Permitted Transactions
86. (1) A credit union or its subsidiary may enter into any of the following transactions with a restricted party if the transaction is authorized in advance by at least two-thirds of the members of the board of the credit union: 1. A written contract for the purchase of goods or services, other than management services, required by the credit union or the subsidiary to carry on business. The term of the contract and of each potential renewal must not exceed five years. The contract must state the consideration to be paid. 2. A written contract for the provision of management services to or by the credit union or subsidiary. It must be reasonable that the credit union or subsidiary supply the services. The amount to be paid must not exceed fair market value. 3. A written lease of personal property for the credit union or subsidiary to use in carrying on business. The term of the lease and of each potential renewal must not exceed five years. The amount to be paid must not exceed fair market value. 4. A written lease of real property for the credit union or subsidiary to use in carrying on business. The term of the lease and of each potential renewal must not exceed 10 years. The amount to be paid must not exceed fair market value. 5. A contract of employment with a director or officer of the credit union or a subsidiary. 6. A written contract for employment benefit plans and pension plans and for other reasonable commitments incidental to the credit union or subsidiary employing individuals. 7. A residential mortgage loan. The credit union or subsidiary must be otherwise authorized under the Act to make the loan. The terms of the loan must be no more favourable than those offered in the ordinary course of business by the credit union to its members. 8. A personal loan. The credit union or subsidiary must be otherwise authorized under the Act to make the loan. The terms of the loan must be no more favourable than those offered in the ordinary course of business by the credit union to its members. (2) A credit union or a subsidiary may enter into any of the following transactions with a restricted party: 1. A contract of employment with an individual who is not a director or officer of the credit union or subsidiary. 2. A deposit made by the credit union for clearing purposes with a financial institution that is a direct clearer or a group clearer member under the by-laws of the Canadian Payments Association. 3. A contract to borrow money from the restricted party. 4. The receipt of deposits from the restricted party. 5. The issuance of debt obligations to the restricted party. (3) The by-laws of the credit union may require the transactions described in subsection (2) to be authorized by a process specified in the by-laws. (4) If two-thirds of the members of the board have approved in advance the terms of the loan and the policies and procedures governing them, a credit union may, (a) make a residential mortgage loan or a personal loan to a director, officer, committee member or employee on terms more favourable than those offered in the ordinary course of business by the credit union to its members; or (b) make a loan other than one described in clause (a) to a director, officer, committee member or employee on terms no more favourable than those offered in the ordinary course of business by the credit union to its members. O. Reg. 76/95, s. 86.