CONTENTS
Thursday 9 June 1994
Financial Services Statute Law Reform Amendment Act, 1993, Bill 134, Mr Laughren / Loi de 1993
portant réforme de diverses lois relatives aux services financiers, projet de loi 134, M. Laughren
STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS
*Chair / Président: Johnson, Paul R. (Prince Edward-Lennox-South Hastings/
Prince Edward-Lennox-Hastings-Sud ND)
*Vice-Chair / Vice-Président: Wiseman, Jim (Durham West/-Ouest ND)
Caplan, Elinor (Oriole L)
*Carr, Gary (Oakville South/-Sud PC)
*Haslam, Karen (Perth ND)
*Jamison, Norm (Norfolk ND)
*Johnson, David (Don Mills PC)
*Kwinter, Monte (Wilson Heights L)
*Lessard, Wayne (Windsor-Walkerville ND)
Mathyssen, Irene (Middlesex ND)
*Phillips, Gerry (Scarborough-Agincourt L)
*Sutherland, Kimble (Oxford ND)
*In attendance / présents
Substitutions present / Membres remplaçants présents:
Elston, Murray J. (Bruce L) for Mrs Caplan
Hayes, Pat (Essex-Kent ND) for Mr Jamison
Owens, Stephen (Scarborough Centre ND) for Mrs Mathyssen
Also taking part / Autres participants et participantes:
Ministry of Finance:
Abols, Imants, legal counsel
Bythell, Ann, legal counsel, Ontario Insurance Commission
Glower, Harvey, manager, financial and business standards, credit unions and cooperatives branch
Owens, Stephen, parliamentary assistant to the minister
Smart, Joan, vice-chair, Ontario Securities Commission
Clerk / Greffière: Mellor, Lynn
Staff / Personnel: Yurkow, Russell, legislative counsel
The committee met at 1020 in committee room 1.
FINANCIAL SERVICES STATUTE LAW REFORM AMENDMENT ACT, 1993 / LOI DE 1993 PORTANT RÉFORME DE DIVERSES LOIS RELATIVES AUX SERVICES FINANCIERS
Consideration of Bill 134, An Act to revise the Credit Unions and Caisses Populaires Act and to amend certain other Acts relating to financial services / Projet de loi 134, Loi révisant la Loi sur les caisses populaires et les credit unions et modifiant d'autres lois relatives aux services financiers.
The Chair (Mr Paul R. Johnson): The committee will continue with clause-by-clause of Bill 134. I would ask Mr Yurkow, legal counsel, to give us some advice.
Mr Russell Yurkow: There was a question on renumbering. Just for clarification, the bill as reprinted and reported out of committee will not be renumbered, but as printed for third reading will be renumbered.
Mrs Karen Haslam (Perth): Mr Chair, am I correct to think that we set aside a couple of subsections?
The Chair: You just took the words right out of my mouth.
Mrs Haslam: I'm not used to doing that. I'm used to having other people talk for me.
The Chair: With respect to the subject matter Ms Haslam has just raised, we're going to deal with section 224, which was stood down. Mr Owens.
Mr Stephen Owens (Scarborough Centre): The motions that we're going to revisit will be subsections 224(5) and 224(6). On subsection 224(5), it's the view of the government that the motion will stand as is and we will reopen that issue for debate or questions, if any.
On the issue of subsection 224(6), there were points raised by Mr Kwinter with respect to the powers being too broad. Ministry staff have reviewed his concerns as well as the language contained within the subsection. We're proposing that we will withdraw the original subsection 224(6) and replace it with new language which would limit the scope on the use of information.
In terms of process, we'll start with subsection 224(5).
The Chair: Any explanation for that, Mr Owens?
Mr Owens: The explanation essentially remains the same as it was last week. There's a necessity to have the listed officers and/or employees as persons who can have access to the records. The example that was listed to me by ministry staff, and Mr Abols can expand on this, was that if in the event, for instance, that a credit union was in the process of taking over a second credit union, there would need to be some level of ability for the receiving credit union to come in and examine records etc.
It's our view that this subsection quite nicely addresses that issue, so the government will stand on its original amendment.
The Chair: Mr Abols, any comments on that?
Mr Imants Abols: The only point I want to make is on the addition of "employee" as a statutorily recognized person who can have access. The default would be having to go to the board and getting authorization of the board every time a new employee came on board, and that is totally impractical. It's in the nature of an employee's job that they would have to have day-to-day access to the records of a credit union.
The Chair: Further comments? Shall subsection 224(5) carry? All in favour? Opposed? Carried.
We go to subsection 224(6).
Mr Owens: Just as a question of process, do I then withdraw?
The Chair: Yes, you withdraw your original 224(6).
Mr Owens: I'd like to withdraw the original subsection 224(6), as proposed, and replace it with the following new subsection 224(6):
I move that section 224 of the bill be amended by adding the following subsection:
"Use of information
"(6) A list of members or shareholders obtained under this section shall not be used by any person except in connection with,
"(a) an effort to influence the voting of members or shareholders of the credit union;
"(b) an offer to acquire shares of the credit union; or
"(c) any other matter relating to the affairs of the credit union."
I'll ask Mr Abols to explain that section.
Mr Abols: In the last committee hearing there was some concern expressed about the scope of this provision. Originally it read that no person authorized under the act could use the information except under the circumstances listed in subsection (6). This was modelled on a similar provision in federal legislation. Indeed, in the federal legislation it's much more confined; it's simply confined to the use of membership lists and shareholder lists. So the motion as tabled today reflects that approach. In other words, we're only dealing with what you can do with membership lists and shareholder lists and confining the use of that information to the items listed in subsection (6).
The Chair: Any comments? Seeing none, shall the section carry? All in favour? Opposed? Carried.
We have dealt with our stood-down motions. Now we will continue with the section where we left off, section 232. We have an amendment.
On the advisement of the clerk, is section 224, as amended, is carried. All in favour? Opposed? Carried.
Now if we would continue with section 232 of the bill.
Mr Owens: I move that clause 232(2)(d) of the bill be amended by inserting after "person" in the first line "or entity."
Mrs Haslam: I'm sorry, Mr Chair. Did you pass 227 to 231? I thought it was just 224.
The Chair: Ms Haslam, we carried sections 225 to 231 at a previous meeting.
Explanation, Mr Owens?
Mr Owens: This is a technical amendment that addresses the fact that unincorporated bodies may be members of a credit union. The concept known as "entity" captures these unincorporated bodies and the phrase or word "entity" is defined in section 1 of the bill.
The Chair: Any comments? Seeing none, shall the amendment carry? All in favour? All opposed? Carried.
Shall section 232, as amended, carry? All in favour? Opposed? Carried.
Section 233.
Mr Owens: I move that paragraph 3 of subsection 233(1) of the bill be amended by inserting after "board" in the second line "executive committee."
This amendment addresses a technical oversight in that the register should also provide for a list of the members of the executive committee.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 233, as amended, carry? All in favour? Opposed? Carried.
Shall sections 234 and 235 carry? All in favour? Opposed? Carried.
Section 236 has an amendment.
Mr Owens: I move that subsection 236(8) be struck out.
I'll ask Mr Abols for a quick explanation.
Mr Abols: Subsection 236(8), as it appears in the bill, was meant to clarify that the appeal provisions in section 238 do not apply to orders that a director may make under another section of the act. But apparently there are several other areas where the director may make orders that are not captured in the list, so it raises the question or begs the question, what are the appeal mechanisms for those sections?
Our view is that those sections stand on their own. Since it doesn't clarify issues but confuses issues, the recommendation is that the motion should be withdrawn.
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The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 236 carry? All in favour? Opposed? Carried.
Section 237 has amendments.
Mr Owens: I move that subsections 237(1) to (4) of the bill be struck out and the following substituted:
"Order without a hearing
"237(1) The director may make an order under section 236 without first giving notice and holding a hearing if he or she is of the opinion that the interests of the members, depositors or shareholders of the credit union may be prejudiced or adversely affected by a delay in issuing an order.
"Effective date
"(2) An order made under subsection (1) comes into effect when it is made.
"Request for hearing
"(3) Any person, by written notice served on the director within fifteen days after receiving an order made under subsection (1), may ask for a hearing before the director."
What this amendment does is that it integrates procedures in section 237 with the procedures and grounds set out in section 236. As section 237 appears in our bill, the director does not require any grounds before making an order under subsection 237(2). It's our view that the director may only make the order if any of the grounds enumerated in subsection 236(1) exist.
Mr Murray J. Elston (Bruce): I haven't quite gotten into the swing of this yet, so it may be something that is apparent with a little more study. It says an order made under subsection (1) comes into effect when it is made. In many cases you have situations where orders are set aside until there has been an appeal period that has lapsed or any of those other things. Is there any inconsistency that we should be concerned about having immediate effect? In other words, if the director makes an order, whatever he/she says is it. I presume if there's an appeal mechanism that would stay the order.
Mr Abols: No. It is consistent with the purpose of 237. Section 237 is an emergency sort of provision whereby the director can immediately issue an order and ensure that order does operate. Section 236 is the normal situation where there's a proposal to make an order and then there's a right to make representations and have a hearing, so given the nature of the order as an emergency order, it's not inconsistent with it.
There is a provision later on in 237 to request a hearing after the fact, and then the superintendent has the discretion to either have the order continue while listening to the appeal or have the order continue pending the outcome of the appeal.
Mr Elston: Presumably there could be some kind of a judicial review as well instigated in the meantime at the behest of somebody who thinks that the director has overstepped his or her bounds?
Mr Abols: There could very well be, yes.
Mr Elston: Because this will be subject to that. The decision having been taken would be subject still to judicial review. So there are remedies that continue to exist outside the act as well?
Mr Abols: Yes.
The Chair: Further comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
An additional amendment to 237.
Mr Owens: I move that subsection 237(7) of the bill be amended by inserting after "union" in the third line "to the deposit insurer."
This amendment simply allows the deposit insurer to be informed of circumstances that may or may not lead to a windup and a call on the deposit insurer. It's our view that the deposit insurer should have notification as soon as possible.
Mr Monte Kwinter (Wilson Heights): The form of the drafting of it makes no sense. If you read it literally, it says that after the word "union," you are to add the words, "to the deposit insurer". So the sentence would read: "A copy of an order made under this section" -- section 236 -- "shall be sent to each director of the affected union to the deposit insurer and to" -- is that supposed to be "and to the deposit insurer and to the stabilization authority of the credit union"?
Mr Yurkow: Perhaps I can address that. Editorially, there'll be a comma after "credit union." It isn't in the draft, but the editors will put the comma in.
The Chair: Shall the motion carry? All in favour? Opposed? Carried.
Shall section 237, as amended, carry? All in favour? Opposed? Carried.
Shall sections 238 through 244, inclusive, carry? All in favour? Opposed? Carried.
Section 245 has an amendment.
Mr Elston: I move that section 245 of the bill be amended by adding the following subsection:
"Same
"(3) Nothing in this act shall be construed so as to make the corporation responsible for leagues."
This was an amendment that was brought to our attention in one of the presentations and we had adopted that as an item that would maybe clarify exactly where it's going. One of the problems in our committee hearings is that we don't generally have the time to reflect on some of the details. This amendment is really designed to turn our attention to some of the issues that we didn't get around to talking with the proponents about. Perhaps if I could hear the response from the parliamentary assistant or the ministry, it would be helpful.
Mr Owens: Thank you for your amendment. Unfortunately, we will not be supporting the amendment. The reason for this is that there is an authority within the bill for the Lieutenant Governor to exempt leagues from this bill. It's our view that we don't particularly want to start with a minimalist position and have to work up to a more fulsome position: that it's better to be able to work back.
Mr Elston: So you're going to do it anyway, except it's going to be by regulation.
Mr Owens: Well, I wouldn't say that.
Mr Elston: But your presentation would lead one to believe that you were going to accomplish it through the regulations. So you're not going to support this.
Mr Owens: The enabling ability is in the --
Mr Elston: I know. Just to be clear, though, the ability exists, but you have no intention of passing the regulation at this point. Is that right? So you are not only not going to support this, but you are not going to do it through regs?
Mr Abols: No, that's not entirely true. First of all, I think it's important to point out that the section as it appears in the bill really carries forward what is already in the act. The act now is an act of general application, applies to leagues, which are defined to be credit unions, so all provisions of the act apply to the leagues except those provisions the Lieutenant Governor in Council identifies in a regulation as not applying to leagues.
There is a regulation in effect. Preliminary review of that regulation suggests that most of those provisions will probably be carried forward in a new regulation, and we are currently going through the act to see what other provisions should be exempted or should not apply to leagues as well. At this point it's difficult to say to what extent, but the regulatory authority is there, has been used in the past and presumably will be used in the future.
The Chair: Any further comments? Shall the motion carry? All in favour? Opposed? The motion is lost.
Shall section 245 carry? All in favour? Opposed? Carried.
Section 246 has an amendment.
Mr Owens: I move that section 246 of the bill be amended by striking out "inconsistent with" in the next-last line and substituting "prohibited or restricted by."
The reason for this amendment is that it more clearly focuses the extent to which provincial legislation may override federal legislation governing leagues. What this will do is that a league may not accept or exercise any power, right or privilege conferred under federal legislation if that power or right would be prohibited or restricted by a provision in the act or in the regulations.
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The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 246, as amended, carry? All in favour? Opposed? Carried.
Shall section 247 carry? All in favour?
Interjection.
The Chair: No, it's not an amendment; it's a new section.
Shall section 247 carry? All in favour? Opposed? Carried.
We have a government motion, new section 247.1.
Mr Owens: I move that the bill be amended by adding the following section:
"Members
"247.1 Subject to the prescribed terms, credit unions and other prescribed entities may be members of a league."
This section simply is an enabling section that establishes the principle that credit unions may become members of a league and also provides the enabling authority for regulations which would permit other entities to become members of a league.
Mr Kwinter: Again, just in the matter of drafting, it would seem to me that it should be redrafted so that this comes first. It should be 247 and what is now 247 should be 247.1. This gives you the ability to be a member of a league; 247 tells you how to do it. What you're really saying is, 247, here's how you do it, and then 247.1 says you can do it. I think it just should be the reverse.
Mr Abols: The order of this is really in the discretion of leg counsel. I'm not sure whether this could be changed through an --
Mr Elston: The parliamentary assistant was right all along.
Mr Yurkow: I don't quarrel with what Mr Kwinter is saying. I don't know whether there is a whole lot of thought as to whether it went before or after.
Mr Abols: I don't think it affects the substance or the operation of the provision. The optics of it may not look very good but at this point --
Mr Kwinter: All I'm talking about is the optics. I'm saying that under normal circumstances when you look at the legislation, the first part of the clause tells you what you can do and the second part tells you how to accomplish it. This way it says, "Here's how you accomplish it," and the second part says, "You can do it." It's just a matter of reversing it. I'm not suggesting any changes other than putting it in its proper sequence.
Mr Elston: I move that we exchange order and move 247.1, as it currently exists, to be 247, and 247, as it now appears, to be 247.1.
The Chair: Mr Elston has made a motion. All in favour? Opposed? Carried. The order of section 247 and 247.1 will be reversed.
Mr Elston: This is the only amendment I've won.
The Chair: Shall section 247.1 carry? All in favour? Opposed? Carried.
Shall section 248 carry? All in favour? Opposed? Carried.
Section 249 has an amendment.
Mr Owens: I move that the French version of clause 249(2)(d) of the bill be amended by striking out "surveillance" in the first line and substituting "supervision."
The Chair: Any comment? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 249, as amended, carry? All in favour? Opposed? Carried.
We have a government motion amending the title.
Mr Owens: I move that the heading to part XIV be struck out and the following substituted:
"Deposit Insurance Corporation of Ontario."
This is a consequential amendment that flows from subsection 250(1).
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Section 250 has an amendment.
Mr Owens: I move that subsection 250(1) of the bill be amended by striking out the last four lines and substituting "the Deposit Insurance Corporation of Ontario and, in French, Société ontarienne d'assurance-dépôts."
The Chair: Any comments? Shall the motion carry? All in favour? Opposed? Carried.
Shall section 250, as amended, carry? All in favour? Opposed? Carried.
Shall sections 251 to 257, inclusive, carry? All in favour? Opposed? Carried.
Section 258 has amendments.
Mr Owens: I move that subsection 258(3) of the bill be renumbered as section 258.1 and that subsection 258(4) of the bill be renumbered as section 258.2.
This amendment is designed to separate out subsection 258(3) so that the superintendent's power to obtain information from the deposit insurer is not confined to a request within the context of the annual examination of the deposit insurer's affairs. I guess with the renumbering of legislative counsel, it will go on that this section will be subsequently renumbered as well. Is that correct?
Mr Yurkow: Yes, when the bill goes for third reading, it will all be a renumbered version.
The Chair: Any comments? Shall the motion carry? All in favour? Opposed? Carried.
Shall section 258, as amended, carry? All in favour? Opposed? Carried.
Shall section 259 of the bill carry? All in favour? Opposed? Carried.
Section 260 has amendments.
Mr Owens: I move that clause 260(e) of the bill be amended by inserting after "credit union" in the third line "under administration."
This amendment limits the deposit insurer's ability to grant financial assistance to credit unions. It can only do so when a credit union is under its administration.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
There's a Liberal amendment.
Mr Elston: I think this is maybe to the same extent as before; at least the discussion may very well be. This just says, "The objects of the corporation do not extend to having control over, management of, direction over or responsibility for leagues" as an added subsection (2). We probably talked a little about this before, so I withdraw.
The Chair: Shall section 260, as amended, carry? All in favour? Opposed? Carried.
Section 261 has some amendments.
Mr Owens: I move that clause 261(1)(a) of the bill be amended by striking out "and" at the end of subclause (i) and by adding the following subclauses:
"(iii) financial assistance to credit unions, and
"(iv) the payment of a stabilization authority's administrative costs."
The reason for this amendment is that it identifies the deposit insurance reserve fund as the deposit insurer's source of funds in providing financial assistance to a credit union or a stabilization authority. The deposit insurance reserve fund is maintained through the annual deposit insurance premium levied on member credit unions.
Mr Kwinter: What section were you just talking about right now?
The Chair: Clause 261(1)(a).
Mr Kwinter: I had a comment on 260, but you've already passed it. I'd just like to make a comment, if I can have the committee's indulgence.
Although it's implied, if you know what you're talking about, about the stabilization authority, under the provision that was just changed, where you say the "credit union under administration," under the objects of the corporation it does not in any way identify the ability to put a credit union under administration.
If you're really looking at the objects, there should be some provision that says one of the objects is that in the case of a problem they can in fact put a credit union under administration. When you talk about it, you say, "Here are things you can do if it is under administration." But there's really no provision in the objects. There's a provision to provide for a stabilization authority, but there's no provision to put it under administration.
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Mr Abols: There is in clause (j), "act as an administrator of a credit union." That's what it's doing when it has a credit union under administration.
The Chair: Mr Owens, you gave your explanation for 261(1)(a). Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
A further amendment to 261.
Mr Owens: I move that clause 261(1)(b) of the bill be amended by inserting after "credit unions" in the second line "under administration."
The reason for this is that the amendment limits the ability of the deposit insurer to provide financial assistance to a credit union and it may only do so when it's under administration.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
A further amendment to 261.
Mr Owens: I move that subsection 261(1) of the bill be amended by adding the following clause:
"(o.1) appoint an agent."
The reason for this is the amendment adds to the list of the deposit insurer's ancillary powers the ability to appoint an agent, and much of the deposit insurer's activity as a deposit insurer and stabilization authority will be carried out through agents.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed. Carried.
Shall section 261, as amended, carry? All in favour? Opposed? Carried.
Shall sections 262, 263 and 264 carry? All in favour? Opposed? Carried.
Section 265 has an amendment.
Mr Owens: I move that section 265 of the bill be amended by adding the following subsections:
"Same
"(1.1) A league may, by written or oral representations, advertise or hold out its members as being insured or approved for deposit insurance by the corporation if they are members of the corporation."
This will enable the leagues to advertise or represent that their members are insured by the deposit insurer.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 265, as amended, carry? All in favour? Opposed? Carried.
Section 266 has an amendment.
Mr Owens: I move that section 266 of the bill be amended by adding the following subsection:
"Same
"(1.1) Subject to subsection (2), no league shall advertise or hold out, by written or oral representations, that its members are insured by the corporation."
Again, with respect to this issue, it enables the deposit insurer to authorize materials and prohibits leagues from advertising that they are covered by the deposit insurer without prior authorization of those said materials.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 266, as amended, carry? All in favour? Opposed? Carried.
Shall sections 267 and 268 carry? All in favour? Opposed? Carried.
Section 269 has amendments.
Mr Owens: I've been advised by ministry staff that we would like to stand down this section as there's still some drafting work going on.
Mrs Haslam: All of 269?
The Chair: Is that all of 269 or sections of 269?
Mr Owens: I can do 269(2). We're standing down 269(4.1) and 269(5). We'll just go through these.
I move that subsection 269(2) of the bill be amended by striking out "or" at the end of clause (c), by adding "or" at the end of clause (d) and by adding the following clause:
"(e) the administrator orders that the credit union be wound up under subparagraph iii of paragraph 6 of subsection 294(1)."
The reason for this is that it adds another event that would trigger the deposit insurer's obligation to make a payment in respect of a deposit; namely, if the credit union is ordered by the administrator to be wound up.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Mr Owens: Subsection 269(4.1) we'll stand down until this afternoon.
The Chair: Do we have an agreement to stand down subsection 269(4.1)? All in agreement? Agreed.
Subsection 269(5).
Mr Owens: I move that subsection 269(5) of the bill be amended by striking out "the prescribed rate" in the third line and substituting "the rate established by its bylaws."
The effect of this amendment is that the rate of interest that the deposit insurer must pay on any deposit will be established by the deposit insurer's bylaws.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? All opposed? Carried.
We will have to then deal with section 269, as amended --
Mr Owens: Subsection 269(7).
The Chair: Subsection 269(7), sorry.
Mr Owens: I'm just getting a clarification on this as to whether we'll have to stand it down because it's a consequential amendment to the one that we stood down.
Mr Elston: Just while you're talking, can I ask a question? The corporation is basically going to insure all deposits except deposits "not payable in Canada or in Canadian currency." That's clause 1(a). What type of a deposit is that? What are we talking about here? What type of a transaction? They hold all of their deposits here, but it's not payable here. I just want to know what it is. It's the curious nature of my mind here. I'd like to understand what an item this is.
The Chair: Mr Glower, did you wish to answer that question?
Mr Elston: Just in case I want to move all my Ontario funds to the Caymans or something. Mr Glower is searching his pocketbook to see if he's got one of these statements.
Mr Abols: I'll talk off the top of my head, which is always a dangerous thing to do, I know. First of all, it addresses the fact that the deposit insurer is insuring community-based financial institutions. So the moneys would normally be payable because there are no branch operations or credit unions outside of Ontario, at least none that we know of, and there shouldn't be.
Mr Elston: And if you find out about them, there won't be.
Mr Abols: And there won't be. With respect to the ones that are not payable in Canadian currency, again there's been some problem with -- I'm not sure whether this is the same rule that applies with respect to the federal deposit insurer, but it really simply means that your accounts have to be denominated in Canadian currency; you can't have a US money market account of some sort, or you can have it, but it won't be covered by deposit insurance.
Mr Elston: So this would be a position that would impair in some ways credit unions in competition with the banks, which obviously -- I don't happen to have one, but I know lots of people have a US currency account in a Canadian bank.
Mr Jim Wiseman (Durham West): Are they insured, though?
Mr Elston: It's not insured either?
Mr Wiseman: I don't know. I'm asking.
Mr Elston: I don't know. It just seems to me that if the account is held there, the fact that you have to convert it into another currency -- I just want to understand that it means it is no longer insured, because there are certainly people --
Mr Wiseman: I have a voice here is saying it's not insured.
Mr Elston: But people probably don't understand that. Basically if you have an account in a bank or any place, any kind of an account, you figure it's all going to be insured. So if this is the same, then it's fine, but I think we have to make sure people are alerted to the fact then that their non-Canadian currency accounts in Canadian institutions which advertise "CIDC insured" or now "DICO insured" are going to be well aware that their accounts are uninsured in other currencies.
Mr Wiseman: I think you're --
Mr Elston: The signs on the front of our financial institutions, or lots of them anyway, deposit takers say, "We are insured" or "Not insured," and "We are insured" is the sign that usually lures people into a feeling of security about their deposits.
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The Chair: I think it's important that we continue with our amendments. Is there any very short, further comment with regard to what Mr Elston has said?
Mr Elston: I just want to know what this is before we go on to something else.
The Chair: Sure. Mr Glower.
Mr Harvey Glower: On the signage, if you will, the sticker on the door, essentially what would be done is for any non-denominated-in-Canadian-dollars account, ie a US dollar account, that would have to be authorized by the member's signature acknowledging that there is no deposit insurance coverage on that account, and that's something we would intend to do.
On deposits not payable in Canada, it's just a catch-all to ensure really that unless the deposit is in the credit union in Ontario, it is not otherwise insured. For example, if somebody would attempt to open up an account and deposit US cheques that they're getting from their grandmother in New York City in the credit union, until that cheque is in fact converted into Canadian dollars and deposited in the credit union in Canadian dollars, it is not insured, period, end of story. So whether in transit or otherwise, it must be payable in Canada and must be in Canadian dollars.
Mr Kwinter: I must be missing something in this clause, because if you read clause 269(1), it says:
"The corporation shall insure each deposit with a credit union except,
"(a) a deposit that is not payable in Canada" -- which I understand, and then it goes on to say -- "or in Canadian currency."
So what they're saying is that they can't insure it if it's not payable in Canada or if it's in Canadian currency. Could you explain that to me? I would think it should say "in non-Canadian currency."
Mr Yurkow: Not Canadian currency. The question is whether there should be a second negative there, a deposit that is not in Canadian.
Mr Kwinter: This is a prohibition of insuring against deposits that are in Canadian currency.
The Chair: Is this a prohibition? Is that what you're suggesting?
Mr Kwinter: I just want an explanation. It doesn't make any sense.
The Chair: It may very well be. Mr Yurkow?
Mr Yurkow: I would read that as "not payable in Canada or not in Canadian currency," but if there is some confusion, you might add the second "not."
Mr Kwinter: Or non-Canadian currency?
Mr Yurkow: Yes. I would read it that the "not" applies to both, but certainly if there's some confusion --
The Chair: We want to have the language accurate.
Mr Owens: Monte can do it. Do you want to move an amendment?
Mr Kwinter: Yes. I would like to move that we amend clause 269(1)(a) to say, "A deposit that is not payable in Canada or in non-Canadian currency."
The Chair: Has everyone heard the motion? All those in favour of Mr Kwinter's motion? Opposed? Carried.
Thank you, Mr Kwinter, for bringing that to the committee's attention. It certainly shows that indeed Mr Kwinter has perused the bill to its absolute.
This brings us to subsection 269(7) of the bill.
Mr Owens: I move that subsection 269(7) of the bill be struck out.
This is a consequential amendment. The option of having a deposit transferred to another credit union is addressed in the amendment to subsection 269(4.1), which will be dealt with this afternoon.
Mr Elston: May I just ask a question? The drafting around the newly intended subsection (4.1) will take care of this item? As long as we have some assurance of that -- I don't want to have to go back.
Mr Owens: No, no. We're trying to de-escalate or clear up some of the issues, and it's a drafting issue that we're looking at.
The Chair: I can expect then that we will deal with section 269 in its completeness this afternoon. That will bring us then to --
Mr Elston: Are we going to vote on subsection (7) first?
The Chair: Okay.
Mr Owens: I move that subsection 269(7) of the bill be struck out. I guess I've already explained it.
The Chair: Shall the motion carry? All in favour? Opposed? Carried.
As I said, we will deal with section 269, as amended, this afternoon.
Shall sections 270, 271 and 272 carry?
All in favour? Opposed? Carried.
Section 273 has amendments. Mr Owens.
Mr Owens: I move that clause 273(1)(c) of the bill be amended by inserting after "corporation" in the second line "or another person."
The effect of this amendment is that the appointment of any liquidator of a credit union, in addition to the deposit insurer, may trigger the cancellation of the credit union's deposit insurance. I'll ask Mr Abols to explain that.
Mr Abols: There are situations where persons other than the deposit insurer could be appointed as liquidator. For example, in the context of a voluntary windup of a credit union, the credit union may appoint its own liquidator, or in the case of a court-ordered dissolution of a credit union, the court may appoint someone else as the liquidator of the credit union.
The Chair: Any questions or comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Further amendment? Mr Owens.
Mr Owens: I move that subsection 273(5) of the bill be amended by inserting after "director" in the first and second lines "the league for the credit union."
This amendment obliges the deposit insurer to notify a credit union's league of any cancellation of the credit union's deposit insurance.
The Chair: Any comments and/or questions? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 273, as amended, carry? All in favour? Opposed? Carried.
Section 274 has amendments. Mr Owens.
Mr Owens: I move that subsections 274(2) to (5) of the bill be struck out and the following substituted:
"Assessment for the fund
"(2) For the purpose of establishing and maintaining the funds, a stabilization authority may, subject to the prescribed conditions, assess member credit unions in the amounts and at the times and frequency set out in the stabilization authority's bylaws.
"Bylaws approved
"(3) Bylaws to which this section applies are subject to the approval of the director.
"Transition
"(4) Stabilization funds established under a predecessor of this act will be maintained as prescribed."
Mr Abols, if you could explain that.
Mr Abols: The change in subsection 274(2) simply moves the governing authority for stabilization funds from regulation to the stabilization authority's bylaws.
Subsection 274(3), though, ensures that there's some regulatory oversight in that these bylaws have to be submitted to and approved by the director of credit unions.
Then subsection 274(4) deals with the fact that today, under the current act, we have a few stabilization funds still in existence with funds under administration. Those were set up for specific purposes, and therefore we want to just grandfather those and carry them through in this bill.
Mr Elston: Can I just understand what the prescribed conditions might be? I take it as a result of this there are a whole series of regulations that restrict the movement of the deposit insurer under this section?
Mr Abols: Not only the deposit insurer, but any group of credit unions that have applied to become a stabilization authority.
Mr Elston: Okay.
Mr Abols: Those prescribed conditions, the basic one would be the rate at which the assessments will be levied. Perhaps they may be based on a certain experience profile. If it's a credit union that's been under supervision a number of times, it may have a higher assessment rate.
The regulations have not yet been developed, and these regulations are going to have to be worked on in concert with representatives of the credit union movement and the deposit insurer.
Mr Elston: Is there any merit to freeing up the organizations themselves to develop these rules as opposed to having the programs enshrined in regulation?
Mr Abols: There is, because they're going to be principally responsible for administering this program, and the sector has different experience. The francophone credit unions may want to approach stabilization in a different way; the members of Credit Union Central of Ontario may have different views on how stabilization should be done. So this allows for a program that's tailored to the perspectives and needs of different segments in the movement.
Mr Elston: What I'm just saying here is that "subject to the prescribed conditions" really means that at the end of the day the management, or at least the ultimate authority for all their activities, is going to be restricted or could be limited by whatever the Lieutenant Governor in Council may set out. When I see "prescribed," I always think of regulations, ie, as in under the act.
Mr Abols: That's right. There'll be basic framework and basic de minimis requirements that one would expect to see applied to all stabilization authorities, and those would be Lieutenant Governor in Council regulations.
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Mr Elston: So although there is some flexibility, the organizations themselves will have to basically get by with a skeletal framework type program.
Mr Abols: That's right.
Mr Elston: They are going to be, then, fairly flexibly able to delineate their own courses of action under this.
Mr Abols: That's right.
The Chair: Any further comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 274, as amended, carry? All in favour? Opposed? Carried.
Section 275 has a government amendment and a Progressive Conservative amendment. Mr Owens first.
Mr Owens: I move that subsection 275(5) of the bill be struck out and the following substituted:
"Limitation
"(5) For the purposes of clause (4)(a), prescribed classes of credit unions shall be based in part on measurable criteria which relate to the risk posed by the credit union and may be based in part on other factors so long as they are not based on membership in a league or stabilization authority."
What this amendment requires is that any regulation which prescribes a differential insurance premium be based partly on criteria related to the risk posed by an individual credit union, and it maintains the already existing prohibition against basing a differential premium on membership in a league or a stabilization authority.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Mr Carr for the PC motion.
Mr Gary Carr (Oakville South): There's a PC motion Mr Johnson was interested in. I'll move it in his absence. During the discussion, I believe there was some discussion of whether the coalition still wants it, but I'll move it anyway.
I move that section 275 of the bill be amended by adding the following subsection:
"(6) The Lieutenant Governor in Council may authorize the Minister of Finance to advance, out of any unappropriated moneys in the consolidated revenue fund, amounts to the corporation by way of loan on such terms and conditions as the Lieutenant Governor in Council may determine."
I understand this was one of the amendments proposed by the Coalition of Credit Unions and Caisses Populaires of Ontario. There was some discussion, I think, last week of whether that was going to be dealt with. I don't know if the parliamentary assistant did want to speak to this and what his feelings were, but in essence the intent is to level the playing field between the CDIC and the OSDIC and, by extension, between the different deposit-taking institutions that they stand behind.
That was the intent, but I understand there may be some need for this not to be passed. So I would turn to the parliamentary assistant.
The Chair: If I can intervene here, Mr Carr, and just let you know that the motion is out of order, and that's because only a minister can move this. I just thought I'd bring that to the attention of yourself and members of the committee.
Mr Carr: I wonder if the parliamentary assistant could just speak to it, then, either way.
Mr Owens: Mr Carr, you're right that we did deal with this issue in some level of detail last week. It's the position of the government that we can't support this amendment. It's our view that the stabilization authorities that have been established are sufficient and that linking the consolidated revenue fund to that particular process is not agreeable to us.
The Chair: Well, it's out of order, so we can't proceed.
Mr Carr: I appreciate the comments anyway of the parliamentary assistant.
Mr Elston: May I have a reason for your ruling, please?
The Chair: The reason is that only a minister can authorize the expenditure of moneys from the consolidated revenue fund.
Mr Elston: No, no. This doesn't authorize any expenditure; it just says the cabinet can make a determination on expenditure. This is only an authorization to the cabinet to authorize the Finance minister to do something. This isn't actually making an expenditure itself; it gives the power or the authority to the executive council.
I think the issue is one that is in order, because the determination is not made here by an opposition person or a backbench individual, but it says cabinet shall decide if an expenditure is to be undertaken by the Finance minister. In that sense, I think the amendment is in order. The question of whether it's to be supported by the people here is another matter.
Mr Owens: That is always a substantive question.
Mr Elston: It is substantive, but I just don't want to get into the habit of not being able to move any amendments that authorize decisions to be taken on financial matters by the cabinet.
The Chair: I appreciate your comments, Mr Elston. It's been brought to my attention that the reason is because it's unappropriated moneys taken out of the consolidated revenue fund. I heard your comments, Mr Elston. However, if the motion is out of order, then it cannot proceed. That's the way it is, as they say. Certainly, if it's out of order, then we can't proceed with it.
That's the ruling from the Chair and we will proceed to section 275, as amended. All those in favour? Opposed? Carried.
Shall sections 276 to 279, inclusive, carry? All in favour? Opposed? Carried.
Section 280 has an amendment. Mr Owens.
Mr Owens: I move that section 280 of the bill be amended by adding the following subsection:
"Exception
"(3) Despite subsections (1) and (2), the corporation may require a report limited to matters identified by the corporation."
The reason for this amendment is that due to the cost and time involved in preparing an examination, subsection 280(3) gives a deposit insurer the option of limiting the scope of the annual report to matters identified by the corporation.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 280, as amended, carry? All in favour? Opposed? Carried.
Section 281 has an amendment. Mr Owens.
Mr Owens: I move that section 281 of the bill be amended by adding the following subsection:
"Stabilization authority for credit unions
"281(0.1) The corporation is the stabilization authority for all credit unions governed by this act except those for which a stabilization authority is designated."
This is a new subsection that clarifies the deposit insurer as stabilization authority for all credit unions until the deposit insurer designates a league or an association of credit unions as a stabilization authority for a particular group of credit unions.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 281, as amended, carry? All in favour? Opposed? Carried.
Section 282 has amendments. Mr Owens.
Mr Owens: I move that the French version of clause 282(2)(a) of the bill be amended by striking out "surveillées" in the first and second lines and substituting "supervisées."
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
An additional amendment, Mr Owens.
Mr Owens: I move that subsection 282(4) of the bill be amended by adding at the end "or any limitations on their powers as a stabilization authority."
This amendment clarifies that a league or an association of credit unions may appeal not only a refusal to be designated as a stabilization authority but any limitation imposed on its power where it has been designated as a stabilization authority.
The Chair: Any comments?
Mr Kwinter: That one was 282(4)?
The Chair: Yes.
Mr Kwinter: The reason I was a little late -- again, I hate to keep harping on these things, but it doesn't make any sense in the drafting of it. I understand the intent, but if you read 282(4), it says, "A league or association of credit unions may, within fifteen days after receiving the corporation's reasons, appeal to the minister the corporation's decision not to designate it or any limitations on their powers as a stabilization authority."
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Is it really saying that you appeal to have them not designated on the limitations or the powers as a stabilization authority? It just doesn't read properly.
Mr Abols: No. There are two issues here. One is, do you become the stabilization authority or don't you? We have that already in the bill. The other issue is, the deposit insurer, in designating a particular league or association as a stabilization authority, may say, "Yes, you are the stabilization authority but these are your powers and these are the restrictions and limitations on your powers." The applicant may not like those restrictions or have a different view as to whether they're appropriate, and so on that issue alone it could also appeal to the superintendent to determine whether those restrictions or limitations should apply. So there are two grounds of appeal here.
Mr Kwinter: What you're saying is they can appeal to the minister "not to designate it or any limitations on their powers." I mean, how do you designate limitations on their powers as a stabilization authority? I can see you designating an entity as a stabilization authority, but how do you designate limiting of someone's powers as a stabilization authority?
Mr Abols: It's not the designating of the limitations that's at issue.
Mr Kwinter: But that's my concern, because when you read it, it says, "A league or association of credit unions may, within fifteen days after receiving the corporation's reasons, appeal to the minister the corporation's decision not to designate it or any limitations on their powers as a stabilization authority." It doesn't make any sense.
Mr Abols: It does if you read it in context of the entire section, and if you go back to subsection 282(2), which you would have read before you got to subsection (4), you would see that it can also, in designating a credit union, identify who it supervises and specify limitations, if any, on its powers. It's clearly identified as a decision by the deposit insurer that these limitations or restrictions are imposed by the deposit insurer --
Mr Kwinter: I have no problem with that; that's already covered. All I'm saying is, how do you designate the limitations on someone's powers as a stabilization authority?
Mr Abols: I wouldn't read it that way, but if there's a better drafting solution, I would perhaps defer to legislative counsel on this.
Mr Yurkow: I read this as an appeal to the minister, one, of the corporation's decision not to designate it, or an appeal to the minister of any limitations on their power. There are two grounds of appeal: One is the decision not to designate; the second is any limitation on their power. That is the way I read that.
Mr Abols: I'm sorry, where did we leave off?
The Chair: Mr Yurkow gave an explanation.
Mr Abols: Supporting, I assume, our interpretation.
Mr Yurkow: Yes.
Mr Abols: I defer to legislative counsel, the wordsmith in this area. I wouldn't read it the way you read it, Mr Kwinter.
Mr Kwinter: You wouldn't?
Mr Abols: I wouldn't, no. I don't see designating -- the verb ends with one subject matter and the other subject matter is the limitations.
Mr Kwinter: If you read the final part, as amended, it says, "not to designate it or any limitations on their powers as a stabilization authority." In clause 282(2)(b), where you talk about the limitations, I have no problem with that. I have a problem where you're designating its limitations as a stabilization authority. I would suggest that it should be just, at the end -- there's no reason to amend it to include a limitation on their powers as a stabilization authority.
Mr Yurkow: If I may make a suggestion, if it makes it any clearer: if after "minister" we put an "(a)," so that, "appeals to the minister (a) the corporation's decision not to designate it, or (b) any limitation on their powers," etc, to make it clear that it's the appeal to the minister and there are two grounds for the appeal. I'm not sure if that would clear up the confusion.
The Chair: Does that help, Mr Kwinter?
Mr Kwinter: It helps somewhat, yes.
Mr Glower: Then it's like 2(a) and (b).
Mr Kwinter: Yes. I have no problem with that.
The Chair: So we need to ensure that the change then is recognized in the wording of the legislation.
Mr Yurkow: I'd suggest that you make a motion to let legislative counsel do that editorially. It's not a change in substance; it's just inserting clausing.
Mrs Haslam: I so move, because this is just grammatically putting in place to clarify it. I understand it the way it's written, but if it's grammatically necessary to put an (a) and a (b) to alleviate concerns, then let's do it. That's only a minor change that can be done editorially and I so move it.
The Chair: Do we have an agreement to do that? Agreed. Thank you for bringing that to our attention, Mr Kwinter.
Subsection 282(4): Shall the motion carry? All in favour? Opposed? Carried.
Shall section 282, as amended, carry? All in favour? Opposed? Carried.
Shall section 283 carry? All in favour? Opposed? Carried.
Section 284 has amendments.
Mr Owens: I move that the French version of subsection 284(1) of the bill be struck out and the following substituted:
"Supervision par l'organe de stabilisation
"284(1) Le directeur donne l'ordre qu'une caisse soit placée sous la supervision de l'organe de stabilisation si celui-ci le lui demande."
The reason for this amendment is that it brings into line the French version with the English version. And all those who think this is fun can come up and do it themselves.
Mrs Haslam: You're trying hard.
The Chair: Yes, you're doing a very good job, and we're grateful as well that it is in printed text.
Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
An additional motion, Mr Owens.
Mr Owens: I move that the French version of subsection 284(2) of the bill be amended by striking out "surveillance" in the second line of the portion before paragraph 1 and in the second line of paragraph 1 and substituting in each case "supervision."
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
An additional amendment, Mr Owens.
Mr Owens: I move that section 284 of the bill be amended by adding the following subsection:
"Interpretation
"(2.1) For the purposes of paragraph 2 of subsection (2), a variation under section 86 does not make a credit union in compliance with prescribed capital and liquidity requirements."
This amendment clarifies that even where a credit union has been granted under section 86 of the bill a variation from prescribed capital and liquidity requirements for the purposes of determining whether to place a credit union under supervision, a variation of prescribed capital and liquidity requirements does not mean that the credit union is in compliance with prescribed capital and liquidity requirements.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
An additional amendment, Mr Owens.
Mr Owens: I move that the French version of subsection 284(3) of the bill be amended by striking out "surveillance" in the first line of the portion before clause (a) and in the third line of clause (b) and substituting in each case "supervision."
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
One additional amendment, Mr Owens.
Mr Owens: I move that the French version of subsection 284(4) of the bill be amended by striking out "surveillance" at the end and substituting "supervision."
The Chair: Shall the motion carry? All in favour? Opposed? Carried.
Shall section 284 of the bill, as amended, carry? All in favour? Opposed? Carried.
Section 285 has an amendment.
Mr Owens: I move that subsection 285(1) of the bill be amended by striking out "283 or" in the third and fourth lines.
The amendment deletes and corrects a cross-reference.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Another amendment, Mr Owens.
Mr Owens: I move that section 285 of the bill be amended by adding the following subsection:
"Notice to deposit insurer
"(4.1) A copy of the superintendent's order shall be served on the corporation."
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The amendment requires that the superintendent's decision on an appeal from a supervision order be served on the deposit insurer.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 285, as amended, carry? All in favour? Opposed? Carried.
Mr Owens: I move that the French version of paragraph 1 of subsection 286(1) of the bill be amended by striking out "surveiller" in the first line and substituting "superviser" and by striking out "surveillance" in the third line and substituting "supervision."
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Mr Owens: I move that subsection 286(2) of the bill be struck out and the following substituted:
"Same
"(2) Without limiting the generality of paragraph 3 of subsection (1), the stabilization authority may grant financial assistance to a credit union,
"(a) by purchasing securities of the credit union;
"(b) by making or guaranteeing loans, with or without security or advances to or deposits with a credit union; and
"(c) by taking security for loans or advances to a credit union.
"Exception
"(3) Paragraphs 2 and 3 of subsection (1) do not apply to the corporation as a stabilization authority.
"Subsidiary
"(4) A subsidiary referred to in paragraph 10 of subsection (1) has all the powers set out in subsections (1) and (2) and in subsection 288(1)."
The reason for this, notwithstanding the language, is that it clarifies the scope of financial assistance a stabilization authority may grant in exercising its powers under paragraph 3 of subsection 286(1) to make conditional loans or advances. The loans and advances may involve the purchase of securities, as I indicated, and making guaranteed loans with or without security in taking of security for loans or advances.
Subsection 286(3) also limits the powers of the deposit insurer. When acting as a stabilization authority, the deposit insurer cannot establish a stabilization fund or make conditional loans or advances, and then -- I guess we're moving a little bit ahead of ourselves here -- subsection 286(4) is a consequential amendment that flows from the two previous amendments.
Mr Kwinter: It seems to me that there's a little confusion in the structuring of these amendments. It would seem to make more sense to take the first part of the amendment and amend subsection 286(1) and add these things to it, and then take "Subsidiary," (4), and change the number to -- I guess it would stay the same, because what you're really doing is amending 286(2), which deals with a subsidiary, and what you're talking about in the first part of this amendment has nothing to do with a subsidiary. It just has to do with the ability and the powers of the stabilization authority.
It would seem to more naturally flow as "has the following powers," and you would say that notwithstanding what happens in subsection (3), these are the things that happen. But to take subsection 286(2), where you're dealing with subsidiaries, and start talking about these additional powers and the exception to the powers would -- from a drafting point of view, the first part of this amendment should be part of 286(1) and then the part that you have with the subsidiary would stay where it is.
Mr Abols: That might be another drafting solution, but at the end of the day, you get to the same result. I think it's six of one, half a dozen of the other, quite frankly.
Mr Kwinter: Can I have a response from my friends who are doing the wrapup on what you feel about that?
Mr Yurkow: It's something I'd like to think about. I'm quite sure the substance isn't changed, but whether there is a more natural way of doing it, right now I'm not sure without thinking about it a bit more. I don't know if the committee wants to instruct us to take another look at it.
Mr Kwinter: If you're looking at this, I would assume that you would keep 286(1) exactly the way it is under your proposed amendments, and this would come under the general subheading of "Powers of stabilization authority." Then you would go to 286(2), where the general heading is "Subsidiary," and you would list this new section.
What I'm saying is that the bulk of this new section has absolutely nothing to do with the subsidiary provisions. It has to do with the powers of the stabilization authority. It would seem to me that it would more naturally be placed as a subsection under 286(1), until you get to that point where you're talking about subsidiaries, and then it would become 286(2). But to include all of this proposed amendment under 286(2) just doesn't -- I'm not quarrelling with the content. I'm quarrelling with the format.
Mr Abols: My only observation is that if you want to separate the subject matter, powers of the stabilization authority and then powers of the subsidiary, the proposed motion does that because the issue of what are the powers of subsidiary then appears as the last subsection. Subsections (1) and (2) deal with the powers of all stabilization authorities; (3) deals with the powers of the corporation as a stabilization authority, taking away some powers; and then subsection (4) deals with subsidiaries. So there seems to me to be a natural progression from the general to the more specific at the end.
Mr Kwinter: There is a natural progression even in the original drafting. All I'm saying is that it just doesn't make any sense to do what is going on. We're not talking about the content; we're talking about the format.
Mr Owens: Can I maybe suggest that we do something similar as we did in the last section you raised with respect to clarity, to move a motion that legislative counsel be allowed to work some magic on the ordering?
The Chair: That sounds nice, Mr Owens, but I don't know if that gives adequate direction to legislative counsel to deal with the problem. Maybe we could stand it down till this afternoon. All in agreement to stand down this section till this afternoon? Agreed.
Mr Owens: I move that clauses 287(1)(a) and (b) of the bill be struck out and the following substituted:
"(a) passed by the board of directors of the stabilization authority or subsidiary, as the case may be;
"(b) confirmed, with or without variation, by at least two thirds of the votes cast at a general meeting of the shareholders of the stabilization authority or subsidiary, as the case may be, duly called for that purpose, or such greater proportion of the votes as the articles provide; and."
The reason for this amendment is that it's the correction of a technical error. It's clarification that it is the board of directors of the stabilization authority or its subsidiary, respectively, that must approve the bylaws. As currently drafted, subsection 287 requires a board of the stabilization authority to approve a subsidiary's bylaws.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 287, as amended, carry? All in favour? Opposed? Carried.
Mr Owens: I move that subsection 288(1) of the bill be amended:
(a) in the French version, by striking out "surveillance" in the first and second lines of the portion before clause (a) and in the fourth line of clause (a) and substituting in each case "supervision"; and
(b) by striking out "and" at the end of clause (e), adding "and its credit and audit committees; and" at the end of clause (f) and adding the following clause:
"(g) propose bylaws for the credit union and amendments to its articles of incorporation."
This amendment adds to the list of the stabilization authority's powers when it's supervising a credit union and the ability to propose bylaws for the credit union and amendments to its articles of incorporation.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
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Mr Owens: I move that section 288 of the bill be amended by adding the following subsection:
"Exception
"(1.1) Clause (1)(e) does not apply to the corporation acting as a stabilization authority."
The amendment clarifies that when acting as a stabilization authority, the deposit insurer does not have the authority to provide financial assistance to a credit union under its supervision.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Mr Owens: I move that subsection 288(2) of the bill be amended by striking out "resolution or act" in the second line and substituting "or resolution," by striking out "made or done" in the fourth line and substituting "or made" and, in the French version, by striking out "surveillance" in the seventh line and substituting "supervision."
The reason for this amendment is that it deletes the reference to "act." Subsection 288(2) requires that the stabilization authority approve all corporate acts by the credit union while under the stabilization authority's supervision. It's our view that the powers are too broad and impractical.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 288, as amended, carry? All in favour? Opposed? Carried.
Mr Owens: I move that the French version of section 289 of the bill be amended by striking out "surveillance" in the third line of subsection (1) and in the second and in the fifth and sixth lines of subsection (2) and substituting in each case "supervision."
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 289, as amended, carry? All in favour? Opposed? Carried.
Shall section 290 of the bill carry? All in favour? Opposed? Carried.
Mr Owens: I move that the French version of paragraph 3 of subsection 291(1) of the bill be amended by striking out "surveillance" in the first line and substituting "supervision."
That's again simply a translation to bring a French version in line with the English version.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 291, as amended, carry? All in favour? Opposed? Carried.
Shall section 292 of the bill carry? All in favour? Opposed? Carried.
Mr Owens: I move that the French version of section 293 of the bill be amended by striking out "surveillance" in the third-last line of paragraph 1 of subsection (1), in the second line of clause (9)(b) and in the second and third lines of subsection (10) and substituting in each case "supervision."
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 293, as amended, carry? All in favour? Opposed? Carried.
Shall sections 294 through 305 of the bill, inclusive, carry? All in favour? Opposed? Carried.
Mr Owens: I move that section 306 of the bill be amended by adding the following subsection:
"Exception
"(3.1) Clause (3)(a) does not apply where the corporation is the liquidator."
This amendment exempts the deposit insurer from the requirement for the directors' approval to exercise certain powers as a liquidator, and it reinstates an exemption found under the current act.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 306, as amended, carry? All in favour? Opposed? Carried.
Shall sections 307 through 315, inclusive, carry? All in favour? Opposed? Carried.
Section 316 has an amendment.
Mr Owens: I move that paragraph 4 of subsection 316(1) of the bill be amended by striking out "214(4)" at the end and substituting "215(1)".
This is an amendment that addresses an incorrect internal reference.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Mr Owens: I move that subsection 316(1) of the bill be amended by adding the following paragraph:
"29. prescribing the form and content of information, circulars and proxies and the discretionary authorities that may be conferred in proxies and excluding the application of similar provisions in regulations made under part VIII of the Business Corporations Act."
The reason for this is that this amendment creates an enabling authority for regulations governing information, circulars and proxies.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Mr Owens: I move that subsection 316(3) of the bill be amended by inserting after "guideline" in the fourth line "as amended from time to time, whether before or after the regulation is filed."
This amendment ensures that any standard or guidelines adopted in the regulation made under the bill remains current, and that if a guideline or standard is amended, it won't be necessary to reopen the bill.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Mr Owens: I move that section 316 of the bill be amended by adding the following subsection:
"Same
"(4) If an amount or rate is to be prescribed under subsection (1), the regulation may prescribe the method of determining the amount or rate."
The amendment provides for an interpretation clause, and it also ensures that any regulation prescribing an amount or rate may also prescribe the method for calculating that amount.
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 316, as amended, carry? All in favour? Opposed? Carried.
Shall sections 317 through 326, inclusive, carry? All in favour? Opposed? Carried.
Section 327 has an amendment.
Mr Owens: I move that the French version of clause 327(1)(b) of the bill be amended by striking out "verse" in the third line and substituting "paie."
The Chair: Any comments? Seeing none, shall the motion carry? All in favour? Opposed? Carried.
Shall section 327, as amended, carry? All in favour? Opposed? Carried.
Shall sections 328 through 332, inclusive, carry? All in favour? Opposed? Carried.
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Section 333 has a PC amendment.
Mr Carr: I move that the bill be amended by deleting section 333 and substituting the following therefor:
"Sunset review
"333. Unless the rights of a credit union are terminated pursuant to this act, a credit union shall not carry on its business on a day that is five years after the day on which this section comes into force."
This was an amendment proposed by the Coalition of Credit Unions and Caisses Populaires of Ontario. This amendment would establish a very aggressive and I think stringent sunset review requirement in the statute. As it's written, Bill 134 requires the director to review the act every five years and recommend any required amendments to the minister, but the industry is concerned that this does not ensure that the act would be updated every five years. Therefore, the proposed amendment would require that the act be re-enacted every five years. As we heard through many of the presentations, we have not had too many changes over the last little while. Given the rate of change in the financial sector, credit unions do not want to wait another 17 years for an overhaul. This would in essence force the minister to do that and to review it every five years.
On a personal note, I'm in favour of some of the sunset clauses, so I would obviously be supporting this, and if the government is not, I would appreciate that the parliamentary assistant give some rationale.
Mr Owens: I appreciate the motion from Mr Carr. I begin by saying that we will not be supporting this particular amendment. I also appreciate the fact that he's mentioned that it has taken 17 years to bring these changes to fruition and it's our government that's doing that.
If you look at the clause as proposed, I've termed this the "implosion" clause, because what in effect will happen is that the credit unions will be unable to function at the time this section comes into effect. I don't think that's the intent, Mr Carr, that you would want to have by this language.
What we have done is add permissive regulation-making powers to review issues as they arise. I take quite seriously your comments with respect to the financial sector and how quickly things can change as technology changes etc, but it's our view that this clause is not functional.
Mr Kwinter: I'll speak briefly to this amendment. I understand the intent of it, but this amendment surely attacks the wrong end of the problem. What this amendment is saying is that a credit union shall not carry on its business on a day that is five years after the date on which it comes into effect.
It seems to me that the proposer is really concerned about the director and the act, to make sure the act is kept up to date, but what he's really doing is putting in a punitive clause that's going to impact on the credit unions without bringing any kind of pressure other than the howling of the credit unions as the five-year term comes to an end and they find they're no longer in business. It would seem to me that the intent should be bringing pressure not on the credit unions but on the government, the act, the directors, as opposed to putting the credit unions under the gun. I'd be interested to hear the proponent's comment on that.
Mr Carr: What this essentially will do is force the government to take a look at it. Obviously, if there's a termination in there, they will be forced to look at it. The way it stands now, I suspect we will not. Given that we haven't looked at it for 17 years, and there are numerous reasons different governments have not, if there is a termination clause in there, obviously it will force the government to take a look at it every five years. If any changes are required, they will be done, and if not, you simply carry on, and that can be done very easily. It is rather strong in terms of termination, but this will ensure that it gets reviewed.
It really doesn't matter too much, as the parliamentary assistant has already said that the government won't be supporting it. As I mentioned earlier, it was an amendment that was proposed by the coalition of the credit unions.
Mr Owens: Once again I want to thank Mr Carr for pointing out that it is the NDP government and Floyd Laughren who are finally making these changes and updating the financial services legislation.
Mr Carr: And it'll be another 17 years before you're in power again.
The Chair: With regard to the PC motion, all those in favour? Opposed? That motion is lost.
Shall section 333 of the bill carry? All in favour? Opposed? Carried.
Mr Owens: I move that section 334 of the bill be amended by striking out "or" at the end of clause (b), by adding "or" at the end of clause (c) and by adding the following clause:
"(d) in the case of a member, addressed to the member at his or her address as shown in the records of the credit union or by personal delivery to the member at his or her place of employment."
This is addressed as to how notices must be delivered to members of the credit union.
The Chair: Any comments? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
Shall section 334 of the bill, as amended, carry? All in favour? Opposed? Carried.
I would like to suggest at this time that we recess.
Mr Owens: If we could quickly finish this stuff up, these motions are not substantive in nature.
The Chair: Mr Owens, I think you're not correct.
Mr Owens: All right, then let's go.
The Chair: We will then proceed with section 335 of the bill when we resume the committee at 3:30 or immediately following routine proceedings this afternoon. This meeting stands recessed.
The committee recessed from 1158 to 1540.
The Chair: The standing committee on finance and economic affairs will come to order. We are continuing with clause-by-clause of Bill 134. I have an indication from Mr Owens that we will at this time revisit section 269 of the bill, which was stood down.
Mr Owens: I move that subsection 269(4) of the bill be struck out and the following substituted:
"Same
"(4) The corporation may,
"(a) enter into a deposit administration agreement with another credit union whereby that credit union agrees to pay on behalf of the corporation,
"(i) the amount of the deposit according to the terms of the deposit, or
"(ii) before maturity of the deposit, an amount equal to the principal of and accrued interest on the deposit on the day it is paid;
"(b) pay, before maturity of the deposit, an amount equal to the principal of and accrued interest on the deposit on the day it is paid."
I'll ask Mr Abols to explain the reworked amendment.
Mr Abols: This essentially allows the deposit insurer to employ another credit union as an agent in dealing with deposits of an insolvent credit union. Under the terms of a deposit administration agreement, the deposit insurer can pass on the obligation to administer the deposit on a day-to-day basis to the credit union agent or, in (b), it could directly pay the deposit out on its own. There's sort of a cash-flow issue here and the deposit insurer doesn't always have the funds to address a large liability in the event of a credit union's failure.
The Chair: Any comments? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
We have another amendment that was stood down, and that was 286.
Clerk of the Committee (Ms Lynn Mellor): I think maybe you want to carry 269, as amended, first.
The Chair: I'm sorry. Section 269, as amended, all those in favour? Opposed? Carried.
We then will proceed to section 286 of the bill for amendment.
Mr Owens: For those who weren't here this morning, there was an issue with respect to clarity and flow of language that legislative counsel was asked to take a look at. I'll either ask legislative counsel or Mr Abols to respond on that.
Mr Yurkow: I'll respond to that. Section 286 was set up so that subsection (1) deals with the powers of the stabilization authority. Subsection (2) is a clarification of one of the powers. Subsection (3) sets out the exceptions to the powers. Subsection (4) is in the nature of an interpretation or definition section or subsection.
Subsection (2) could have been incorporated in paragraph 3 of 286(1). That would have made a very long and, I think, complicated section. So the decision was made to break it out as a separate subsection of its own that is a little easier to read.
In looking at it, I can't see a reasonable way of changing it. Now, you could play around with the order of subsections (2), (3) and (4). It makes no difference to the substance and I can see nothing other than personal preference as to how it is placed or ordered. There doesn't seem to be any particularly more compelling, natural way of doing it. Having looked at it, I can't see a change that would, to my mind, improve or clarify the arrangement.
Mr Kwinter: Without trying to go over the whole issue all over again, my concern was that the initial subsection 286(2) as proposed really deals with the powers of the stabilization authority which are covered under 286(1), and to make them as part of 286(2) -- as I say, the parts about the subsidiary and things of that kind I have no problem with. It just seemed to make sense that this is where they should be, because all this really does is explain the powers of the stabilization authority. It doesn't in any way change the substance of it, and I conceded that right at the beginning.
You have to understand this is how lawyers make their money, by interpreting these kinds of documents. It's one thing for us as members of this committee -- I have to say with all frankness not all members of this committee are that familiar even with this particular act, but at least we're dealing with it and we're dealing with it over a period of time. But for someone who has no experience at all with this particular statute and has got to then look at certain parts of it, the idea is that it should be as user-friendly as possible. I don't see the big hangup with the fact that we take all of those aspects in this particular section that deal with the powers of the stabilization authority and put them under one subsection.
As I say, I'm not going to prolong this, because it doesn't in any way change the substance. It's just, as I say, in the essence of making it more user-friendly and making it easier because -- trust me -- when someone refers to this they look at the annotations on the side to try to find the spots where they can find the reference to the issue they're trying to resolve.
If it gets a little confusing and if someone gets to the point where they say "Powers of stabilization authority" and they read the things in that section, there is the possibility that they won't go further under a situation where those powers are hidden. I don't mean hidden in the sense that there is deliberate attempt, but it's in a section that deals with some other issue. That is my concern. I just leave it at that and I've raised the point. Whatever response I get I'm going to have to accept.
Mr Yurkow: If I may, to address Mr Kwinter's point, the margin note in sub (2) says "Same," so anyone reading sub (1) with the "Powers of stabilization authority," the very next margin note is a clue that it deals with identical subject matter.
I must say that I think the government, and certainly legislative counsel, has an interest in making a legislation as user-friendly as possible. People may disagree on a particular form and some may find one form easier than another, and I guess there we differ.
Mr Kwinter: I've made my point. Thank you.
The Chair: Thank you, Mr Kwinter. You have certainly raised a point, and at this point we will continue on.
Shall the motion carry? All those in favour? Opposed? Carried.
Shall section 286, as amended, carry? All those in favour? Opposed? Carried.
Now we will continue with section 335 of the bill.
Shall section 335 of the bill carry? All those in favour? Opposed? Carried.
There's an amendment to the bill which is 335.1, which is a Liberal motion. Mr Kwinter.
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Mr Kwinter: I move that the bill be amended by adding the following section:
"335.1. Clause 102(1)(a) of the act is repealed and the following substituted:
"(a) prepare annually and deliver to the superintendent, on or before the prescribed date for the prescribed category of insurer, a statement of the condition of affairs of the insurer for the year that ended, at the election of the company in its bylaws, on the 31st day of October or the 31st day of December next preceding the delivery of the statement; and"
I have to say that this amendment was proposed by one of my colleagues. I have read it and I cannot give you any further explanation other than what it says.
The Chair: That's fine. Did you want to comment, Mr Owens?
Mr Owens: The government would like to indicate support for Mr Kwinter's amendment.
The Chair: Mr Johnson, would you like to make a comment?
Mr David Johnson (Don Mills): Is this to do with the annual report? Is that what this is about? Is this somewhat equivalent to the amendment that I was going to put later on? Isn't that sneaky. At any rate, I wonder if staff could analyse -- is it precisely identical? If it is, obviously I'll support the Liberal amendment.
The Chair: As a matter of fact, if I can just speak to both section 335.1 and 346.1 and advise the committee that this amendment, proposed as an amendment to section 102 of the Insurance Act, which sets out annual and interim statements insurers are required to prepare and deliver, has not been dealt with in the bill. Therefore I must rule that the amendment's out of order as it introduces a principle beyond the scope of the bill. However, I have an indication that if we have unanimous consent to allow the amendment to stand, then so be it. Mr Johnson?
Mr David Johnson: Yes, I agree. I was going to dash back and get my notes on it, because unfortunately I left them back in my office, but my recollection is that because of the way it's set up now, there's a requirement to report on October 31 and then another requirement to report at the end of December. Consequently, they're having to go through the rigour of two reports.
It is my understanding that this pertains to the life insurance companies, and that extra two months would be picked up in the subsequent year's report at any rate. So it really doesn't serve any particular purpose, as I can recall, to force the insurance industry to do that a second time.
There is considerable cost associated with this too, as I can recall. I remember talking to a representative of one of the firms who indicated that for his firm alone the estimated cost of having to go through the second report was in the nature of $100,000. This is in terms of people power, I guess, and paper and associated costs. From my information, this would certainly be a worthwhile thing to support, and I'm glad to hear -- at least I think I heard that the government is going to support this amendment as well.
Mr Owens: If you recall the public hearings portion of the committee, the insurance companies had come in and requested this specific amendment, and all we are doing first of all is acceding to their request. What this does is it simply harmonizes with what's currently in federal statute. What this in fact will do is give the insurance corporations the choice of reporting on either October 31 or December 31. It's not a requirement for two filings.
The Chair: We have unanimous consent to allow this amendment to stand. All those in favour? Opposed? Carried.
That brings us to section 336 of the bill, and there's an amendment.
Mr Owens: I move that section 336 of the bill be amended by adding the following subsection:
"(0.1) Paragraph 31 of subsection 121(1) of the act is repealed and the following substituted:
"31. prescribing classes of bodies corporate in whose fully paid shares a mutual insurance corporation that is a participant in the fire mutuals guarantee fund may invest its funds under subsection 433(9) and setting out what constitutes control for the purpose of subsection 433(9)."
I'll ask ministry staff to provide an explanation.
The Chair: And you are, for the purpose of the committee members and Hansard?
Ms Ann Bythell: My name is Ann Bythell.
This is the first of four provisions that deal with fire mutuals. It's the section that gives the authority to make regulations prescribing classes of corporations in which fire mutual insurance companies can invest.
The Chair: Any further comments? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
We have an additional amendment, a Progressive Conservative motion.
Mr David Johnson: I move that section 336 of the bill, amending subsection 121(1) of the act, as amended by the statutes of Ontario, 1993, chapter 10, section 12, be further amended by adding the following paragraph:
"37.5 prescribing classes of bodies corporate in whose fully paid shares an insurer may invest its funds under clause 433(8)(h)."
This is in discussion with the Canadian Life and Health Insurance Association. CLHIA had suggested that the provisions of the government's amendment in terms of broader subsidiary ownership and investment activities for the fire mutuals be extended to include all Ontario chartered insurance companies. The association maintains that this amendment is necessary to level the playing field for other financial institutions in addition to the fire mutuals.
It's pointed out that as permitted subsidiaries are to be prescribed in the regulation, they could still be controlled by the regulator so as to avoid any solvency concerns. This would be simply permitting the classes to be included in the regulations.
Mr Owens: I just want to indicate to the member for Don Mills that the government will not be supporting his amendment. One reason for this is that to begin with, the fire mutuals, as indicated by the last amendment that was passed, there's a guarantee fund that all companies stand behind each other with respect to their businesses. This is not the case in the areas that Mr Johnson has tried to address. I'll ask ministry staff to continue with that explanation.
Ms Bythell: The second reason would be that fire mutuals are mutual companies, and of the five life insurance companies incorporated in Ontario, four are joint stock; only one is a mutual company. Joint stock companies are able to diversify, as opposed to mutual companies that are not. The one company that is a mutual company is very small and wouldn't be able to have the same kind of size that would lend itself to diversifying downstream.
The Chair: Mr Sutherland?
Mr Kimble Sutherland (Oxford): Sorry, if there's more debate first from Mr Johnson, I'll wait.
Mr David Johnson: Just one follow-up question. So the staff would feel that this wouldn't be relevant. Is that what I take from your comments, that there would only be one entity that would be in a position to take advantage of the amendment?
Ms Bythell: I don't think it's a question of relevance as much as the fact that the fire mutuals are different. The government has addressed a very different set of companies that all belong to the fire mutuals guarantee fund. It's simply a different situation.
Mr Sutherland: I'd like to have a 10-minute recess, please.
The Chair: Sure. Everybody in agreement? I have no problem, but does the rest of the committee have a problem with that?
Mr Elston: Sorry, what's happening? We're moving along here fairly well. I'm just wondering what's going on.
Mr Sutherland: I'd just like a 10-minute recess. We're not filibustering or anything.
The Chair: Sure, we'll have a 10-minute recess. We'll resume in 10 minutes, at 10 after 4.
The committee recessed from 1601 to 1617.
The Chair: I call the committee back to order. We will continue with Mr Johnson's motion 336, which we were debating. Were there any further comments with regard to that motion? Seeing none, shall the motion carry? All those in favour? Opposed? The motion is lost.
Shall section 336, as amended, carry? All those in favour? Opposed? Carried.
Section 337 has amendments.
Mr Owens: I move that section 337 of the bill be amended by adding the following subsection:
"(1.1) Subsection 393(5) of the act is repealed."
This section mandates that an agent's licence must limit the agent's authority to the class of insurance for which his or her appointing or sponsoring insurer was licensed. This mandate is not needed, and its continuation may create confusion in the law because a life insurance agent will not always be dependent upon the continuing appointment or sponsorship of a single insurer.
The Chair: Any additional comments? Seeing none, shall the motion carry? All those in favour? All those opposed? Carried.
An additional amendment, Mr Owens.
Mr Owens: I move that section 337 of the bill be amended by adding the following subsection:
"(2.1) Subsection 393(12) of the act is repealed and the following substituted:
"Authority of agent
"(12) A licence referred to in clause (2)(b) or (2)(c) authorizes an agent to act for one insurer only.
"Same
"(12.1) For purposes of subsection (12), the insurer must be specified in the licence and licensed for the classes of insurance referred to in clause (2)(b) or (2)(c).
"Representation restricted
"(12.2) An agent holding a licence referred to in clause (2)(b) or (2)(c) shall not make any representation to the public, by advertisement or otherwise, that the agent is an agent of any insurer other than the one specified in the licence for the purposes of selling the classes of insurance specified in the licence."
This amendment is needed to add a clarification that the restriction is imposed on the licence of a general insurance agent and is only applicable to general insurance activities of that agent. If an agent holds other licences, then his or her activities pursuant to those other licences would not be affected by this restriction.
The Chair: Any comments? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
An additional amendment, Mr Owens.
Mr Owens: I move that section 337 of the bill be amended by adding the following subsection:
"(2.2) Section 393 of the act is amended by adding the following subsection:
"Same
"(13.1) For the purpose of subsection (13), mutual insurance corporations that participate in the fire mutuals guarantee fund and insurers in whose fully paid shares a mutual insurance corporation has invested under subsection 433(9) shall be deemed to be an affiliated group of insurers carrying on business as a common undertaking."
I'll ask ministry staff to provide an explanation.
Ms Bythell: This section allows fire mutual insurance corporations that are members of the guarantee fund and their insurance subsidiaries to be deemed to be an affiliated group of insurers carrying on business as a common undertaking. Therefore, for the purposes of subsection 393(13), their insurance agents may be licensed to act for more than one fire mutual insurance company.
The Chair: Any further comments? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
Shall section 337, as amended, carry?
Interjection: No, there's one more.
The Chair: Is there? I'm sorry, there is indeed. An additional amendment to section 337.
Mr Owens: I move that subsection 393(17) of the Insurance Act, as set out in subsection 337(3) of the bill, be amended by striking out "(13)" in the third line and substituting "(11)".
I'll ask ministry staff to provide an explanation.
Ms Bythell: The new subsection of the act, 393(17), provides that if there's a self-regulating organization that has been recognized by the commissioner of insurance, certain subsections of the act that authorize the superintendent of insurance to deal with the licence for life insurance agents will not apply. Subsection 393(12) has been amended. It refers only now to general insurance agents. Therefore, it's no longer necessary to have subsections (12) and (13) of 393 inapplicable if there is a self-regulating organization in place.
The Chair: Any comments? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
Shall section 337, as amended, carry? All those in favour? Opposed? Carried.
Shall sections 338 through 342, inclusive, carry? All those in favour? Opposed? Carried.
Section 343 has an amendment.
Mr Owens: I move that section 343 of the bill be amended by adding the following subsection:
"(2) Subsection 433(9) of the act is repealed and the following substituted:
"Same
"(9) Despite subsection (1) and section 435, a mutual insurance corporation that participates in the fire mutuals guarantee fund may, with the approval of the commissioner and subject to any terms and conditions he or she may impose, invest in the fully paid shares of a body corporate of a prescribed class incorporated in Canada if, after the investment, one or more of the mutual insurance corporations that participate in the fund controls, or as a result of the investment will acquire control of, the body corporate."
I'll ask ministry staff to provide an explanation.
Ms Bythell: One or more fire mutual insurance corporations will be able to invest in the shares of corporations of prescribed classes if the investment results in control of the corporations. The investments will be subject to the approval of the commissioner of insurance and any terms and conditions that the commissioner may impose.
The prescribed classes of corporations will be set out in regulations and will consist of classes of financial institutions, service corporations and ancillary business corporations.
The Chair: Any further comments? Seeing none, shall the motion carry? All those in favour? All those opposed? Carried.
Shall section 343, as amended, carry? All those in favour? Opposed? Carried.
Mr Johnson for new section 343.1, an amendment.
Mr David Johnson: I move that the bill be amended by adding the following new section:
"343.1 Subsection 433(8) of the act is amended by adding the following clause:
"(h) with the prior approval of the commissioner, any corporation of a prescribed class."
I think that's an amendment that ties in with the previous amendment that I put, and I'm a little bit lost here as to know if this one still makes sense. We know what the outcome will be at any rate, because the rationale from the staff and the government has already been given in opposition to this. I take it that would persist here.
It is an amendment aiming at broadening the government's amendment for broader subsidiary ownership and investment activities for fire mutuals to also include all Ontario chartered insurance companies, and the attempt there is to level the playing field. We've already gone through this discussion, so I'll simply place that amendment.
The Chair: Mr Owens, do you want to comment on this?
Mr Owens: I'll ask ministry staff to respond.
Ms Bythell: I think that we've already commented on this section as it related to the motion to allow regulations to be prescribed, so I'm not sure if there's any further comment that I can make.
Mr David Johnson: That was my observation as well.
The Chair: Would you like to leave this motion standing or do you choose to withdraw it?
Mr David Johnson: We'll vote on it.
Mr Owens: We won't be supporting it.
Mr David Johnson: I anticipated you wouldn't be supporting it.
Mr Owens: Just in case you were wondering. We weren't going to leave anything to chance here.
The Chair: All those in favour of the PC motion? All those opposed? That motion is lost.
Shall sections 344, 345 and 346 carry? All those in favour? Opposed? Carried.
We have a PC amendment, new section 346.1.
Mr David Johnson: My understanding is that this is entirely equivalent to the amendment that was placed by the Liberal Party. Consequently, I'll withdraw it. It's already approved.
The Chair: I just thought I'd allow you to do that.
Shall section 347 carry? All those in favour? Opposed? Carried.
Section 348 has an amendment.
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Mr Owens: I move that subsection 348(8) of the bill be amended by inserting ", by" immediately before "a credit union" in the fourth line.
The reason for this amendment is it's a technical change that would conform the amendment that would be made by subsection 348(8) of the bill to the grammatical structure of the provision of the act that is being amended.
The Chair: Any further comments? Seeing none, all those in favour of the motion? All those opposed? Carried.
Shall section 348, as amended, carry? All those in favour? Opposed? Carried.
Shall sections 349, 350 and 351 carry? All those in favour? Opposed? Carried.
Section 352 has an amendment.
Mr Owens: I move that subsection 6(4) of the Securities Act, as set out in section 352 of the bill, be amended by striking out "a" in the second line and substituting "another."
This is a technical amendment that essentially has no policy significance since the definition of "director" includes executive director, and assignment of the powers and duties of executive director can only be made to another director.
The Chair: Any further comments? Seeing none, shall the amendment carry? All those in favour? Opposed? Carried.
Shall section 352, as amended, carry? All those in favour? Opposed? Carried.
Shall section 353 of the bill carry? All those in favour? Opposed? Carried.
Section 354 has an amendment.
Mr Owens: I move that subsection 9(1) of the Securities Act, as set out in section 354 of the bill, be struck out and the following substituted:
"Appeal
"(1) A person or company directly affected by a final decision of the commission, other than a decision under section 74, may appeal to the Divisional Court within 30 days after the later of the making of the final decision or the issuing of the reasons for the final decision."
The reason for this amendment -- and we would like to credit Mr Phil Anisman and will call this the Anisman section -- is that it's a technical amendment that clarifies when the 30-day period begins. These are concerns that were raised in a brief presented to us.
The Chair: Any comment on the amendment? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
Shall section 354, as amended, carry? All those in favour? Opposed? Carried.
Shall section 355 carry? All those in favour? Opposed? Carried.
Section 356 has amendments.
Mr Owens: I move that subsection 17(2), exclusive of the clauses, of the Securities Act, as set out in section 356 of the bill, be struck out and the following substituted:
"Opportunity to object
"(2) No order shall be made under subsection (1) unless the commission has, where practicable, given reasonable notice and an opportunity to be heard to."
Mr Kwinter: Point of order, Mr Chairman: You're reading the amendment to 356 of the bill?
Mr Owens: That's right, subsection 17(2).
Mr Kwinter: What happened to 15(1) and 15(2)?
Clerk of the Committee: The original amendment was 356, subsections 15(1) and (2) of the act. The next one, which is the one that was brought to you this morning, was subsection 17(2) of the act and then the other one that was in the original package was 21.8(3)
Mr Kwinter: That is correct.
The Chair: I'd like to thank Mr Kwinter for bringing that to the Chair's attention and thank the clerk for the direction.
Mr Owens: I move that subsections 15(1) and (2) of the Securities Act, as set out in section 356 of the bill, be struck out and the following substituted:
"Report of investigation or examination
"15. (1) The person or persons appointed under subsection 11(1) or 12(1) shall, at the request of the chair of the commission or of a member of the commission involved in making the appointment, provide a report to the chair or member, as the case may be, or any testimony given and any documents or other things obtained under section 13.
"Same
"(2) The person or persons appointed under subsection 11(5) shall, at the request of the chair of the commission, provide a report to the chair or any testimony given and any documents or other things obtained under section 13."
I'll ask securities commission staff to explain the amendment.
Ms Joan Smart: The reason for these amendments is to make it clear that the report of either the investigation or the financial examination doesn't automatically go to the commissioners; it only goes upon request. The concern might be that if it appears that it automatically goes to the commission, there may be allegations of bias raised in relation to the commissioners. The practice now is that it does not automatically go to the commissioners.
Mr Kwinter: On a point of order, Mr Chair: The parliamentary assistant was reading and he used the term "a person or persons" on two different occasions. My copy doesn't have that. I was just wondering if those amendments were made -- maybe there are other amendments that I wasn't really following, because I don't have that in my copy.
The Chair: I'll see if I can get to the bottom of this, Mr Kwinter. Mr Kwinter's information is not the same as the information that Mr Owens read.
Mr Kwinter: On subsection 15(1) and "Same, (2)" you started out and you said, "a person or persons." My amendment doesn't show "or persons." All I'm saying is that I have no quarrel with it; I just want to make sure that the document I'm looking at is the same document, and whether there are any other changes I'm not aware of.
The Chair: Thank you for bringing that to my attention. Indeed, Mr Owens, the motion that I have before me and, I suspect, other members of the committee --
Mr Owens: Can I suggest we take a couple of minutes to ensure that my clause-by-clause binder is complete and in line with what we've given to members? It's becoming a little embarrassing to be doing this.
The Chair: By all means, Mr Owens. We'll recess for a couple of minutes until Mr Owens comes back.
The committee recessed from 1639 to 1643.
Mr Owens: I want to apologize to the committee on behalf of the ministry. It appears that through this monumental collating and editing process some things were misfiled, so we're just in the process of getting things back together. We'll be another couple of minutes.
The Chair: In that case we'll continue to recess until Mr Owens gets the proper documentation.
The committee recessed from 1644 to 1647.
The Chair: The committee will come to order. We are now at section 356 of the bill with amendments, and it was brought to our attention that there was a slight error in the amendment Mr Owens was reading now. I believe he has the corrected material.
Mr Owens: Let's try this for the third time and see if we can get it right. I'll keep my eye on Mr Kwinter to see if he shakes his head up and down or not.
I move that subsections 15(1) and (2) of the Securities Act, as set out in section 356 of the bill, be struck out and the following substituted:
"Report of investigation or examination
"15(1) A person appointed under subsection 11(1) or 12(1) shall, at the request of the chair of the commission or of a member of the commission involved in making the appointment, provide a report to the chair or member, as the case may be, or any testimony given or any documents or other things obtained under section 13.
"Same
"(2) A person appointed under subsection 11(5) shall, at the request of the chair of the commission, provide a report to the chair or any testimony given and any documents or other things obtained under section 13."
I'll ask Ms Smart to provide the explanation. Then we'll vote on it.
The Chair: I believe Ms Smart already gave the explanation. Are there any comments from the committee members? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
Mr Owens: I move that subsection 17(2), exclusive of the clauses, of the Securities Act, as set out in section 356 of the bill, be struck out and the following substituted:
"Opportunity to object
"(2) No order shall be made under subsection (1) unless the commission has, where practicable, given reasonable notice and an opportunity to be heard to."
Ms Smart: This amendment is intended to clarify that a person or company who's notified that the commission is considering a request for disclosure of matters arising from an investigation or a financial examination also has the right to an opportunity to make a submission by or against the disclosure order.
The Chair: Any comments? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
Mr Owens: I move that subsection 21.8(3) of the Securities Act, as set out in section 356 of the bill, be struck out.
Ms Smart: It used to be that auditors of TSE or IDA members were required to audit and report on the financial affairs of members to the auditor of the TSE or the IDA who reviewed the reports. For that reason, it was necessary for the TSE or IDA auditor to have a certain amount of experience. That's no longer the case. Now the auditor of the TSE or the IDA only audits the institutions, and as a result, experience in the securities industry is not absolutely necessary.
The Chair: Any comments? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
Shall 356, as amended, carry? All those in favour? Opposed? Carried.
Shall sections 357 through 360, inclusive, carry? All those in favour? Opposed? Carried.
Section 361 has an amendment.
Mr Owens: I move that the English version of section 361 of the bill be amended by inserting ", or" immediately before "a credit" in the third line.
Ms Smart: That's simply a technical amendment.
The Chair: Any comments? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
Shall section 361, as amended, carry? All those in favour? Opposed? Carried.
Section 362 has an amendment.
Mr Owens: I move that clause (c.2) of paragraph 1 of subsection 35(2) of the Securities Act, as set out in subsection 362(5) of the bill, be amended by striking out "member credit unions" in the third and fourth lines and substituting "members."
Ms Smart: Again, that's simply a technical amendment.
The Chair: Any comments? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
Mr Owens: I move that subsection 362(7) of the bill be struck out and the following substituted:
"(7) Paragraph 9 of subsection 35(2) of the act is repealed and the following substituted:
"9. Membership shares of a credit union within the meaning of the Credit Unions and Caisses Populaires Act, 1993."
Ms Smart: Again, that's just a technical amendment.
The Chair: Any comments? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
Mr Owens: I move that paragraph 9.2 of subsection 35(2) of the Securities Act, as set out in subsection 362(8) of the bill, be amended by striking out "member credit unions" in the first and second lines and substituting "members."
Ms Smart: That's a technical amendment.
The Chair: Shall the motion carry? All those in favour? Opposed? Carried.
Shall section 362, as amended, carry? All those in favour? Opposed? Carried.
Shall sections 363 through 370, inclusive, carry? All those in favour? Opposed? Carried.
Section 371 has an amendment.
Mr Owens: I move that clause 122(1)(a) of the Securities Act, as set out in section 371 of the bill, be amended by striking out "the director" in the fourth line and substituting "a director."
Ms Smart: That's a technical amendment relating to the definition of "director."
Mr Kwinter: On a point of order, Mr Chair: There's an amendment to 371, clauses 122(1)(a) and (b).
The Chair: Mr Owens, would you like to just withdraw.
Mr Owens: Withdraw.
The Chair: Thank you, Mr Owens.
Mr Owens: I've had some practice in the House.
The Chair: Any further comments? Seeing none, shall the motion carry?
Interjection: He didn't read the new one in.
The Chair: Didn't you read the new one in? My apologies, Mr Owens.
Mr Owens: I move that clauses 122(1)(a) and (b) of the Securities Act, as set out in section 371 of the bill, be struck out and the following substituted:
"(a) makes a statement in any material, evidence or information submitted to the commission, a director, any person acting under the authority of the commission or the executive director or any person appointed to make an investigation or examination under this act that, in a material respect and at the time and in the light of the circumstances under which it is made, is misleading or untrue or does not state a fact that is required to be stated or that is necessary to make the statement not misleading;
"(b) makes a statement in any application, release, report, preliminary prospectus, prospectus, return, financial statement, information circular, takeover bid circular, issuer bid circular or other document required to be filed or furnished under Ontario securities law that, in a material respect and at the time and in the light of the circumstances under which it is made, is misleading or untrue or does not state a fact that is required to be stated or that is necessary to make the statement not misleading; or."
Ms Smart: As currently provided in the bill, a statement can give rise to an offence if it's misleading or untrue in a material respect or if it omits to state a fact that is necessary or required to be stated so that the statement is not misleading. Thus, even if a factual omission in a statement is not material in any respect, it could give rise to an offence. This amendment clarifies that in order for a statement to give rise to an offence, the statement must be misleading or untrue in a material respect or must involve a factual omission in a material respect, given the time and circumstances under which it's made.
Mr Kwinter: Just for clarification, so I understand what we're doing, the parliamentary assistant read, before I brought his attention to this one, a particular amendment. Do I understand that particular amendment has been withdrawn?
The Chair: Yes.
Mr Kwinter: So that is no longer of any effect and we're now dealing with this one?
The Chair: Yes.
Mr Kwinter: That's fine.
The Chair: Any further comments? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
Shall section 371 of the bill, as amended, carry? All those in favour? Opposed? Carried.
Shall sections 372 through 378, inclusive, carry? All those in favour? Opposed? Carried.
There are several amendments to section 379 of the bill. The first one is subsection 146(1).
Mr Owens: I move that subsection 146(1) of the Securities Act, as set out in section 379 of the bill, be struck out and the following substituted:
"No privilege
"146(1) Despite subsection 33(4) of the Evidence Act, the commission may by order compel a bank or officer of a bank, in an investigation, financial examination or hearing under Ontario securities law to which the bank is not a party, to produce any book or record the contents of which can be proved under section 33 of the Evidence Act or to appear as a witness to prove the matters, transactions and accounts contained in the book or record."
Ms Smart: This amendment clarifies that a bank or an officer of the bank does not automatically lose the protection of subsection 33(4) of the Evidence Act. An order of the commission will be required before a bank or officer of the bank may be compelled as a witness or to produce documents in an investigation, financial examination or hearing under Ontario securities law to which the bank is not a party.
The Chair: Any comments? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
Mr Owens: I move that section 148 of the Securities Act, as set out in section 379 of the bill, be amended by striking out "the director" in the second and third lines and substituting "a director."
Ms Smart: This is a technical amendment.
The Chair: Any comments? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
Mr Owens: I move that section 150 of the Securities Act, as set out in section 379 of the bill, be amended by striking out "an order" in the third line and substituting "a decision."
Ms Smart: This is a technical amendment. The term "decision" as defined in the bill includes an order.
The Chair: Any comments? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
Mr Owens: I move that section 151 of the Securities Act, as set out in section 379 of the bill, be amended by adding the following subsection:
"Filing decision
"(2) A decision of a director may not be filed with the court under subsection (1) until the time permitted for an application to review the director's decision pursuant to subsection 8(2) has expired or, if the decision has been appealed, the commission has confirmed it."
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Ms Smart: This amendment clarifies that a director's decision will not be enforced as an order of the court until it has become final.
The Chair: Any comments? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
Mr Owens: I move that the French version of subsection 152(2) of the Securities Act, as set out in section 379 of the bill, be amended by striking out "Dans la mesure du possible," at the beginning.
Ms Smart: This is a technical amendment.
The Chair: Any comments? Seeing none, shall the motion carry? All those in favour? Opposed? Carried.
Shall section 379 of the bill, as amended, carry? All those in favour? Opposed? Carried.
Shall section 380 of the bill carry? All those in favour? Opposed? Carried.
Shall section 381 carry? All those in favour? Opposed? Carried.
We have a government motion, new section 381.1.
Mr Owens: I move that the bill be amended by adding the following section:
"Corporations Act
"381.1 Section 141 of the Corporations Act is amended by adding the following subsection:
"Networking
"(5) An insurer incorporated under this act may,
"(a) act as an agent for any person in respect of the provision of any service that is provided by a financial institution;
"(b) enter into an arrangement with any person in respect of the provision of that service; and
"(c) refer any other person to a person referred to in clause (a) or (b)."
Mr Abols: This is a provision which just clarifies that mutual insurers have the ability to network products, or insurers generally have the ability to network products.
The Chair: I'd like to bring to the attention of committee members that this amendment is out of order. It's beyond the scope of the bill, as it amends the Corporations Act, which has not been opened.
Mr Owens: Can I request unanimous consent that we're able to proceed with this section?
The Chair: Do we have unanimous consent to proceed? Agreed.
All those in favour of the motion? Opposed? Carried.
Mr Elston: I have several other amendments to the Corporations Act, then.
Mr Wiseman: You just happen to have them in your pocket.
The Chair: Shall sections 382 through 394, inclusive, carry? All those in favour? Opposed? Carried.
Shall the title carry? All those in favour? Opposed? Carried.
Shall the bill, as amended, carry? All those in favour? Opposed? Carried.
Shall I report Bill 134, as amended, An Act to revise the Credit Unions and Caisses Populaires Act and to amend certain other Acts relating to financial services? Agreed.
Mr Owens: Just before we adjourn, I'd like to thank the members of the committee for their work, particularly Mr Kwinter for his grammatical points and points of accuracy that helped get us through.
There are a number of people who participated in this review. It's no secret that the on one side 17 years and on another side 44 years that it's taken for this piece of legislation to come to fruition has involved a number of people.
I'd like to thank Jonathan Guss; David Guiney, the legal counsel for Credit Union Central of Ontario; Pierre Lacasse, directeur général; Daniel Brault -- I'm sorry if I've mispronounced your name -- from the caisses populaires; Michel Paulin, the directeur général and his staff from L'Alliance des caisses populaires; Danielle Morin and Joanne Brunet, as representatives of the association of credit unions and the unaffiliated credit unions.
As a note of sadness, Gary Gillam, who passed away last December but who spearheaded the industry review: I'd like to place a posthumous thanks to him and his family. Perhaps we can make arrangements to have this sent to his family.
Of course, ministry staff: Imants Abols; Harvey Glower, who is leaving the ministry to assume a new role as vice-president of the Ontario Development Corp; Terry Campbell; Andy Poprawa and OSDIC -- the 1% solution was quite appreciated; the staff of the Ontario Securities Commission -- Joan Smart; Linda Fuerst; Philip Anisman, who's a member of the private securities bar; and Marilyn Dasil from the ministry.
Last but not least, the folks who have waited 44 years for the business to be done, keeping in mind that it was an NDP government that did the financial services review: Glen Johnson of the Ontario farm mutual association and those from the life underwriters and insurers who have contributed to this worthwhile project over the years.
Thank you very much. We've made history today.
Mr Sutherland: I want to thank all the members of the committee and the cooperation of the opposition. I thank you, the clerk and legal counsel, for helping us move through this in a very effective and efficient manner as well. It was greatly appreciated.
The Chair: If there are no further comments, I would certainly like to conclude by saying thank you to all of those people who assisted the committee in getting to this point, including the technicians, Hansard, and certainly the clerk, Lynn Mellor, and Russell Yurkow.
The committee stands adjourned until the call of the Chair.
The committee adjourned at 1706.