C-41 - Trust Companies Act

Section 7 Disposition versions

1983-04-01

7. (1)  Subject to any provisions to the contrary contained in a special charter, no company may contract loans by taking deposits or by issuing bonds. It may nevertheless borrow money by issuing subordinated notes or by accepting subordinated shareholder loans, for the purposes and according to the terms and conditions provided in the regulations made by the Government. However, the Minister may, according to the circumstances and after having obtained the opinion of the Inspector General, impose upon a particular company terms and conditions restricting such borrowing power.

“Subordinated note” means, for the purposes of this subsection, a title of indebtedness that by its terms provides that the indebtedness evidenced by it shall, in the event of the insolvency or winding-up of the company, rank:

(a)  after the other debts of the company;

(b)  equally with the other subordinated notes issued by it;

(c)  before the subordinated shareholder loans.

“Subordinated shareholder loan” means, for the purposes of this subsection, a loan for a fixed term granted to the company by one of its shareholders or by a person who controls one of its shareholders and stipulating that in the event of the insolvency or winding-up of the company, the loan shall rank equally with other similar loans but be subordinate to all other debts.

(2)  Whenever money is entrusted to a company for the bona fide purpose of having such money invested by the company in its capacity of trustee or agent, the fact of the company guaranteeing the payment of such money or of the interest thereon at an agreed rate of interest at fixed dates shall not constitute a loan or an issue of bonds or debentures forbidden by subsection 1 of this section.

(3)  A company may, however, borrow or issue bonds or debentures to an amount of not more than seventy-five per cent of its paid-up capital, in order to erect buildings for its own use, in whole or in part.

R. S. 1964, c. 287, s. 7; 1974, c. 67, s. 4; 1982, c. 52, s. 144.

1977-12-31

7. (1)  Subject to any provisions to the contrary contained in a special charter, no company may contract loans by taking deposits or by issuing bonds. It may nevertheless borrow money by issuing subordinated notes or by accepting subordinated shareholder loans, for the purposes and according to the terms and conditions provided in the regulations made by the Government. However, the Minister may, according to the circumstances, impose upon a particular company terms and conditions restricting such borrowing power.

“Subordinated note” means, for the purposes of this subsection, a title of indebtedness that by its terms provides that the indebtedness evidenced by it shall, in the event of the insolvency or winding-up of the company, rank:

(a)  after the other debts of the company;

(b)  equally with the other subordinated notes issued by it;

(c)  before the subordinated shareholder loans.

“Subordinated shareholder loan” means, for the purposes of this subsection, a loan for a fixed term granted to the company by one of its shareholders or by a person who controls one of its shareholders and stipulating that in the event of the insolvency or winding-up of the company, the loan shall rank equally with other similar loans but be subordinate to all other debts.

(2)  Whenever money is entrusted to a company for the bona fide purpose of having such money invested by the company in its capacity of trustee or agent, the fact of the company guaranteeing the payment of such money or of the interest thereon at an agreed rate of interest at fixed dates shall not constitute a loan or an issue of bonds or debentures forbidden by subsection 1 of this section.

(3)  A company may, however, borrow or issue bonds or debentures to an amount of not more than seventy-five per cent of its paid-up capital, in order to erect buildings for its own use, in whole or in part.

R. S. 1964, c. 287, s. 7; 1974, c. 67, s. 4.