Leases and Conditional Sales Contracts
124. (1) A provincial corporation shall not enter into a financial lease agreement or a conditional sales agreement other than a financial lease agreement or conditional sales agreement, (a) in respect of personal property that was, (i) selected by the lessee or purchaser and acquired by the corporation at the request of the lessee or purchaser, or (ii) previously acquired by the corporation in respect of another financial lease agreement or conditional sales agreement; and (b) the primary purpose of which is the extending of credit to a lessee or purchaser. (2) A provincial corporation shall not direct its customers or potential customers to particular dealers in respect of personal property that is conditionally sold or that is to be conditionally sold under a conditional sales agreement with the corporation. (3) A provincial corporation shall not permit its prescribed subsidiaries to do anything that the provincial corporation is prohibited from doing by subsection (1) or (2). (4) Every financial lease agreement or conditional sales agreement entered into by a provincial corporation must include a provision assigning to the lessee or purchaser the benefit of, or setting out the responsibilities of the corporation in respect of, all warranties, guarantees or other undertakings made by a manufacturer or supplier in respect of the personal property that is the subject of the agreement. (5) Every financial lease agreement entered into by a provincial corporation must yield, (a) a return to the corporation that is not less than its full investment in the property that is the subject of the agreement; and (b) a rate of return that is reasonable taking into account the term and the other conditions of the agreement and the rate of return sought by other lessors in respect of the financial leasing of similar property under similar conditions. (6) For the purposes of subsection (5), the calculation of the return under a financial lease agreement must take into account, (a) rental charges that have been or are to be paid by the lessee under the lease agreement; (b) estimated tax benefits accruing to the corporation on account of the lease agreement, including tax credits and capital cost allowance claims; and (c) either, (i) if the lessee or a third party who is dealing at arm’s length with the corporation has, on or before the start of the lease agreement, contracted to purchase the leased property or has unconditionally guaranteed the resale value of the leased property at the date of expiration of the lease agreement, the amount of the purchase price or resale value, or (ii) in a case other than that set out in subclause (i), the lesser of the amount of the estimated residual value of the property and 25 per cent of the cost of acquisition of the property to the corporation. (7) A provincial corporation shall not permit its prescribed subsidiaries to enter into a financial lease agreement or conditional sales agreement which the corporation is prohibited from entering into by subsections (4) and (5). (8) The aggregate of the estimated residual value of all leased properties held by a provincial corporation and its prescribed subsidiaries that are referred to in subclause (6) (c) (ii) may not at any time exceed 10 per cent of the aggregate of the cost of acquisition of those leased properties. (9) This section does not apply to leases or conditional sales contracts where the provincial corporation or any of its prescribed subsidiaries is either the lessee or the conditional purchaser. (10) In this section, “estimated residual value” means, in respect of personal property that is the subject of a financial lease agreement with a provincial corporation or its prescribed subsidiaries, the value of the property immediately after the expiration of the lease agreement, as estimated by the corporation or its subsidiary at the time the lease agreement was entered into. O. Reg. 413/97, s. 31. PART XX.1   DURATION OF AUTHORITY TO CARRY ON BUSINESS