Investments
79. (1) A credit union may lend or invest its funds in, government securities (a) the bonds, debentures, stocks or other evidences of indebtedness issued or guaranteed by the government of Canada, or of a province or territory of Canada; municipal securities (b) the bonds, debentures or other evidences of indebtedness issued or guaranteed by a municipal corporation in Canada, or by a school or religious corporation in Canada, or secured by rates or taxes levied under the authority of the government of a province of Canada on property situate in such province and collectable by the municipalities in which such property is situate; revenue bonds (c) the bonds, debentures or other evidences of indebtedness issued by an authority or other body established and empowered pursuant to the law of Canada or any province thereof to administer, regulate the administration of, provide or operate port, harbour, airport, bridge, highway tunnel, transportation, communication, sanitation, water, electricity or gas services or facilities and, for any of these purposes, to levy, impose or fix taxes, rates, fees or other charges; bonds, etc., secured by mortgage (d) the bonds, debentures or other evidences of indebtedness issued by a corporation that are fully secured by a mortgage, charge or hypothec to a trustee, or to the credit union upon any, or upon any combination, of the following assets, (i) improved real estate or leasehold, (ii) the plant or equipment of a corporation that is used in the transaction of its business, or (iii) bonds, debentures or other evidences of indebtedness or shares, of a class authorized by this subsection, as investments, or cash balances, if such bonds, debentures or other evidences of indebtedness, shares or cash balances are held by a trustee, and the inclusion, as additional security under the mortgage, charge or hypothec, of any other assets not of a class authorized by this Act as investments shall not render such bonds, debentures or other evidences of indebtedness ineligible as an investment; equipment trust certificates (e) obligations or certificates issued by a trustee to finance the purchase of transportation equipment for a corporation incorporated in Canada to be used on railways or public highways, if the obligations or certificates are fully secured by, (i) an assignment of the transportation equipment to, or the ownership thereof by, the trustee, and (ii) a lease or conditional sale thereof by the trustee to the corporation; debentures (f) the bonds, debentures or other evidences of indebtedness issued or guaranteed by, (i) a corporation if, at the date of investment, the preferred shares or the common shares of the corporation are authorized as investments by clause (h) or (i), (ii) a corporation, if its earnings in a period of five years ended less than one year before the date of investment have been equal in sum total to at least ten times and in each of any four of the five years have been equal to at least one and one-half times the annual interest requirements at the date of investment on all indebtedness of or guaranteed by it, other than indebtedness classified as a current liability in its balance sheet, and, if the corporation at the date of investment owns directly or indirectly more than 50 per cent of the common shares of another corporation, the earnings of the corporations during the said period of five years may be consolidated with due allowance for minority interests, if any, and in that event the interest requirements of the corporation shall be consolidated and such consolidated earnings and consolidated interest requirements shall be taken as the earnings and interest requirements of the corporation, and, for the purpose of this subclause, “earnings” means earnings available to meet interest charges on indebtedness other than indebtedness classified as a current liability; guaranteed investment certificates (g) guaranteed investment certificates issued by a trust corporation incorporated in Canada if, at the date of investment, the preferred shares or the common shares of the trust corporation are authorized as investments by clause (h) or (i); preferred shares (h) the preferred shares of a corporation if, (i) the corporation has paid a dividend in each of the five years immediately preceding the date of investment at least equal to the specified annual rate upon all of its preferred shares, or (ii) the common shares of the corporation are, at the date of investment, authorized as investments by clause (i); common shares (i) the fully paid common shares of a corporation that during a period of five years that ended less than one year before the date of investment has either, (i) paid a dividend in each such year upon its common shares, or (ii) had earnings in each such year available for the payment of a dividend upon its common shares, of at least 4 per cent of the average value at which the shares were carried in the capital stock account of the corporation during the year in which the dividend was paid or in which the corporation had earnings available for the payment of dividends, as the case may be; mortgages, etc. (j) ground rents, mortgages, charges or hypothecs on real estate or leaseholds in Ontario, but the amount paid for the mortgage, charge or hypothec together with the amount of indebtedness under any mortgage, charge or hypothec on the real estate or leasehold ranking equally with or prior to the mortgage, charge or hypothec in which the investment is made shall not exceed three-quarters of the value of the real estate or leasehold covered thereby; guaranteed mortgages (k) mortgages or charges on improved real estate or leaseholds in Ontario although the mortgage or charge exceeds the amount that the credit union is otherwise authorized to invest if the excess is insured or guaranteed by the government of Canada or Ontario or by an agency of the government of Canada or Ontario or by a policy of mortgage insurance issued by an insurance company licensed under the Insurance Act for such class of insurance; real estate or leaseholds for the production of income (l) real estate or leaseholds for the production of income in Canada either alone or jointly with any other credit union or with any loan corporation or trust corporation incorporated in Canada, if, (i) a lease of the real estate or leasehold is made to, or guaranteed by, (A) the Government of Canada and its territories or of a province, or municipality thereof, or (B) a corporation, the preferred shares or common shares of which are, at the date of investment, authorized as investments by clause (h) or (i), (ii) the lease provides for a net revenue sufficient to yield a reasonable interest return during the period of the lease and to repay at least 85 per cent of the amount invested in the real estate or leasehold within the period of the lease but not exceeding thirty years from the date of investment, and (iii) the total investment of a credit union in any one parcel of real estate or in any one leasehold does not exceed 2 per cent of the book value of the total assets of the credit union, and the credit union may hold, maintain, improve, lease, sell or otherwise deal with or dispose of the real estate or leasehold; other real estate or leaseholds for the production of income (m) real estate or leaseholds for the production of income in Canada either alone or jointly with any other credit union or with any loan corporation or trust corporation incorporated in Canada, if, (i) the real estate or leasehold has produced, in each of the three years immediately preceding the date of investment, net revenue in an amount that, if continued in future years, would be sufficient to yield a reasonable interest return on the amount invested in the real estate or leasehold and to repay at least 85 per cent of that amount within the remaining economic lifetime of the improvements to the real estate or leasehold but not exceeding forty years from the date of investment, and (ii) the total investment of a credit union in any one parcel of real estate or in any one leasehold does not exceed 2 per cent of the book value of the total assets of the credit union, and the credit union may hold, maintain, improve, lease, sell or otherwise deal with or dispose of the real estate or dispose of the real estate or leasehold; mutual funds (n) in the fully paid shares or units of any mutual fund or corporation incorporated to offer public participation in an investment portfolio subject to such terms and conditions as may be prescribed by the Lieutenant Governor in Council. Idem (2) Despite clauses (1)(k), (l) and (m), a credit union may invest to an aggregate amount not exceeding 5 per cent of its unimpaired capital, deposits and reserves, in any other classes or types of investments, including mortgages or charges, the purchase of land, the improvement thereof, the construction of buildings thereon, and the management and disposal of such lands and buildings. R.S.O. 1980, c.102, s.79.