Vol. 142, No. 14 — April 5, 2008

By-law Amending the Canada Deposit Insurance Corporation Deposit Insurance Policy By-law

Statutory authority

Canada Deposit Insurance Corporation Act

Sponsoring agency

Canada Deposit Insurance Corporation

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the By-law.)

Description

The Board of Directors of the Canada Deposit Insurance Corporation (CDIC) made the CanadaDeposit Insurance Corporation Deposit Insurance Policy By-law (the “By-law”) on October 27, 1993, pursuant to subsection 18(3) and paragraph 11(2)(g) of the Canada Deposit Insurance Corporation Act (the “CDIC Act”). Subsection 18(3) of the CDIC Act provides that a policy of deposit insurance shall contain such provisions as may be prescribed by the by-laws, and paragraph 11(2)(g) provides that the CDIC Board of Directors may make by-laws prescribing anything that by virtue of any provision of the CDIC Act is to be prescribed by the by-laws. The By-law prescribes the terms and conditions of the policy of deposit insurance of every CDIC member. The CDIC Board of Directors subsequently amended the By-law on March 3, 1999, March 7, 2002, and April 12, 2005.

At the time of making the By-law and its subsequent amendments, subsection 18(3) of the CDIC Act provided that “the policy of deposit insurance shall be in such form and contain such provisions as may be prescribed by the by-laws.” Section 405 of An Act to amend the law governing financial institutions and to provide for related and consequential matters, S.C. 2007, c. 6, (the “Amending Statute”) amended subsection 18(3) of the CDIC Act. As a result of the change, the By-law is no longer to prescribe both the form and provisions of the policy, but only the provisions. The Amending Statute contains changes to a number of sections of the CDIC Act that are referenced in the By-law. Therefore, technical amendments need to be made to ensure that the By-law is consistent with the new provisions of the CDIC Act.

Set out below is an explanation of each of the changes with the reasons for the change.

AMENDING BY-LAW	BY-LAW	EXPLANATION
Section 1	Title	Technical: Renames the entire by-law.
Section 2	Sections 1 and 2	Technical: Describes the Schedule as prescribing the provisions of the policy of deposit insurance, rather than the form and provisions of the policy itself. Required due to amendment to section 18(3) of CDIC Act.
Section 3	Schedule Heading	Technical: Amends reference to appropriate section of By-law.
Section 4	Schedule Title	Technical: Renames Schedule to refer to provisions of policy. Required due to amendment to section 18(3) of CDIC Act.
Section 5	Schedule Section 1	Technical: Repealed. No longer needed due to amendment to section 18(3) of CDIC Act.
Section 6	Schedule Sections 5 and 6	Technical: Repeals section 5 as this section speaks to replacement of the policy deemed to take place when amended. As the Schedule is now to be provisions of the policy, rather than the policy itself, this section is no longer needed. Repeals section 6 that deals with the term of the policy. The term is a matter of statute and need not be stated in the provisions of the policy.
Section 7	Schedule Subsection 10(2)	Technical: Inserts the words “or estimate” after “shall determine” to make the provision in the policy consistent with an amendment to subsection 21(5) of the CDIC Act that now permits a method “to determine or estimate” insured deposits. Correction to the cross-reference to “calculation.”
Section 8	Schedule Subparagraphs 16(b)(iv) and (v) and paragraph 16(d)	Updating of language: The intent of paragraph 16(b) is that CDIC can request whatever information it deems necessary to get a full understanding of the deposit liabilities of the institution, including its systems. When first drafted, the nature of systems was not nearly as complex as today. Therefore, it was necessary to include subparagraph 16(b)(iv.1) dealing specifically with depositor systems. Subparagraph 16(b)(v) described the assets and liabilities as they may have been described in 1993. The language needed to be updated to reflect the current profile of CDIC member institutions. The language of paragraph 16(d) has been amended to include information about not only subsidiaries or affiliates, but information pertaining to the affairs of the member with any financial institution or corporation.
Section 9	Schedule Section 30	Technical: Since the Schedule contains provisions of the policy rather than actually being the policy, the language of section 30 of the Schedule needed to change.
Section 10	Schedule Section 32	Technical: Since the Schedule contains provisions of the policy rather than actually being the policy, the language of section 32 of the Schedule needed to change.
Section 11	Schedule Section 33	Technical: Since the Schedule contains provisions of the policy rather than actually being the policy, the language of section 33 of the Schedule needed to change.
Section 12		Comes into force on the day of registration.

Alternatives

There are no available alternatives. The amendments must be done by way of by-law.

Benefits and costs

The implementation of the Amending By-law will ensure that the By-law is consistent with recent amendments to the CDIC Act. No costs should be attributed directly to these changes.

Consultation

As the substantive changes are statutorily driven or technical in nature, only consultation by way of pre-publication in the Canada Gazette, Part I, is necessary.

Compliance and enforcement

There are no compliance or enforcement issues.

Contact

Sandra Chisholm
Director, Insurance
Canada Deposit Insurance Corporation
50 O’Connor Street, 17th Floor
P.O. Box 2340, Station D
Ottawa, Ontario
K1P 5W5
Telephone: 613-943-1976
Fax: 613-992-8219
Email: schisholm@cdic.ca

PROPOSED REGULATORY TEXT

Notice is hereby given that the Board of Directors of the Canada Deposit Insurance Corporation, pursuant to paragraph 11(2)(g) (see footnote a) and subsection 18(3) (see footnote b) of the Canada Deposit Insurance Corporation Act (see footnote c), proposes to make the annexed By-law Amending the Canada Deposit Insurance Corporation Deposit Insurance Policy By-law.

Interested persons may make representations concerning the proposed By-law within 60 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Sandra Chisholm, Director, Insurance, Canada Deposit Insurance Corporation, 50 O’Connor Street, 17th Floor, Ottawa, Ontario K1P 5W5 (e-mail: schisholm@cdic.ca).

Ottawa, March 17, 2008

GUY L. SAINT-PIERRE
President and Chief Executive Officer
Canada Deposit Insurance Corporation

BY-LAW AMENDING THE CANADA DEPOSIT INSURANCE CORPORATION DEPOSIT INSURANCE POLICY BY-LAW

AMENDMENTS

1. The long title of the Canada Deposit Insurance Corporation Deposit Insurance Policy By-law (see footnote 1) is replaced by the following:

CANADA DEPOSIT INSURANCE CORPORATION DEPOSIT INSURANCE POLICY BY-LAW

2. The heading before section 1 and sections 1 and 2 of the By-law are replaced by the following:

1. For the purpose of subsection 18(3) of the Canada Deposit Insurance Corporation Act, the provisions set out in the schedule are prescribed as the provisions of the policy of deposit insurance.

3. The reference “(Section 2)” after the heading “SCHEDULE” in the schedule to the By-law is replaced by the reference “(Section 1)”.

4. The heading of the schedule to the By-law is replaced by the following:

PROVISIONS OF THE POLICY OF DEPOSIT INSURANCE

5. Section 1 of the schedule to the By-law is repealed.

6. The heading before section 5 and sections 5 and 6 of the schedule to the By-law are repealed.

7. Subsection 10(2) of the schedule to the By-law is replaced by the following:

(2) When making the calculations for the purposes of subsections 21(1) and 23(1) of the Act, the member institution shall determine or estimate the aggregate amount of insured deposits by using a method set out in the Return of Insured Deposits.

8. (1) Subparagraph 16(b)(v) of the schedule to the By-law is replaced by the following:

(iv.1) a detailed description of the accounting and information systems and the procedures and controls used by the member institution with respect to deposit liabilities, including the manner in which the member institution identifies depositors for the purpose of calculating insured deposits, and

(v) a detailed list of assets, liabilities, derivatives and commitments both on- and off-balance sheet;

(2) Paragraph 16(d) of the schedule to the By-law is replaced by the following:

(d) without delay, any other reports, documents and information pertaining to its affairs and those of its subsidiaries and affiliates, or pertaining to the affairs of any other financial institution or any other corporation with which the member institution has a relationship, that are specified in the request.

9. The portion of section 30 of the schedule to the By-law before paragraph (a) is replaced by the following:

30. The failure of the member institution to comply with any condition of its policy may result in

10. Section 32 of the schedule to the By-law is replaced by the following:

32. The Corporation may cancel the policy of the member institution under subsection 26.04(3) or section 33 of the Act.

11. Section 33 of the schedule to the By-law is replaced by the following:

33. If the policy of the member institution is terminated or cancelled, the institution shall continue to be bound by the provisions of the policy as if it were still a member institution until it no longer holds any deposits that are insured by the Corporation.

COMING INTO FORCE

12. This By-law comes into force on the day on which it is registered.

[14-1-o]

Footnote a
R.S., c. 18 (3rd Supp.), s. 51

Footnote b
S.C. 2007, c. 6, s. 405

Footnote c
R.S., c. C-3

Footnote 1
SOR/93-516

NOTICE:
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