Pension Benefits Standards Regulations, 1985 — 9.1
plan year following the valuation date. (3) An employer may reduce the face value of a letter of credit after making a payment to the pension fund of the amount of the reduction. (4) The face value of a letter of credit may be reduced if, based on the most recent actuarial report, (a) the solvency ratio of the plan would have been no less than 1.05 had the reduced face value been in effect at the valuation date; and (b) the average solvency ratio of the plan would have been no less than 1.0 had the reduced face value been in effect at the valuation date. (5) A letter of credit shall be an irrevocable and unconditional standby letter of credit that (a) is in accordance with the rules of the International Standby Practices ISP98, International Chamber of Commerce Publication No. 590, as amended from time to time; (b) specifies the date that it becomes effective, which can be no later than the date on which the instalment of the special payment that is being replaced is due, and the date that it expires, which shall be the day on which the plan year ends; (c) provides that the issuer will pay the face value of the letter of credit on demand from the trustee without inquiring whether the trustee has a right to make the demand; (d) is payable in Canadian currency; (e) provides that (i) the insolvency, liquidation or bankruptcy of the employer is to have no effect on the rights or the obligations of the issuer of the letter of credit or the trustee, (ii) it will, in accordance with these Regulations, be renewed, replaced or allowed to expire without renewal or replacement, and (iii) it may not be (A) assigned except by the issuer to another issuer, or (B) amended except (I) on a renewal, to increase the face value or to decrease the face value, (II) if a successor issuer has taken over the rights and obligations under it from a predecessor issuer, to change the name of that predecessor to the name of that successor, (III) following an assignment, to reflect the change in issuer, and (IV) to decrease the face value in accordance with these Regulations; (f) provides that if the issuer assigns the letter of credit without the agreement of the employer or, after the issuance of the letter of credit, fails to meet the definition of an issuer, the issuer is still required to pay the face value of the letter of credit on demand from the trustee; and (g) provides that any amendments to the letter of credit be provided to the employer within five days after the amendment is made. (6) The employer or, if the employer is not the administrator of the plan, the administrator shall enter into a trust agreement or may amend any existing trust agreement that they may have with the trustee regarding the letters of credit. (7) If the employer is not the administrator, the administrator shall give a copy of the trust agreement to the employer within 10 business days after entering into or amending a trust agreement. (8) The trust agreement shall provide that (a) the trustee shall hold letters of credit in Canada in trust for the plan; (b) the definition default in subsection (1) applies to the agreement; (c) the employer shall immediately notify, in writing, the trustee and the Superintendent and, if the employer is not the administrator of the plan, the administrator of a default; (d) if not otherwise notified under paragraph (c), the administrator shall notify, in writing, the trustee and the Superintendent of a default immediately after becoming aware of it; (e) on receipt of the notice referred to in paragraph (c) or (d), the trustee shall immediately make a demand for payment of the face value of (i) all of the letters of credit held for the benefit of the plan, if the default is one that is described in any of paragraphs (a) to (d) and (f) of the definition default in subsection (1), and (ii) the letter of credit that has not been renewed, if the default is one that is described in paragraph (e) of that definition; (f) on receipt of a written no