of Bank Act Security documents executed by the
borrower in order to complete the renewal?
A renewal (or an extension of the registration period) of a Bank
Act Security registration is not done by filing a new notice of
intention to give security (a "Notice of
Intention") every three years.2 Rather,
the Regulations under the Bank Act3 set out the annual
procedure to be followed to extend or continue the registration
period of any existing Notice of Intention.
Each Notice of Intention registered under Section 427 of the
Bank Act initially remains effective until December 31st
of the fifth year following the date of registration. Thus, a
notice of intention filed on September 17, 2013 will remain
effective until December 31, 2018.
Under the Regulations, each bank is required, annually during
the month of March, to send to the appropriate agency of the Bank
of Canada a statement listing every notice of intention that was
registered more than five years before the end of the preceding
December in respect of which the special security that was given to
the bank is still in effect.4 The listing must indicate
the number, place, date and time of registration of each Notice of
Intention that is to remain in effect, and the name of the person
who gave the special security. At the time that each bank sends the
statement, the registration period of each Notice of Intention
included in the statement is extended.5 The Bank of
Canada is also permitted to remove from its registration system any
notices of intention in favour of the applicable bank registered
more than five years before the end of the preceding December that
are not included on the list.6
Thus by complying with this procedure, the bank can annually
extend the registration period of a particular Notice of Intention
for a further year for as long as the Bank Act Security is intended
to remain in effect.
Two Bank Act Security documents that are customarily signed by a
borrower immediately after the registration of a Notice of
Intention are the application for credit and promise to give
security under Section 427 of the Bank Act (the
"Application"), and the special security
"Assignment")7. In some
instances the Application and/or the Assignment may contain text
that describes the specific credit facility being secured or
creates a defined term for "secured obligations", and
that text may contain words that could limit or restrict the scope
of the Bank Act Security. If there has been a change in the nature
or amount of the credit facility being secured or in the type of
the secured obligations since the time of the filing of the Notice
of Intention, the bank may need to file a new Notice of Intention
and obtain a new Application and Assignment in order for the Bank
Act Security to extend to and secure the repayment of all of the
borrower's indebtedness under the new or amended or extended
credit facility or in respect of the expanded "secured
obligations". This determination will depend upon the specific
text used in those documents. However, these types of supplemental
filings are not technically renewals of the existing Bank Act
1. Bank Act SC 1991, c 46, as amended
2. The three year period is referenced in Section
427(4)(a) of the Bank Act, and is frequently mistaken as being the
registration period of a Notice of Intention. However, that
subsection actually provides that the rights of the bank under
Section 427 are not effective unless the Notice of Intention is
filed not more than three years immediately before the security was
3. Registration of Bank Special Security Regulations,
SOR/92-301, as amended [TheRegulations]
4. The Regulations, s 7(1).
5. The Regulations, s 7(2).
6. The Regulations, s 7(3).
7. The Regulations, ss 2 and 8(2).
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.
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