Guide for Initial Licence Application from a Trust Company or Savings Company not Incorporated in Québec

Transcription

1 Guide for Initial Licence Application from a Trust Company or Savings Company

2 Table of Contents Page 1. Introduction 1 2. Application evaluation criteria 2 3. Required documents and information 3 4. Fees payable 5 5. Submitting the application 5 6. Processing the application 6 Autorité des marchés financiers

3 1. Introduction The Autorité des marchés financiers (AMF) is the body mandated to administer the Act respecting trust companies and savings companies (R.S.Q., c. S-29.01), the primary Act regulating trust companies and savings companies that operate in Québec. Only the legal persons authorized for such purpose by law and holding licences issued by the AMF (R.S.Q., c. S-29.01, s. 221) may carry on their activities in Québec. The regulatory provisions related to obtaining a licence can be find in Chapter XVI of the Act respecting trust companies and savings companies (R.S.Q., c. S-29.01, ss. 221 to 243). The AMF is also mandated to administer the Deposit Insurance Act (R.S.Q., c. A-26), which regulates trust companies and savings companies that solicit and receive deposits in Québec. These companies must register with the AMF (deposit insurance fund) and hold a licence issued to this effect. The regulatory provisions related to obtaining this licence can be find in Section IV of the Act (R.S.Q., c. A-26, ss. 27 and 28) as well as Section II of its Regulation respecting the application of the Deposit Insurance Act (R.S.Q., c. A-26, r.1.1). The company who seeks to conduct distribution activities should comply with the provisions of the Act respecting the distribution of financial products and services (R.S.Q., c. D-9.2). Moreover, if the company and/or parent company is quoted, they should also comply with the provisions of the Securities Act (R.S.Q., c. V-1.1). This guide is intended for companies that are not incorporated in Québec and wish to operate as trust companies or savings companies in Québec. The guide was developed to present, among other things: the conditions that an applicant must meet in order to be issued a licence to operate as a trust company or savings company in Québec; the information and documentation to be provided in support of the initial licence application; the procedure for presenting the licence application. An analyst from the Direction du contrôle du droit d exercice will assess the licence application based on the information submitted by the applicant. Recommendations in this respect will be made to the Executive Director, Solvency, who will then submit the application to the AMF s President and Chief Executive Officer. The latter is responsible for approving applications and issuing licences. It should be noted that this guide was developed to provide a better understand of the applicable rules as well as the procedure to follow for obtaining a trust company or savings company licence. However, it does not cover in any way the interpretation of the rules required for adaptation to a specific case or in response to a particular situation. In this case, it may be advisable to consult a lawyer in private practice. Autorité des marchés financiers Page 1

4 Note that legal persons who wish to conduct business in Québec must be duly registered with Québec s Registraire des entreprises (Enterprise Register), in regard of the Act respecting the legal publicity of sole proprietorships, partnerships and legal persons (R.S.Q., c. P-45) and the Regulation respecting its application (R.S.Q., c. P-45, r.1). Lastly, when a person representing the applicant acts as a lobbyist vis-à-vis the AMF, as defined in the Lobbying Transparency and Ethics Act (R.S.Q., c. T-11.01), the person must register with the Lobbyists Registry pursuant to the rules set out in the Act. For more information on the framework and mechanisms regulating lobbying practices in Québec, please consult the website of Québec s Lobbyists Commissioner. 2. Application evaluation criteria The Solvency Division is responsible for evaluating the licence applications of trust companies and savings companies wishing to operate in Québec and for submitting recommendations to that effect to the AMF s President and CEO. The application will be evaluated on the basis of the criteria described hereinafter. 2.1 Compliance with laws and regulations The AMF ensure that the applicant complies to the laws and regulations prescribed by the government for its application and any law of another legislative authority that regulates its activities, as well as the regulations prescribed pursuant to this law. 2.2 Ownership The AMF reviews the proposed ownership structure and the ties between group members so as to, among other things, determine the AMF s capacity to oversee, examine and regulate the company. 2.3 Financial position The AMF assess the strength of the principal shareholders financial commitment toward the company and determine whether they can provide the insurer with sustained support or whether they have access to the necessary financial resources. 2.4 Board of Directors and its committees The AMF ensure that the board and its committees function efficiently. Among other things, it verifies the integrity of all members, determines whether they possess the required skills and expertise, and reviews the role and assignments of the board as well as the mandates of the committees. 2.5 Officers The AMF verifies the integrity of senior officers and ensures they possess the skills and expertise required to manage and direct the company s activities. Autorité des marchés financiers Page 2

5 2.6 Risk management policies, procedures and control mechanisms The AMF ensures that adequate management and control policies and practices are in place to support the company s activities and, to comply with the laws and regulations as well as the AMF s guidelines. 2.7 Business plan The AMF ensures the soundness, cost-effectiveness and feasibility of the company's business plan. Among other things, it verifies the company s financial forecasts, proposed management structure and its operation, projected activities, including products and services offered, as well as the marketing and distribution method. 2.8 Market conduct The AMF ensures that mechanisms are in place to process complaints and handle requests for information from Québec consumers and regulatory authorities. 3. Required documents and information The information listed below must be provided in support of an application for a licence to operate in Québec from an extra-provincial company. This information is required to verify the strength of the principal shareholders commitment toward the company, to ensure that the company will have adequate capital and control mechanisms to support its activities as well as to evaluate the company s capacity to manage and control its activities. The documents and information that must be provided are: 3.1 The duly sworn Licence Application form prescribed by the AMF, containing the following information: name of company; address of the company s head office; if the head office is not in Québec, the name and address of the chief representative; the name and address of the officer designated by the company for routine administrative communications with the AMF; date of incorporation; detailed information about any previously refused licence to a company or any licence that is subject to conditions; details on insurance against embezzlement and theft. Autorité des marchés financiers Page 3

6 3.2 A sworn copy of the power of attorney designating the chief representative (if the head office is outside Québec) (Schedule 1 of the Licence Application form). Any extra-provincial company that does not have its head office in Québec must, to obtain a licence, name a chief representative in Québec. For this purpose, the company must provide a sworn copy of the power of attorney designating its chief representative in Québec. Among other things, it provides the name and address in Québec of the chief representative and indicates the chief representative s duties and powers. The chief representative must, among other things, be empowered to be served with written proceedings on behalf of the company and be able to ensure application of the company policy regarding the examination of complaints. 3.3 A personal information return for each senior officer, director and significant shareholder (owning 10% or more of the shares) of the company (Schedule 2 of the "Licence Application" form). The applicant must notably demonstrate that its directors and the directors of the legal person controlling it, meet the conditions of section 91 of the Act. 3.4 The resolution by the company s board of directors to the effect, among other things, of authorizing the AMF to proceed with inspections and examinations, and of undertaking to provide the information requested and to comply with the Act, regulations as well as the written orders and directives of the AMF (Schedule 3 of the "Licence Application" form). 3.5 The business plan (French version), including financial statements, three-year forecasts and narrative (see Schedule 6 of the Licence Application form for more information). 3.6 A certified copy of the instrument of incorporation (letters patent), including by-laws and amendments. 3.7 A copy of the Order to Commence and Carry on Business issued by the Office of the Superintendent of Financial Institutions (OSFI) as well as the name of an OSFI contact person assigned to overseeing the company. 3.8 A copy of the insurance policy in effect against embezzlement and theft. The company must carry an insurance policy against embezzlement and theft for an amount that the AMF deems adequate, taking into account commonly accepted practice and the size of the company s activities. 3.9 A copy of the Declaration of Registration sent to Québec s Registraire des entreprises (Enterprise Register), stipulating notably the French version of the company s name. Autorité des marchés financiers Page 4

7 3.10 If the company plans to solicit and receive deposits in Québec, it must also provide: the duly sworn permit application prescribed by the AMF under the Deposit Insurance Act; a resolution by the company s board of directors to apply for a permit under the Deposit Insurance Act and authorizing two officers to sign all documentation required for this purpose on its behalf; an evidence that it is a member of the Canada Deposit Insurance Corporation (CDIC); the calculation of the liquidity ratio and debt ratio for the next three years by filling out Schedule 8 and Schedule 60 respectively of the annual statement prescribed by the AMF(see instructions for completing schedules); If the applicant expects its debt ratio to exceed 10, it must attach a request for authorization of such excess, accompanied by a resolution of the board of directors as set out in section 198 of the Act; the confirmation of the assets to capital multiple approval, if it is different from the standard established by the Office of the Superintendent of Financial Institutions (OSFI). The AMF may request other information in support of the application. As well, it may contact the supervisor in charge of overseeing the applicant to verify any information, in particular information related to its oversight. Note that the Act respecting trust companies and savings companies allows the AMF to impose restrictions and conditions on the issuance of a licence to an extra-provincial company if it believes that the Act regulating such company or its instrument of incorporation does not provide third parties with guarantees equivalent to those required of Québec companies pursuant to the Act. 4. Fees payable You will find at section 20 of the Regulation under the Act respecting trust companies and savings companies the fees for the issuance of a licence for a trust company or savings company. Payment must be by cheque or money order made out to the Autorité des marchés financiers, and dated on the date of the application. 5. Submitting the application The applicant must submit a formal application to the AMF including: a formal letter of application; the Licence Application" form prescribed by the AMF; supporting documents required for the application; the fees payable for the issuance of the licence. Autorité des marchés financiers Page 5

8 6. Processing the application The AMF will examine the company s licence application and communicate with the applicant as required regarding any pending issues and, at the latter s request, to inform the company regarding the status of the file. The AMF may, in certain cases, require additional information as part of its application assessment. The application will be considered complete when the AMF has received all of the information it has requested in a form it deems satisfactory. Please note that there is no specific timeline for assessing applications, but the AMF will do so as expeditiously as possible. Examination of an initial licence application for a trust company or savings company not incorporated in Québec takes an average of three (3) months, but missing information or requests for additional information may cause some delays. For additional information, please contact us at the following address: Autorité des marchés financiers Direction du contrôle du droit d exercice Place de la Cité, tour Cominar 2640, boulevard Laurier, bureau 400 Québec (Québec) G1V 5C1 Telephone: (418) , ext.: 4572 Toll-free number: , ext.: 4572 Fax: (418) Autorité des marchés financiers Page 6