(a) a fire-engine, bus, ambulance or utility truck; or

      (b) any other special purpose motorized vehicle that contains significant special features that make it suitable for a specific purpose.

``mutual fund distribution entity''
« courtier de fonds mutuels »

``mutual fund distribution entity'' means an entity whose principal activity is acting as a selling agent of units, shares or other interests in a mutual fund and acting as a collecting agent in the collection of payments for any such interests if

      (a) the proceeds of the sales of any such interests, less any sales commissions and service fees, are paid to the mutual fund; and

      (b) the existence of a sales commission and service fee in respect of the sale of any such interest is disclosed to the purchaser of the interest before the purchase of the interest.

``mutual fund entity''
« entité s'occupant de fonds mutuels »

``mutual fund entity'' means an entity

      (a) whose activities are limited to the investing of the funds of the entity so as to provide investment diversification and professional investment management to the holders of its securities; and

      (b) whose securities entitle their holders to receive, on demand, or within a specified period after demand, an amount computed by reference to the value of a proportionate interest in the whole or in a part of its net assets, including a separate fund or trust account of the entity.

``participating share''
« action participante »

``participating share'' means a share of a body corporate that carries the right to participate in the earnings of the body corporate to an unlimited degree and to participate in a distribution of the remaining property of the body corporate on dissolution.

``permitted entity''
« entité admissible »

``permitted entity'' means an entity in which a bank is permitted to acquire a substantial investment under section 468.

``prescribed subsidiary''
« filiale réglementaire »

``prescribed subsidiary'' means a subsidiary that is one of a prescribed class of subsidiaries.

``real property brokerage entity''
« courtier immobilier »

``real property brokerage entity'' means an entity that is primarily engaged in

      (a) acting as an agent for vendors, purchasers, mortgagors, mortgagees, lessors or lessees of real property; and

      (b) the provision of consulting or appraisal services in respect of real property.

``specialized financing entity''
« entité s'occupant de financement spécial »

``specialized financing entity'' means a specialized financing entity as defined in the regulations.

Members of a bank's group

(2) For the purpose of this Part, a member of a bank's group is any of the following:

    (a) an entity referred to in any of paragraphs 468(1)(a) to (f) that controls the bank;

    (b) a subsidiary of the bank or of an entity referred to in any of paragraphs 468(1)(a) to (f) that controls the bank;

    (c) an entity in which the bank, or an entity referred to in any of paragraphs 468(1)(a) to (f) that controls the bank, has a substantial investment; or

    (d) a prescribed entity in relation to the bank.

Non-applicati on of Part

(3) This Part does not apply in respect of

    (a) the holding of a security interest in real property, unless the security interest is prescribed under paragraph 479(a) to be an interest in real property; or

    (b) the holding of a security interest in securities of an entity.

General Constraints on Investments

Investment standards

465. The directors of a bank shall establish and the bank shall adhere to investment and lending policies, standards and procedures that a reasonable and prudent person would apply in respect of a portfolio of investments and loans to avoid undue risk of loss and obtain a reasonable return.

Restriction on control and substantial investments

466. (1) Subject to subsections (2) to (4), no bank shall acquire control of, or hold, acquire or increase a substantial investment in, any entity other than a permitted entity.

Exception: indirect investments

(2) A bank may, subject to Part XI, acquire control of, or acquire or increase a substantial investment in, an entity other than a permitted entity by way of

    (a) an acquisition of control of an entity referred to in any of paragraphs 468(1)(a) to (j), or of a prescribed entity, that controls or has a substantial investment in the entity; or

    (b) an acquisition of shares or ownership interests in the entity by

      (i) an entity referred to in any of paragraphs 468(1)(a) to (j), or a prescribed entity, that is controlled by the bank, or

      (ii) an entity controlled by an entity referred to in any of paragraphs 468(1)(a) to (j), or a prescribed entity, that is controlled by the bank.

Exception: temporary investments, realizations and loan workouts

(3) A bank may, subject to Part XI, acquire control of, or acquire or increase a substantial investment in, an entity by way of

    (a) a temporary investment permitted by section 471;

    (b) an acquisition of shares of a body corporate or of ownership interests in an unincorporated entity permitted by section 472; or

    (c) a realization of security permitted by section 473.

Exception: specialized financing regulations

(4) A bank may, subject to Part XI, acquire control of, or hold, acquire or increase a substantial investment in, an entity other than a permitted entity if it does so in accordance with regulations made under paragraph 467(d) concerning specialized financing.

Exception: uncontrolled event

(5) A bank is deemed not to contravene subsection (1) if the bank acquires control of, or acquires or increases a substantial investment in, an entity solely as the result of an event not within the control of the bank.

Regulations re limits

467. The Governor in Council may make regulations

    (a) respecting the determination of the amount or value of loans, investments and interests for the purposes of this Part;

    (b) respecting the loans and investments, and the maximum aggregate amount of all loans and investments, that may be made or acquired by a bank and its prescribed subsidiaries to or in a person and any persons connected with that person;

    (c) specifying the classes of persons who are connected with any person for the purposes of paragraph (b); and

    (d) concerning specialized financing for the purposes of subsection 466(4).

Subsidiaries and Equity Investments

Permitted investments

468. (1) Subject to subsections (4) to (6) and Part XI, a bank may acquire control of, or acquire or increase a substantial investment in

    (a) a bank;

    (b) a bank holding company;

    (c) a body corporate to which the Trust and Loan Companies Act applies;

    (d) an association to which the Cooperative Credit Associations Act applies;

    (e) an insurance company or a fraternal benefit society incorporated or formed by or under the Insurance Companies Act;

    (f) an insurance holding company;

    (g) a trust, loan or insurance corporation incorporated or formed by or under an Act of the legislature of a province;

    (h) a cooperative credit society incorporated or formed, and regulated, by or under an Act of the legislature of a province;

    (i) an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province and that is primarily engaged in dealing in securities; or

    (j) an entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province and that is primarily engaged outside Canada in a business that, if carried on in Canada, would be the business of banking, the business of a cooperative credit society, the business of insurance, the business of providing fiduciary services or the business of dealing in securities.

Permitted investments

(2) Subject to subsections (3) to (6) and Part XI, a bank may acquire control of, or acquire or increase a substantial investment in, an entity, other than an entity referred to in any of paragraphs (1)(a) to (j), whose business is limited to one or more of the following:

    (a) engaging in any financial service activity that a bank is permitted to engage in under any of paragraphs 409(2)(a) to (d) or any other activity that a bank is permitted to engage in under section 410 or 411;

    (b) acquiring or holding shares of, or ownership interests in, entities in which a bank is permitted under this Part to hold or acquire;

    (c) engaging in the provision of any services exclusively to any or all of the following, so long as the entity is providing those services to the bank or any member of the bank's group, namely,

      (i) the bank,

      (ii) any member of the bank's group,

      (iii) any entity that is primarily engaged in the business of providing financial services,

      (iv) any permitted entity in which an entity referred to in subparagraph (iii) has a substantial investment, or

      (v) any prescribed person, if it is doing so under prescribed terms and conditions, if any are prescribed;

    (d) engaging in any activity that a bank is permitted to engage in, other than an activity referred to in paragraph (a) or (e), that relates to

      (i) the promotion, sale, delivery or distribution of a financial product or financial service that is provided by the bank or any member of the bank's group, or

      (ii) if a significant portion of the business of the entity involves an activity referred to in subparagraph (i), the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any other entity that is primarily engaged in the business of providing financial services;

    (e) engaging in the activities referred to in the definition ``mutual fund entity'', ``mutual fund distribution entity'' or ``real property brokerage entity'' in subsection 464(1); and

    (f) engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed.

Restriction

(3) A bank may not acquire control of, or acquire or increase a substantial investment in, an entity whose business includes any activity referred to in any of paragraphs (2)(a) to (e) if the entity engages in the business of accepting deposit liabilities or if the activities of the entity include

    (a) activities that a bank is not permitted to engage in under any of sections 412, 417 and 418;

    (b) dealing in securities, except as may be permitted under paragraph (2)(e) or as may be permitted to a bank under paragraph 409(2)(c);

    (c) activities that a bank is not permitted to engage in under section 416 if the entity engages in the activities of a finance entity or of any other entity as may be prescribed;

    (d) acquiring control of or acquiring or holding a substantial investment in another entity unless

      (i) in the case of an entity that is controlled by the bank, the bank itself would be permitted under this Part to acquire a substantial investment in the other entity, or

      (ii) in the case of an entity that is not controlled by the bank, the bank itself would be permitted to acquire a substantial investment in the other entity under subsection (1) or (2), subsection 466(2), paragraph 466(3)(b) or (c) or subsection 466(4); or

    (e) any prescribed activity.

Control

(4) Subject to subsection (8) and the regulations, a bank may not acquire control of, or acquire or increase a substantial investment in,

    (a) an entity referred to in paragraph (1)(a) or (b), unless

      (i) the bank controls, within the meaning of paragraphs 3(1)(a) and (d), the entity or would thereby acquire control, within the meaning of those paragraphs, of the entity, or

      (ii) the bank is permitted by regulations made under paragraph 474(a) to acquire or increase the substantial investment;

    (b) an entity referred to in any of paragraphs (1)(c) to (j), unless

      (i) the bank controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, or

      (ii) the bank is permitted by regulations made under paragraph 474(a) to acquire or increase the substantial investment;

    (c) an entity whose business includes one or more of the activities referred to in paragraph (2)(a) and that engages, as part of its business, in any financial intermediary activity that exposes the entity to material market or credit risk, including a finance entity, a factoring entity and a financial leasing entity, unless

      (i) the bank controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, or

      (ii) the bank is permitted by regulations made under paragraph 474(a) to acquire or increase the substantial investment; or

    (d) an entity whose business includes an activity referred to in paragraph (2)(b), including a specialized financing entity, unless

      (i) the bank controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity,

      (ii) the bank is permitted by regulations made under paragraph 474(a) to acquire or increase the substantial investment, or

      (iii) subject to prescribed terms and conditions, if any are prescribed, the activities of the entity do not include the acquisition or holding of control of, or the acquisition or holding of shares or other ownership interests in, an entity referred to in any of paragraphs (a) to (c) or an entity that is not a permitted entity.

Minister's approval

(5) Subject to the regulations, a bank may not, without the prior written approval of the Minister,

    (a) acquire control of an entity referred to in any of paragraphs (1)(g) to (i) from a person who is not a member of the bank's group;

    (b) acquire control of an entity referred to in paragraph (1)(j) or (4)(c), other than an entity whose activities are limited to the activities of one or more of the following entities, if the control is acquired from an entity referred to in any of paragraphs (1)(a) to (f) that is not a member of the bank's group: