jswizzle3737/ontario_laws_and_regs huggingface dataset:
1. In this Regulation “co-operative credit society” means a body corporate organized and operated on co-operative principles, one of whose principal purposes is to provide financial services to its members; “entity” means a body corporate, trust, partnership, fund, unincorporated association or organization, Her Majesty in right of Canada or of a province of Canada, an agency of Her Majesty in either of such rights and the government of a foreign country or any political subdivision thereof and any agency thereof; “financial institution” means, (a) a corporation incorporated by or under the laws of Ontario, of Canada or of any other province or territory of Canada, (b) a bank, (c) an insurance company, (d) a co-operative credit society incorporated and regulated by or under the laws of Canada or of any province or territory of Canada, including a credit union or caisse populaire, (e) a securities dealer, or (f) a foreign institution; “foreign institution” means an entity that is, (a) engaged in the business of banking, the trust, loan or insurance business, the business of a co-operative credit society or the business of dealing in securities or is otherwise engaged primarily in the business of providing financial services, and (b) incorporated or formed otherwise than by or under the laws of Canada or a province or territory of Canada; “insurance company” means an insurance company incorporated by or under the laws of Ontario, of Canada or of any other province or territory of Canada; “real estate corporation” means a body corporate that is primarily engaged in holding, managing or otherwise dealing with real estate or shares of a body corporate or ownership interests in an unincorporated entity that is also primarily engaged in holding, managing or otherwise dealing with real estate; “real estate holding vehicle” means a limited partnership or a trust that is primarily engaged in holding, managing or otherwise dealing with real estate or shares of a body corporate or ownership interests in an unincorporated entity that is also primarily engaged in holding, managing or otherwise dealing with real estate; “securities dealer” means an entity that is incorporated by or under the laws of Canada or a province or territory of Canada that is primarily engaged in dealing in securities, including portfolio management and investment counselling; “specialized financing corporation” means a body corporate that is primarily engaged in providing specialized business management, in making investments or in providing financing or advisory services. O. Reg. 413/97, s. 1.
2. Revoked: O. Reg. 413/97, s. 1.
3. Revoked: O. Reg. 413/97, s. 1.
4. Revoked: O. Reg. 413/97, s. 1. PART II (s. 5) Revoked: O. Reg. 413/97, s. 1. PART III   DISCLOSURE TO BORROWERS IN LENDING TRANSACTIONS Interpretation
Interpretation
6. (1) In this Part, “annual percentage rate” means, in relation to interest payable on a loan or credit, the interest expressed as a rate per annum; “cost of borrowing” means, in relation to a loan or credit, (a) the interest on the loan or credit, (b) administration costs, including any service, transaction or activity charge, (c) loan fees, finders fees, brokerage fees, renewal fees for a renewed loan, application fees, placement fees, closing costs, discharge fees and similar charges, and (d) any other charges in connection with the loan or credit that are payable by the borrower to the registered corporation or to a person from whom the registered corporation receives a benefit, directly or indirectly, but excludes any amount that the registered corporation is required to pay to persons that are not restricted parties; “credit” means an arrangement for obtaining loans and includes a line of credit and credit made available to a person through the use of a payment, credit or charge card issued by a registered corporation; “loan” means any money lent, whether secured or unsecured, and includes an advance, a lease, a loan to a lessee or conditional purchaser and a mortgage; “prepayment” means, in relation to a loan, a payment other than a payment made on a date or according to a mechanism that is specified in the loan contract and includes a payment that is a prepayment as defined by the loan contract; “principal amount” means, in relation to a loan, the amount of money lent that remains unpaid on a given day. (2) For the purposes of this Part, a renewal of a loan, whether or not it is made pursuant to an option in the original loan, is deemed to be a separate loan. R.R.O. 1990, Reg. 733, s. 6. Exception
Exception
7. This Part does not apply in respect of loans made or credit made available by a registered corporation, (a) to a body corporate, partnership, limited partnership or joint venture; or (b) in an amount that exceeds $250,000, unless the loan or credit is secured or guaranteed, in whole or in part, by a principal or secondary residence of an individual. R.R.O. 1990, Reg. 733, s. 7. Disclosure Requirements for Loans
Disclosure Requirements for Loans
8. (1) A registered corporation that proposes to make a loan or enters into a loan commitment shall disclose to the borrower the terms and conditions of the loan required by subsection 10 (1) on a disclosure statement. (2) A registered corporation shall give a borrower a disclosure statement under subsection (1) not less than five business days before the borrower is required to accept the offer respecting the proposed loan. (3) If, at or after the time a registered corporation gives a borrower a disclosure statement under subsection (1), the registered corporation gives the borrower another document disclosing terms and conditions of the proposed loan, the terms and conditions in the disclosure statement shall be deemed to be the terms and conditions of the proposed loan. R.R.O. 1990, Reg. 733, s. 8.
Disclosure Requirements for Loans
9. At the time a loan contract is entered into, a registered corporation shall disclose to the borrower the terms and conditions of the loan required by subsection 10 (1), (a) as part of the written loan contract between the registered corporation and the borrower; (b) in a promissory note to be signed by the borrower; or (c) in a separate statement that is attached to the loan contract. R.R.O. 1990, Reg. 733, s. 9.
Disclosure Requirements for Loans
10. (1) Every registered corporation shall disclose under subsection 8 (1) or section 9 to a borrower, (a) the gross amount of the loan; (b) the net amount of the loan to be advanced; (c) the amount of prepaid interest, if any, that the registered corporation may deduct from the principal amount; (d) the term of the loan; (e) the interest on the loan as of the date the loan is made, expressed as an annual percentage rate, and the method of calculating the rate; (f) if the annual percentage rate of interest on the loan is not fixed, the manner of determining the annual percentage rate; (g) the components of the cost of borrowing, other than the interest on the loan, itemized and expressed in dollars and cents; (h) a description and itemized estimate of costs to be paid in respect of the loan to persons other than the registered corporation, including, where applicable, legal fees, registration fees and mortgage insurance fees; (i) the method of applying each payment in respect of the loan to the accumulated cost of borrowing and to the principal amount; (j) whether and in what circumstances prepayments are permitted; (k) if prepayments are permitted under the terms of the loan or otherwise, the conditions for making any prepayment, the costs and penalties, if any, imposed as a result of a prepayment and the method of applying a prepayment to the accumulated cost of borrowing and to the principal amount; (l) if prepayments are permitted under the terms of the loan and the borrower makes a prepayment, the method of calculating any rebate on the cost of borrowing; and (m) particulars of any charge or penalty payable by the borrower upon a failure to make payments under the loan as they come due. (2) The annual percentage rate of interest on a loan that is disclosed to a borrower shall be accurate to within one-eighth of 1 per cent. R.R.O. 1990, Reg. 733, s. 10 (1, 2). (3) A registered corporation that makes an offer to renew a loan shall disclose to the borrower, not less than 21 days before the loan matures, (a) the amount of any renewal fee, placement fee, bonus or similar charge to be imposed upon renewal of the loan; and (b) despite subsection 8 (2), the terms and conditions of the proposed renewed loan. R.R.O. 1990, Reg. 733, s. 10 (3); O. Reg. 413/97, s. 2 (1). (4) A registered corporation shall disclose to a borrower under a loan contract, not less than 21 days before the loan matures, particulars of any fee, bonus, penalty or similar charge payable to the registered corporation upon the discharge of the loan, setting out the terms of the loan contract that entitle the registered corporation to the fee, bonus, penalty or similar charge. R.R.O. 1990, Reg. 733, s. 10 (4); O. Reg. 413/97, s. 2 (2).
Disclosure Requirements for Loans
11. (1) If the annual percentage rate of interest on a loan is variable, the registered corporation shall give the borrower notice of any change in the annual percentage rate being charged during the term of the loan within one month after the change occurs. (2) Subsection (1) does not apply if the change in the annual percentage rate of interest on the loan is made by reference to a corresponding change in a rate that is readily ascertainable by a reasonable borrower. R.R.O. 1990, Reg. 733, s. 11.
Disclosure Requirements for Loans
12. A registered corporation that acquires a loan contract from a third party shall forthwith disclose to the borrower any fee, bonus, penalty or similar charge that is or may be payable by the borrower during the term or upon discharge of the loan. R.R.O. 1990, Reg. 733, s. 12. Disclosure Respecting Credit
Disclosure Respecting Credit
13. (1) A registered corporation that makes credit available to a person shall disclose to the person the terms and conditions of the credit required by section 14. (2) A registered corporation shall disclose to a person at the time it makes credit available to the person the terms and conditions of the credit, (a) as part of a written contract or proposed contract between the registered corporation and the person; or (b) in a separate statement that is attached to the written contract or proposed contract. R.R.O. 1990, Reg. 733, s. 13.
Disclosure Respecting Credit
14. Every registered corporation shall disclose under subsection 13 (1), (a) the maximum aggregate amount of credit available at one time to the person under the credit; (b) the annual percentage rate of interest, and the method of calculating the rate; (c) if the annual percentage rate of interest is not fixed, the manner of determining the annual percentage rate; (d) the components of the cost of borrowing, other than interest, itemized and expressed in dollars and cents; (e) the term of each period for which a statement of account is furnished in respect of the credit; (f) the minimum payment, or the method of calculating the minimum payment, required for each period; (g) the manner, if any, in which the person may discharge the person’s obligations in respect of the credit without incurring any fee, bonus, penalty or similar charge; (h) the maximum liability of the person for the unauthorized use of any card that is issued to the person in connection with the credit, in the event that the card is lost or stolen; and (i) particulars of any charge or penalty payable by the person upon a failure to make payments in respect of the credit as they come due. R.R.O. 1990, Reg. 733, s. 14.
Disclosure Respecting Credit
15. A registered corporation shall give a person to whom credit is made available notice of any change in an item disclosed pursuant to section 14, at least thirty days before the change becomes effective. R.R.O. 1990, Reg. 733, s. 15.
Disclosure Respecting Credit
16. (1) Despite section 15, if the annual percentage rate of interest on the credit is variable, the registered corporation shall give the person notice of any change in the annual percentage rate being charged for the credit within one month after the change occurs. (2) Subsection (1) does not apply if the change in the annual percentage rate of interest on the credit is made by reference to a corresponding change in a rate that is readily ascertainable by a reasonable borrower. R.R.O. 1990, Reg. 733, s. 16. General Requirement
General Requirement
17. If a registered corporation is unable, using reasonable efforts, to ascertain the amount of any component of the cost of borrowing, the registered corporation shall disclose in its place an estimated amount, clearly identified as such, based on the best available information. R.R.O. 1990, Reg. 733, s. 17.
General Requirement
18. No registered corporation may provide additional information with respect to a lending transaction that tends to contradict or obscure the information that it is required under this Part to disclose. R.R.O. 1990, Reg. 733, s. 18.
General Requirement
19. Any disclosure or notice that is required under this Part is sufficiently made or given if it is in writing and given to the person required to be notified or if it is sent by ordinary first class mail to the person’s latest address in the records of the registered corporation making the disclosure. R.R.O. 1990, Reg. 733, s. 19. PART IV   PUBLIC FILE OF REGISTERED CORPORATIONS
General Requirement
20. For the purpose of subsection 139 (1) of the Act, the following information is prescribed to be contained in the Superintendent’s file on each registered corporation: 1. Particulars of the corporation’s charter or letters patent, supplementary letters patent and all other constating documents. 2. Particulars of any orders in council issued with respect to the corporation. 3. Particulars of any orders issued under the Act with respect to the corporation, unless the order provides otherwise. 4. Particulars of any consents issued under the Act with respect to the corporation and with respect to its holding bodies corporate under section 63 of the Act. 5. Particulars of any amalgamation agreements and agreements that provide for the purchase or sale of substantially all assets of or to the corporation, as the case may be. 6. Particulars respecting the continuation of registration in a jurisdiction other than jurisdiction of incorporation. 7. Particulars respecting the registration of the corporation including the details of any notations made by the Superintendent in the Loan Corporations’ Register or Trust Corporations’ Register, as the case may be, pursuant to the Act. 8. Particulars of any powers of attorney and all undertakings of the corporation required under the Act or regulations. 9. Particulars of any court orders or certificates of conviction issued against the corporation as a result of proceedings commenced under the Act or regulations. 10. Particulars of the surrender of charter, winding up and other dissolution documents. 11. Information concerning whether the corporation’s deposits are insured by a public agency approved by the Superintendent. 12. A list of current officers and directors of the corporation according to the records filed with the Superintendent. R.R.O. 1990, Reg. 733, s. 20. PART V   CUSTODY AND SAFEKEEPING OF SECURITIES, PROPERTY AND TRUST ASSETS Provincial Corporations
Provincial Corporations
21. (1) Sections 21 to 26 apply to securities, property and other assets held by a provincial corporation as collateral for a loan or as an acquisition for its own account. (2) Despite subsection (1), if a provincial corporation enters into a securities lending arrangement with a financial institution or securities dealer, sections 21 to 26 apply in respect of any securities received by the provincial corporation as a result of the arrangement but do not apply in respect of any securities lent by the provincial corporation under the arrangement. O. Reg. 413/97, s. 3. Custody
Custody
22. (1) Documents evidencing ownership of securities, property or other assets that are held by a provincial corporation as collateral for a loan or for its own account shall be placed in the possession of a corporation, a bank or the Bank of Canada. (2) Despite subsection (1), documents evidencing ownership of assets not retained in Canada that are acquired by a provincial corporation for its own account may be placed in the possession of an institution in a jurisdiction outside Canada that is, (a) recognized by the laws of the jurisdiction as a bank or an equivalent to a bank; and (b) empowered by the laws of the jurisdiction to act as a custodian, and that is regulated by a system similar to that of Ontario. (3) There shall be an agreement in writing between a provincial corporation and a custodian mentioned in subsection (1) or (2) governing the custody of securities, property and other assets that sets out the obligations of the custodian and the cost, if any, of the services to be provided to the provincial corporation. (4) In this section, “assets not retained in Canada” means, (a) bonds, debentures and other forms of indebtedness of a body corporate that is incorporated outside Canada, (b) shares of a body corporate that is incorporated outside Canada, unless the shares are listed on a Canadian stock exchange, (c) real estate located outside Canada, (d) loans that are secured by real estate or leaseholds outside Canada, and (e) mutual fund shares or units that are traded only by dealers who are not registered with a securities commission in Canada. O. Reg. 413/97, s. 3. Safekeeping
Safekeeping
23. A provincial corporation holding securities or property as collateral for a loan shall obtain from the borrower an assignment of the borrower’s rights in the securities or property and shall obtain, (a) in the case of securities, a power of attorney and proof of the assignability of the securities; and (b) in the case of property, proof of the ownership rights of the borrower. O. Reg. 413/97, s. 3.
Safekeeping
24. A provincial corporation holding securities or government debt instruments for its own account shall, within 15 days after settlement, forward the securities for registration in the name of the provincial corporation or its nominee. O. Reg. 413/97, s. 3.
Safekeeping
25. (1) Canadian money market instruments that are purchased by a provincial corporation for its own account may be held in bearer form or in registered form accompanied by a power of attorney appointing the provincial corporation. (2) Securities and government debt instruments other than Canadian money market instruments that the provincial corporation intends to dispose of within 90 days after acquisition may be held by the provincial corporation in bearer form or in registered form accompanied by a power of attorney appointing the provincial corporation. (3) Section 23 or 24, as the case may be, applies to a provincial corporation that does not dispose of securities or government debt instruments described in subsection (2) within 90 days after acquisition. (4) Despite section 24, if a provincial corporation acquires securities or government debt instruments, (a) that are issued in bearer form only, the provincial corporation may hold the securities or government debt instruments in bearer form; and (b) that are Canadian money market instruments in street form, the provincial corporation may hold the securities or government debt instruments in street form. (5) In this section, “money market instrument” means a publicly traded debt instrument issued by a body corporate or a government, maturing within three years after its date of issue, that is, (a) purchased by a provincial corporation for its own account, or (b) held by a provincial corporation as collateral for a loan payable within up to one year from the day the loan was made. O. Reg. 413/97, s. 3.
Safekeeping
26. A provincial corporation must take reasonable and prudent action to ensure that ownership rights of, or security interest in securities, property and other assets that are registered in the name of the provincial corporation or its nominee, or held by the provincial corporation, are protected under provincial law. O. Reg. 413/97, s. 3. Registered Corporations
Registered Corporations
27. (1) Sections 27 to 29.2 apply to securities, property and other assets held by a registered corporation as trust assets under administration. (2) Despite subsection (1), if a registered corporation enters into a securities lending arrangement with a financial institution or securities dealer for assets held by the registered corporation as trust assets under administration, sections 27 to 29.2 apply in respect of any securities received by the registered corporation as a result of the arrangement but do not apply in respect of any securities lent by the registered corporation under the arrangement. O. Reg. 413/97, s. 3. Custody
Custody
28. (1) Documents evidencing ownership of securities, property or other assets that are held by a registered corporation as trust assets under administration shall be placed in the possession of a corporation, a bank or the Bank of Canada. (2) Subsection (1) does not apply if a court order or an instrument that creates a fiduciary duty contains a direction respecting securities, property or trust assets that is inconsistent with subsection (1). (3) There shall be an agreement in writing between a registered corporation and a custodian holding documents in accordance with subsection (1) or (2) governing the custody of securities, property and other assets held as trust assets that sets out the obligations of the custodian and the costs, if any, of the services to be provided to the registered corporation. O. Reg. 413/97, s. 3. Safekeeping
Safekeeping
29. (1) Trust assets shall be registered and held by a registered corporation or its nominee in trust for the beneficial owner or in the name of the beneficial owner. (2) Subsection (1) does not apply where a court order or an instrument that creates a fiduciary duty contains a direction respecting securities, property or other assets that is inconsistent with the requirements of that subsection. O. Reg. 413/97, s. 3.
Safekeeping
29.1 (1) Canadian money market instruments that are held by a registered corporation as trust assets may be held in bearer form or in registered form accompanied by a power of attorney appointing the registered corporation. (2) Securities and government debt instruments other than Canadian money market instruments held by a registered corporation as trust assets that the registered corporation intends to dispose of within 90 days after acquisition may be held by the registered corporation in bearer form or in registered form accompanied by a power of attorney appointing the registered corporation. (3) Section 29 applies to a registered corporation that does not dispose of securities or government debt instruments described in subsection (2) within 90 days after acquisition. (4) Despite section 29, if a registered corporation acquires securities or government debt instruments held by the registered corporation as trust assets, (a) that are issued in bearer form only, the registered corporation may hold the securities or government debt instruments in bearer form; and (b) that are Canadian money market instruments in street form, the registered corporation may hold the securities or government debt instruments in street form. (5) In this section, “money market instrument” means a publicly traded debt instrument issued by a body corporate or a government, maturing within three years after its date of issue and purchased by a registered corporation as a trust asset. O. Reg. 413/97, s. 3.
Safekeeping
29.2 Where a registered corporation holds securities, property or other assets as trust assets and the securities, property or other assets are registered in the name of the registered corporation or its nominee, the registered corporation must take reasonable and prudent action to ensure that the ownership rights of or security interest in the securities, property or other assets are protected under provincial law. O. Reg. 413/97, s. 3.
Safekeeping
29.3 (1) The existence of and ownership rights of a person in a security or government debt instrument held by a provincial corporation as collateral for a loan or as an acquisition for its own account or held by a registered corporation as trust assets under administration may be established by the delivery to the provincial corporation or registered corporation of, (a) a certificate respecting the issuance and registration of the security or government debt instrument; or (b) a statement of account for the security or government debt instrument given by a recognized securities depository in Canada that is authorized by law to operate a book based system or a comparable institution in a foreign jurisdiction that is authorized by law to operate a transnational book based system. (2) In this section, “book based system” means a system for the central handling of securities within which all securities in a class or series of any issuer that are deposited into the system are treated as fungible and may be transferred or pledged by a bookkeeping entry without the actual delivery of the securities. O. Reg. 413/97, s. 3. PART VI   FINANCIAL STATEMENTS Financial Statements
Financial Statements
30. (1) The financial statements required in respect of a corporation are the financial statements set out in section 120 of the Act. (2) For the purpose of subsection (1), the financial statements must be audited and comply with the requirements for preparation and disclosure set out in this Part. R.R.O. 1990, Reg. 733, s. 30.
Financial Statements
31. For the purposes of clause 120 (1) (d) of the Act, the financial statements of every subsidiary of a corporation must be placed before each annual meeting of shareholders of the corporation. R.R.O. 1990, Reg. 733, s. 31.
Financial Statements
32. (1) The degree of disclosure required in the non-consolidated financial statements of a corporation to be placed before an annual meeting of shareholders is as set out in this Part. (2) The degree of disclosure required for financial statements to be placed before an annual meeting of shareholders that are prepared on a consolidated basis is as set out in this Part, allowing for appropriate consolidation adjustments. R.R.O. 1990, Reg. 733, s. 32.
Financial Statements
33. (1) Despite any other provision in this Part, a corporation is not required to disclose in its financial statements a matter that, in all the circumstances of the corporation, is relatively insignificant. (2) A determination whether a matter is relatively insignificant must take into consideration the effect of the authorized borrowing multiple on the capital base of the corporation. R.R.O. 1990, Reg. 733, s. 33. Statement of Income
Statement of Income
34. (1) Every statement of income must set out separately at least, (a) revenue from mortgages, showing separately, (i) interest earned on mortgages, and (ii) other mortgage revenue, if any, including amortized fee income; (b) earnings from investments in subsidiaries; (c) earnings from investments in securities dealers, where the relationship of the securities dealer to the corporation is that of a subsidiary or a company under significant influence; (d) revenue, excluding gains or losses on sales, from investments in securities other than those set out in clauses (b) and (c); (e) revenue from loans to individuals; (f) revenue from loans to persons other than individuals; (g) revenue from the administration of estates, trusts and agencies; (h) commissions from real estate sales net of commissions paid to other real estate brokers; (i) revenue from real estate held for investment; (j) revenue from real estate held for sale, net of depreciation, property taxes and all other operating expenses; (k) net gains or losses from futures, options, short selling or similar instruments acquired other than for hedging purposes; (l) net gains or losses on the sale of investments or other assets; (m) operating revenue not included under clauses (a) to (l); (n) interest expense on money received for guaranteed investments, savings or other deposits, debentures, notes, certificates of indebtedness and on bank or other borrowings; (o) salaries, pension contributions and other staff benefits; (p) operating expenses, including depreciation and amortization of office premises, equipment and leasehold improvements held for the corporation’s own use; (q) operating expenses, including depreciation of real estate held for investment; (r) operating expenses not included under clauses (n) to (q); (s) amounts recorded as amortization or write-off of any intangible assets; (t) provisions for known, probable and possible losses of any kind; (u) income or loss before income taxes and extraordinary items; (v) taxes on income, indicating the amount, if any, by which current income taxes have been increased or decreased as a result of tax deferrals; (w) income or loss before extraordinary items; (x) extraordinary items shown separately if they are material, less related income taxes, if any; (y) net income or loss for the period; and (z) earnings per share. R.R.O. 1990, Reg. 733, s. 34 (1); O. Reg. 413/97, s. 4. (2) Despite subsection (1), any item required to be disclosed on the income statement may be disclosed in the notes to the financial statements or in another financial statement or, if the amount of the item is not significant, it may be combined with another item on the income statement. R.R.O. 1990, Reg. 733, s. 34 (2). Statement of Retained Earnings
Statement of Retained Earnings
35. Every statement of retained earnings must set out separately at least, (a) the balance of the retained earnings or deficit at the end of the preceding period; (b) the additions to and deductions from the retained earnings or deficit during the current period showing at least, (i) the net income or loss for the period, (ii) the dividends declared on common shares, and, set out separately, on shares other than common shares, and (iii) the prior period adjustments, including a description; and (c) the balance of the retained earnings or deficit at the end of the current period. R.R.O. 1990, Reg. 733, s. 35. Statement of Changes in Financial Position
Statement of Changes in Financial Position
36. Every statement of changes in financial position must set out separately, (a) the changes in cash and cash equivalents resulting from the activities of the corporation during the period; (b) the components of cash and cash equivalents; and (c) cash flows, including cash flows from the corporation’s operating activities, financing activities and investing activities, set out separately. R.R.O. 1990, Reg. 733, s. 36. Balance Sheet
Notes to the Financial Statements
39. (1) In this Part,  “book value”, with respect to an asset, means the cost or amortized cost of the asset less accumulated depreciation, provisions or allowances for losses, and received but unearned interest. R.R.O. 1990, Reg. 733, s. 39 (1). (2) Revoked: O. Reg. 413/97, s. 7.
Notes to the Financial Statements
41. For the purposes of clause 40 (1) (d), the amount of a corporation’s retained earnings or deficit shall be determined as set out in Part VIII. R.R.O. 1990, Reg. 733, s. 41.
Notes to the Financial Statements
42. (1) For the purposes of clause 40 (1) (g), the market value of the investments of a corporation shall be determined as set out in this section and, in this section, “investment” does not include a loan, whether secured or unsecured, or any investment in real estate or in a subsidiary. R.R.O. 1990, Reg. 733, s. 42 (1); O. Reg. 413/97, s. 9. (2) The market value of investments described in this section shall be determined as of the valuation date. (3) In this section, the “valuation date” for determining the market value of an investment is the date as of which the capital base of the corporation is calculated. (4) A share that is listed on any stock exchange shall be valued at its closing sale price on the valuation date or, if there is no sale price reported for the share on the valuation date, at the more recent of, (a) the average of the most recent bid and asked prices for the share; and (b) the most recent sale price published for the share. (5) An investment that is not listed on any stock exchange shall be valued, (a) if bid and asked prices for the investment have been available to the public within sixty days before the valuation date, at the average of the most recent available bid and asked prices; (b) if no bid and asked prices for the investment have been available to the public within sixty days before the valuation date, at the value for the investment that is determined by a valuator appointed for that purpose; and (c) if a value for the investment has not been determined under clause (a) or (b), at the value calculated by reducing the book value of the investment by 25 per cent on the first anniversary of the acquisition of the investment and by 50 per cent on the second anniversary. (6) If a determination of the market value of an investment in preferred shares under subsection (4) or clause (5) (a) results in a value that is not representative of the true value of the investment and the shares, (a) have a variable dividend rate that is altered periodically in accordance with a predetermined index; and (b) are part of an underwriting in which the issuer raised at least $50 million in the initial issue, the determination of the market value of the shares shall be made by a valuator appointed for that purpose. (7) For the purposes of clause (5) (b) and subsection (6), in determining the value of an investment, the valuator shall consider the most recent audited financial statements of the body corporate that issued the investment. (8) No valuation done under clause (5) (b) or subsection (6) may be completed more than six months before the valuation date. R.R.O. 1990, Reg. 733, s. 42 (2-8). PART VIII   RETAINED EARNINGS AND DEFICITS IN THE DEFINITION OF CAPITAL BASE Determination of Retained Earnings or Deficit
Determination of Retained Earnings or Deficit
43. For the purpose of calculating the capital base of a corporation, the amount of the corporation’s retained earnings or deficit shall be determined in accordance with the requirements set out in this Part. R.R.O. 1990, Reg. 733, s. 43. Investments in Subsidiaries
Investments in Subsidiaries
44. The equity method of accounting shall be used to calculate a corporation’s investment in the shares of a subsidiary. R.R.O. 1990, Reg. 733, s. 44. Swaps, Futures and Similar Instruments
Swaps, Futures and Similar Instruments
45. (1) In this section, “financial future” means a contract to buy or sell a standard quantity of a specified financial instrument on a specified future date at an agreed price; “interest rate swap” means an agreement between two parties to exchange interest payments, usually in which one party agrees to make payments at a fixed interest rate and the other party agrees to make payments at a floating interest rate, predicated on notional principal value. (2) If a corporation enters into an interest rate swap or similar agreement, and the purpose of the transaction is to hedge against interest rate or similar risks associated with its specific assets and liabilities or groups of specific assets and liabilities through a compensatory price movement contract, the net interest shall be recorded in the income accounts as it occurs. (3) If a corporation acquires a financial future, financial option or similar instrument and the purpose of the transaction is to hedge against interest rate or similar risks associated with its specific assets and liabilities or groups of specific assets and liabilities through a compensatory price movement contract, any gain or loss shall be deferred until the closure of the hedge. (4) If a corporation acquires a financial future, financial option or similar instrument other than for hedging purposes, the instrument shall be marked-to-market daily on an individual contract basis, any unrealized loss shall be recognized on that basis in the income accounts, and any unrealized gain shall be deferred until realized. R.R.O. 1990, Reg. 733, s. 45.
Swaps, Futures and Similar Instruments
46. (1) In this section,  “covered option” means a contract under which the purchaser acquires the right to require the corporation to sell to it, within or at a specified time, for a specified amount, specified securities that the corporation owns at the time of contracting. (2) Any premium received for writing a covered option shall be recorded as a reduction in the book value of the applicable investment until the expiry or exercise of the option. (3) On the expiry of a covered option, the premium received shall be recorded as income. (4) On the exercise of a covered option, the premium received shall be included in the gain or loss on the disposition of the applicable investment. R.R.O. 1990, Reg. 733, s. 46. Short Selling and Uncovered Options
Short Selling and Uncovered Options
47. (1) In this section,  “short”, in relation to a sale of securities by a corporation, means a sale of securities that the corporation does not own or have the right to acquire at the time of making the sale. R.R.O. 1990, Reg. 733, s. 47 (1). (2) If a corporation sells equity or debt obligations short, (a) Revoked: O. Reg. 431/97, s. 10 (1). (b) the investment in the short sale contract shall be marked-to-market daily, on a contract-by-contract basis, with the accumulated losses, if any, recorded in the corporation’s income accounts; and (c) all unrealized gains on the investment in the short sale contract shall be deferred except to the extent that the recording of gains would increase the investment to its original value. R.R.O. 1990, Reg. 733, s. 47 (2); O. Reg. 413/97, s. 10.
Short Selling and Uncovered Options
48. (1) Any premium received for writing an uncovered call option shall be recorded as deferred income until the option lapses or is exercised or until an equal offsetting contract is purchased. (2) If an uncovered call option, (a) lapses unexercised, the premium shall be recorded as income; (b) is exercised, the premium shall be included in the gain or loss on the transaction; or (c) is offset by the purchase of an equal offsetting contract, the premium previously received shall be netted against the premium paid on the contract purchased, and the net gain or loss shall be recorded in the income accounts at the time of the purchase. (3) Every uncovered call option shall be marked-to-market daily on a contract-by-contract basis with the accumulated losses, if any, recorded in the income accounts. (4) No unrealized gains on an uncovered call option shall be recorded except to reverse previously recorded losses on the transaction. R.R.O. 1990, Reg. 733, s. 48. Financial Instruments Generally
Financial Instruments Generally
49. (1) When a corporation enters into a transaction mentioned in sections 46 to 48, the corporation shall determine whether the transaction is made for the purpose of either hedging or capital appreciation, and shall document its determination with its accounting records. (2) All unrealized gains and losses on transactions mentioned in sections 46 to 48 that are entered into for hedging purposes shall be deferred until the closure of the hedge. (3) All unrealized losses arising from transactions mentioned in sections 46 to 48 that are entered into for capital appreciation purposes shall be marked-to-market daily on a contract-by-contract basis, and all unrecognized gains shall be deferred on a contract-by-contract basis until the termination of the applicable agreement. (4) After a corporation has made a determination under subsection (1) in respect of a transaction, the corporation shall not change its method of accounting for gains and losses arising from the transaction. R.R.O. 1990, Reg. 733, s. 49. Asset-Backed Securities
Asset-Backed Securities
50. (1) In this section,  “asset-backed securities” means an arrangement for the sale of assets that entitles the purchaser to an undivided beneficial interest in a pool of assets. (2) If a corporation has approved issuer status granted by Canada Mortgage and Housing Corporation under the CMHC mortgage-backed securities program, any gain on disposition arising from the sale of interests in pools of mortgages under that program may be recorded immediately in the income accounts. (3) Any gain on disposition arising from the sale by the corporation of interests in pools of National Housing Act (Canada) mortgages under any mortgage-backed securities program may be recorded immediately in the income accounts. (4) If, under any asset-backed securities arrangement not referred to in subsection (2) or (3), the corporation sells interests in pools of assets and retains administration of the assets on behalf of the purchasers, a portion of the gain on the sale, if any, equal to the maximum loss sustainable by the corporation under any recourse provision of the arrangement shall be treated as deferred income until the maturity of the asset-backed securities. R.R.O. 1990, Reg. 733, s. 50. Profit Recognition on Asset Sales
Profit Recognition on Asset Sales
51. (1) If a corporation sells an asset to a purchaser who is not a restricted party and the purchaser makes a cash down payment of at least 25 per cent of the purchase price, the determination of any gain or loss on the sale may be made without taking into account any reduced rate financing on the sale offered to the purchaser and any commercial and reasonable performance guarantee given to the purchaser. (2) If a corporation sells an asset to a purchaser who is not a restricted party and the purchaser does not make a cash down payment of at least 25 per cent of the purchase price, the determination of any gain or loss on the sale shall take into account the estimated costs of any performance guarantee given by the corporation and any forebearance of interest. R.R.O. 1990, Reg. 733, s. 51.
Profit Recognition on Asset Sales
52. Gains and losses on the sale of securities must be recognized in the income accounts at the time of the sale. R.R.O. 1990, Reg. 733, s. 52. Real Estate Project Accounting
Real Estate Project Accounting
53. Indirect costs, including lease-up costs and general and administrative expenses that do not specifically relate to real estate projects under development, must be charged to expense in the income accounts as they are incurred. R.R.O. 1990, Reg. 733, s. 53.
Real Estate Project Accounting
54. The book value of a real estate development project shall not exceed the current market value of the project as reduced by the estimated costs of disposition. R.R.O. 1990, Reg. 733, s. 54.
Real Estate Project Accounting
55. (1) Revenue from the sale of real estate shall not be recognized until, (a) the significant risks and rewards of ownership have been transferred to a purchaser in good faith in a transaction in which all significant acts have been completed and the corporation does not retain any continuing managerial involvement in the degree usually associated with the ownership of real estate; and (b) the collection of the proceeds from the sale is reasonably assured. (2) For the purpose of subsection (1), significant acts are not considered to be completed until such time as all parties are unconditionally bound by the terms of the contract. R.R.O. 1990, Reg. 733, s. 55.
Real Estate Project Accounting
56. Financing and carrying costs for vacant real estate held for resale or development must be charged to the income accounts as they are incurred. R.R.O. 1990, Reg. 733, s. 56. Recognition of Fee Income
Recognition of Fee Income
57. In sections 58 to 68,  “loan fees” means the total of all placement fees, application fees, management fees and all other similar fees payable in respect of a loan, mortgage or lease except those that are unconditionally refundable, and includes, (a) loan fees charged to a debtor, mortgagor or lessee for arranging or originating a loan, mortgage or lease, (b) commitment fees, including standby and guarantee fees and fees of like nature, and (c) interest rate pay-down fees. R.R.O. 1990, Reg. 733, s. 57.
Recognition of Fee Income
58. Sections 59 to 68 apply if the loan fees for a loan, mortgage or lease or a proposed loan, mortgage or lease exceed the lesser of, (a) $1,000; or (b) one per cent of the principal amount of the loan, mortgage or lease. R.R.O. 1990, Reg. 733, s. 58.
Recognition of Fee Income
59. For the purpose of calculating the amount of loan fees, fees charged to a third party are deemed to be fees charged to a debtor, mortgagor or lessee if the third party and the debtor, mortgagor or lessee are related or associated, or if the third party sold the mortgaged property to the mortgagor. R.R.O. 1990, Reg. 733, s. 59.
Recognition of Fee Income
60. (1) Loan fees must be recognized as revenue, as an adjustment of the contractual interest rate over the deemed expected term of the loan to which the fees relate, and must be amortized on a time proportion basis so as to result in a constant interest rate adjustment to the yield on the loan. (2) The deemed expected term of a loan is the contractual maturity date unless, (a) the borrower has a right to renew the loan according to the contract terms, in which event the expected term is deemed to be extended in accordance with the right; (b) the maturity date according to the contract occurs within the year, and in light of the economic substance of the financing it may reasonably be expected that the loan will be renewed, in which event the expected term is deemed to be three years; and (c) there is no contractual maturity date, in which event the expected term is deemed to be five years after the contract date. (3) For the purposes of subsection (2), the deemed expected term of a loan is not affected by any prepayment rights that the borrower is entitled to exercise. R.R.O. 1990, Reg. 733, s. 60.
Recognition of Fee Income
61. (1) Direct costs relating to a loan, mortgage or a lease, including finders fees and commissions, legal fees and appraisal and other direct costs paid to independent third parties, may be recognized on the same basis as loan fees. (2) Indirect costs including supervisory and overhead costs associated with loans, mortgages and leases shall be expensed in the period in which they are incurred. R.R.O. 1990, Reg. 733, s. 61.
Recognition of Fee Income
62. (1) Non-refundable commitment fees shall be accounted for as deposits and may not be recognized as revenue while the commitment, by its terms, remains unexpired. (2) A commitment fee for an expired unexercised commitment shall be recognized as revenue as of the date of expiry. (3) A commitment fee for a commitment that is exercised shall be treated as a loan fee for the resulting loan by the corporation. R.R.O. 1990, Reg. 733, s. 62.
Recognition of Fee Income
63. (1) Unconditionally refundable fees shall be accounted for as deposits until the fees are refunded. (2) Refundable fees subject to conditions shall be treated as deposits until the conditions are resolved, at which time the residual amount shall be treated as loan fees. R.R.O. 1990, Reg. 733, s. 63.
Recognition of Fee Income
64. (1) When a loan, mortgage or lease is sold or the balance of the loan, mortgage or lease is extinguished in the ordinary course of business, any related unamortized loan fees shall be recognized as revenue upon the sale or extinguishment. (2) Subsection (1) does not apply in the case of sale unless all risks and rewards of ownership have been transferred in good faith to an independent third party. R.R.O. 1990, Reg. 733, s. 64.
Recognition of Fee Income
65. If the terms of a loan, mortgage or lease permit prepayments of principal in an amount that exceeds 25 per cent of the balance outstanding and a prepayment is made, the amortization of the unamortized loan fees may be correspondingly accelerated in the proportion that the amount of the prepayment bears to the balance outstanding. R.R.O. 1990, Reg. 733, s. 65.
Recognition of Fee Income
66. When a corporation ceases to recognize the contractual interest rate on a loan, mortgage or lease as income because of the doubtful collectibility of the balance of the loan, mortgage or lease, no unamortized fees shall be amortized until the loan, mortgage or lease ceases to be in arrears. R.R.O. 1990, Reg. 733, s. 66.