(a) an investment by an insurance holding company or any entity it controls in shares of a body corporate or in ownership interests in an unincorporated entity enables the insurance holding company to control the body corporate or the unincorporated entity, or

    (b) the insurance holding company or any entity it controls has entered into an arrangement whereby it or its nominee may veto any proposal put before

      (i) the board of directors of a body corporate, or

      (ii) a similar group or committee of an unincorporated entity,

    or whereby no proposal may be approved except with the consent of the insurance holding company, the entity it controls or the nominee,

the Superintendent may, by order, require the insurance holding company, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the insurance holding company no longer controls the body corporate or unincorporated entity or has the ability to veto or otherwise defeat any proposal referred to in paragraph (b).

Divestment order

(3) If

    (a) an insurance holding company

      (i) fails to provide or obtain within a reasonable time the undertakings referred to in subsection 973(1), (2) or (4), or

      (ii) is in default of an undertaking referred to in subsection 973(1) or (2) and the default is not remedied within ninety days after the day of receipt by the insurance holding company of a notice from the Superintendent of the default, or

    (b) a permitted entity referred to in subsection 973(4) is in default of an undertaking referred to in subsection 973(4) and the default is not remedied within ninety days after the day of receipt by the insurance holding company of a notice from the Superintendent of the default,

the Superintendent may, by order, require the insurance holding company, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the insurance holding company no longer has a substantial investment in the entity to which the undertaking relates.

Exception

(4) Subsection (2) does not apply in respect of an entity in which an insurance holding company has a substantial investment permitted by this Division.

Deemed temporary investment

986. If an insurance holding company controls or has a substantial investment in an entity as permitted by this Division and the insurance holding company becomes aware of a change in the business or affairs of the entity that, if the change had taken place before the acquisition of control or of the substantial investment, would have caused the entity not to be a permitted entity or would have been such that approval for the acquisition would have been required under subsection 971(5) or (6), the insurance holding company is deemed to have acquired, on the day the insurance holding company becomes aware of the change, a temporary investment in respect of which section 974 applies.

Asset transactions

987. (1) An insurance holding company shall not, and shall not permit its subsidiaries to, without the approval of the Superintendent, acquire assets from a person or transfer assets to a person if

A + B > C

where

A is the value of the assets;

B is the total value of all assets that the insurance holding company and its subsidiaries acquired from or transferred to that person in the twelve months ending immediately before the acquisition or transfer; and

C is ten per cent of the total value of the assets of the insurance holding company, as shown in the last annual statement of the insurance holding company prepared before the acquisition or transfer.

Exception

(2) The prohibition referred to in subsection (1) does not apply to

    (a) an asset that is a debt obligation referred to in subparagraphs (b)(i) to (v) of the definition ``commercial loan'' in subsection 490(1); or

    (b) a transaction or series of transactions by a subsidiary of the insurance holding company with a financial institution as a result of the subsidiary's participation in one or more syndicated loans with that financial institution.

Exception

(3) The approval of the Superintendent is not required if

    (a) the insurance holding company or its subsidiary acquires shares of, or ownership interests in, an entity for which the approval of the Minister under Division 7 or subsection 971(5) is required or the approval of the Superintendent under subsection 971(6) is required; or

    (b) the transaction has been approved by the Minister under subsection 715(1) of this Act or subsection 678(1) of the Bank Act.

Value of assets

(4) For the purposes of ``A'' in subsection (1), the value of the assets is

    (a) in the case of assets that are acquired, the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which will be included in the annual statement of the insurance holding company after the acquisition, the fair market value of the assets; and

    (b) in the case of assets that are transferred, the book value of the assets as stated in the last annual statement of the insurance holding company prepared before the transfer, or if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the insurance holding company before the transfer, the value of the assets as stated in the annual statement.

Total value of all assets

(5) For the purposes of subsection (1), the total value of all assets that the insurance holding company or any of its subsidiaries has acquired during the period of twelve months referred to in subsection (1) is the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which immediately after the acquisition were included in the annual statement of the insurance holding company, the fair market value of the assets of the entity at the date of the acquisition.

Total value of all assets

(6) For the purposes of subsection (1), the total value of all assets that the insurance holding company or any of its subsidiaries has transferred during the period of twelve months referred to in subsection (1) is the book value of the assets as stated in the last annual statement of the insurance holding company prepared before the transfer, or if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the insurance holding company before the transfer, the value of the assets of the entity as stated in the annual statement.

Transitional

988. Nothing in this Division requires

    (a) the termination of a loan made before February 7, 2001;

    (b) the termination of a loan made after that date as a result of a commitment made before that date;

    (c) the disposal of an investment made before that date; or

    (d) the disposal of an investment made after that date as a result of a commitment made before that date.

But if the loan or investment would be precluded or limited by this Division, the amount of the loan or investment may not be increased after that date.

Saving

989. A loan or investment referred to in section 988 is deemed not to be prohibited by the provisions of this Division.

Meaning of ``non-insuran ce entity''

990. (1) Subject to subsection (2), for the purpose of section 991, ``non-insurance entity'' means a Canadian entity, other than a company, that is controlled by an insurance holding company or in which an insurance holding company has a substantial investment.

Exception

(2) A Canadian entity is not a non-insurance entity by reason only that a subsidiary of an insurance holding company that is a company that controls, or has a substantial investment, in the Canadian entity.

Disclosure of status

991. (1) A non-insurance entity that carries on as part of its business the provision of financial services shall not borrow money in Canada from the public without disclosing that the non-insurance entity is not regulated as a financial institution in Canada.

Manner of disclosure

(2) The disclosure shall be

    (a) in a prospectus, information circular or other offering document related to the borrowing or in a similar document related to the borrowing or, if there is no such document, in a statement delivered to the lender; or

    (b) in any other manner that may be prescribed.

Exception for certain borrowings

(3) Subsection (1) does not apply

    (a) to a borrowing of a prescribed class or type or to a borrowing in prescribed circumstances or in a prescribed manner; or

    (b) except as may be provided in any regulations, to a borrowing

      (i) from a person in an amount of $150,000 or more, or

      (ii) through the issue of instruments in denominations of $150,000 or more.

Exception

(4) Subsection (1) does not apply if the non-insurance entity is

    (a) an insurance holding company or a bank holding company;

    (b) a bank;

    (c) an entity that is controlled by a bank holding company or in which a bank holding company has a substantial investment;

    (d) a trust, loan or insurance corporation incorporated under an Act of Parliament or of the legislature of a province;

    (e) a financial institution that is described in paragraph (g) of the definition ``financial institution'' in section 2;

    (f) an entity referred to in paragraph 971(1)(f) or (h); or

    (g) a prescribed entity.

DIVISION 10

ADEQUACY OF CAPITAL AND LIQUIDITY

Adequacy of capital and liquidity

992. (1) An insurance holding company shall, in relation to its business, maintain

    (a) adequate capital, and

    (b) adequate and appropriate forms of liquidity,

and comply with any regulations in relation to capital and liquidity.

Regulations and guidelines

(2) The Governor in Council may make regulations and the Superintendent may make guidelines respecting the maintenance by an insurance holding company of adequate capital and adequate and appropriate forms of liquidity.

Directives

(3) Even if an insurance holding company is complying with regulations or guidelines made under subsection (2), the Superintendent may, by order, direct the insurance holding company

    (a) to increase its capital; or

    (b) to provide additional liquidity in such forms and amounts as the Superintendent may require.

Compliance

(4) An insurance holding company shall comply with an order made under subsection (3) within the time specified by the Superintendent in the order.

DIVISION 11

REGULATION OF INSURANCE HOLDING COMPANIES

Supervision

Returns

Required information

993. An insurance holding company shall provide the Superintendent with such information, at such times and in such form as the Superintendent may require.

Names of directors and auditors

994. (1) An insurance holding company shall, within thirty days after each annual meeting of the insurance holding company, provide the Superintendent with a return showing

    (a) the name, residence and citizenship of each director holding office immediately following the meeting;

    (b) the mailing address of each director holding office immediately following the meeting;

    (c) the bodies corporate of which each director referred to in paragraph (a) is an officer or director and the firms of which each director is a member;

    (d) the names of the directors referred to in paragraph (a) who are officers or employees of the insurance holding company or any affiliate of the insurance holding company, and the positions they occupy;

    (e) the name of each committee of the insurance holding company on which each director referred to in paragraph (a) serves;

    (f) the date of expiration of the term of each director referred to in paragraph (a); and

    (g) the name, address and date of appointment of the auditor of the insurance holding company.

Changes

(2) Where

    (a) any information relating to a director or auditor of an insurance holding company shown in the latest return made to the Superintendent under subsection (1), other than information referred to in paragraph (1)(c), becomes inaccurate or incomplete,

    (b) a vacancy in the position of auditor of the insurance holding company occurs or is filled by another person, or

    (c) a vacancy on the board of directors of the insurance holding company occurs or is filled,

the insurance holding company shall forthwith provide the Superintendent with such information as is required to maintain the return in a complete and accurate form.

Copy of by-laws

995. An insurance holding company shall send to the Superintendent within thirty days after the coming into effect of a by-law or an amendment to a by-law, a copy of the by-law or amendment.

Register for insurance holding company

996. (1) The Superintendent shall, in respect of each insurance holding company, cause a register to be maintained containing a copy of

    (a) the incorporating instrument of the insurance holding company; and

    (b) the information referred to in paragraphs 994(1)(a) and (c) to (g) contained in the latest return provided to the Superintendent under section 994.

Form

(2) The register may be maintained in

    (a) a bound or loose-leaf form or in a photographic film form; or

    (b) a system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.

Access

(3) Persons are entitled to reasonable access to the register and may make copies of or take extracts from the information in it.