Regulations setting out the requirements for banks to establish bank holding company structures were published in the October 6 issue of the Canada Gazette Part II.

The regulations set out the requirements for the contents of a bank’s restructuring proposal, the process for shareholders’ approval and the process for Ministerial approval when converting to a bank holding company.

Currently, a bank may set up a regulated non-operating holding company through a share-for-share exchange. But the Bank Act also contains a regulatory authority to develop a second and more flexible mechanism for a bank to set up a bank holding company and to undertake a series of related restructurings. And, these regulations will help provide this flexibility.

The regulations allow a bank to bundle a number of transactions into a proposal and request a single ministerial approval. The proposal may include transactions that establish a holding company, set up subsidiaries of the holding company, transfer assets between subsidiaries, and bring in outside investment into non-bank subsidiaries.

If the regulations are approved, no additional Ministerial approvals under the Bank Act would be required. Superintendent approvals and any approvals under other federal financial institutions statutes would still be necessary, but would be reviewed concurrently and administratively streamlined.

Canada Gazette
http://canadagazette.gc.ca/partII/2004/20041006/pdf/g2-13820.pdf