Notes to the Financial Statements
40. (1) For the purposes of the definition of “capital base” in the Act, the capital base of a provincial corporation shall be calculated by adding the book value of, (a) all or any portion of the fully paid-in common and preference shares; (b) contributed surplus; (c) subordinated indebtedness; (d) retained earnings or deficit; and (e) net deferred income taxes payable, and subtracting from that amount, (f) the book value of, (i) that portion of the shares and subordinated indebtedness of subsidiary loan or trust corporations that are registered under the Act or similar legislation, that the subsidiary includes in calculating its capital base, (ii) that portion of the shares and subordinated indebtedness of a subsidiary bank, insurance company or foreign institution that the subsidiary includes in calculating its capital base, (iii) any substantial investment in a body corporate that is permitted under clause 140 (2) (b) or section 142, (iv) goodwill and other intangible assets, (v) deferred charges, including start-up costs, operating losses and other similar charges, (vi) leasehold improvements less the accumulated amortization on the leasehold, (vii) investments, or any part of an investment, that are not permitted by or are in excess of the limits imposed by the Act or this Regulation, (viii) investments in the shares of, or loans made to, a securities dealer in which the corporation owns more than 10 per cent of the voting shares, (ix) unrealized losses on foreign currency translations, and (x) net deferred income taxes recoverable; (g) the amount, if any, by which the aggregate book value of the investments of the provincial corporation, except securities issued or guaranteed by the Government of Canada, the government of a province, territory or municipality or an agency thereof, exceeds the aggregate market value of the investments determined in accordance with section 42; (h) the amount, if any, by which the aggregate book value of real estate, other than office premises, owned by the provincial corporation exceeds its aggregate market value as determined by an appraisal made within the preceding two years; (i) the amount of any shares and subordinated indebtedness issued by the provincial corporation that represents either directly or indirectly a back to back placement with one or more financial institutions; (j) the amount which is the percentage of the outstanding amount of any subordinated indebtedness with respect to an issue described in subsection 89 (3), as set out in the Table to this section; (k) the amount of any subordinated indebtedness issued by a provincial corporation which is owned by a subsidiary of the corporation, less any amount which has been deducted with respect to that subordinated indebtedness under clause (j); and (l) if the corporation has a subsidiary that is not a financial institution or a subsidiary of a financial institution other than the corporation, (i) the amount determined under subsection (2), and (ii) the amount determined under subsection (3). (2) The amount in subclause (1) (l) (i) is determined by, (a) assuming, for the purposes of the clause, that the corporation referred to in subsection (1) is the subsidiary and calculating the amounts described by clauses (1) (f), (g) and (h); (b) adding the amounts determined in clause (a); and (c) multiplying the amount determined in clause (b) by the percentage of equity in the subsidiary that the corporation holds. (3) The amount in subclause (1) (l) (ii) is the amount obtained by dividing the total of all amounts borrowed by the subsidiary, other than from the corporation or a subsidiary of the corporation, by the authorized borrowing multiple of the corporation determined under section 157 of the Act. TABLE (For clause 40 (1) (j))  Time Period to Maturity or Date on which Holder has Contractual Retraction Right

Percentage of Outstanding Amount


5 years or more

0%


4 years or more and less than 5 years

20


3 years or more and less than 4 years

40


2 years or more and less than 3 years

60


1 year or more and less than 2 years

80


less than 1 year

100 O. Reg. 413/97, s. 8.