SOR/94-8119941

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20196

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INSURANCE COMPANIES ACTProtection of Assets (Fraternal Benefit Societies) RegulationsRegulations Respecting the Protection and Maintenance of Assets of SocietiesP.C.1994-60  19941

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His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to paragraph 703(g) of the Insurance Companies Act*, is pleased hereby to make the annexed Regulations respecting the protection and maintenance of assets of societies.*S.C. 1991, c. 47Short Title

1These Regulations may be cited as the Protection of Assets (Fraternal Benefit Societies) Regulations.

Interpretation

2In these Regulations,bond means a contract of insurance by which one party agrees to indemnify another party for loss arising out of the act of a third party; (caution)security, in respect of a society, means a negotiable security beneficially owned or held by the society or held by the society in trust, but does not include a security issued by the society; (titre)security transaction means a purchase, sale, redemption, exchange, transfer or assignment of, or other transaction in respect of, a security. (opération sur titres)

Application

3These Regulations do not apply to a society(a)that is carrying on business in a jurisdiction in compliance with a law of that jurisdiction, to the extent that that law is inconsistent with these Regulations; or(b)to the extent that they are inconsistent with(i)a power conferred, or a duty imposed, on the society in respect of the administration of an estate or trust, or(ii)the discharge of the society’s responsibilities in acting as an agent.

Safeguarding of Assets

4A society shall(a)maintain a record in writing of procedures to be followed in the handling and safeguarding of assets owned or held by the society; and(b)inform every director, officer, employee and agent of the society who has access to, or is involved in the handling and safeguarding of, assets owned or held by the society of those procedures.

Safeguarding of Securities

5A society shall maintain an up-to-date record that identifies each of its securities.

6(1)Subject to subsection (2) and section 7, a society shall ensure that every security is kept securely, in a manner that prevents unauthorized access to the security, in the custody of(a)the society; or(b)an entity that is authorized to act as a custodian of securities or as a depository or clearing agency for securities by a law of the jurisdiction in which the entity is carrying on business.(2)Subsection (1) does not apply in respect of a security that is(a)under the control of the government of the jurisdiction in which the society is carrying on business;(b)pledged as collateral for the indebtedness or potential indebtedness of the society;(c)loaned to a person pursuant to a written agreement; or(d)in transit.

7A society shall not place a security in the custody of an entity referred to in paragraph 6(1)(b) unless the society has entered into a written custodial agreement with that entity.

8A society shall, on a daily basis, deposit any net amount received by the society as a result of any security transaction in an account kept by the society(a)with the society;(b)with a financial institution that is authorized to accept deposits by a law of the jurisdiction in which the financial institution is carrying on business;(c)with a trust company that is authorized to hold money in trust by a law of the jurisdiction in which the trust company carries on business;(d)with the government of the jurisdiction in which the society is carrying on business, or with an agency thereof that is authorized to act as a custodian of securities; or(e)with CDS Clearing and Depository Services Inc.SOR/94-367, s. 7(E); SOR/2010-285, s. 4

Registration of a Security

9(1)Subject to subsections (2) and (3), a society shall ensure that every security is registered in the society’s name in the register of the entity that issued the security.(2)Subsection (1) does not apply in respect of a security that(a)cannot be registered in the society’s name for a reason that is beyond the control of that society;(b)is under the control of the government of the jurisdiction in which the society is carrying on business;(c)is held by the society as collateral or for safekeeping;(d)is registered in the name of a nominee of the society or of an entity referred to in paragraph 6(1)(b);(e)is held under a book entry certificateless or immobilization system; or(f)is held temporarily by an agent of the society, a liquidator, a trustee or the issuer of the security for purposes of reorganization, amalgamation, liquidation or voting.(3)Where a security is otherwise protected against loss, fraud, theft and destruction, the society may hold the security(a)in bearer form; or(b)in registered form in a name other than the society’s name.

Bonding and Insurance

10(1)A society shall acquire and maintain one or more bonds, issued by an entity authorized to insure risks under the laws of the jurisdiction in which the entity carries on business, to indemnify the society for any loss in respect of assets owned or held by the society that arises out of a dishonest or criminal act of an officer or employee of the society.(2)A society shall, in respect of assets owned or held by the society, acquire and maintain one or more insurance policies to indemnify the society for any loss arising out of damage to, or the destruction or mysterious disappearance of, those assets or out of any other normal contingency.

11A bond or an insurance policy acquired and maintained in accordance with section 10 shall provide that the bond or insurance policy shall not be cancelled or terminated by the insurer or the insured until at least 30 days after the receipt by the Superintendent of a written notice from the insurer or the insured, as the case may be, of its intention to cancel or terminate the bond or insurance policy.

12A bond or an insurance policy acquired and maintained in accordance with section 10 shall be in an amount that is established by the supreme governing body of the society, having regard to(a)the nature and value of the assets owned or held by the society;(b)the arrangements and procedures applicable to the handling and safeguarding of the assets owned or held by the society; and(c)any other factors that might affect the extent of any loss that the society might sustain.