Exemption Orders (Discretionary)
LA CAISSE CENTRALE DESJARDINS DU QUÉBEC
COR#98/298
Headnote
National Application System - relief from the registration and prospectus requirements of the Act in connection with proposed trades in securities which are similar to bankers acceptances
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c. 418, sections 34(1)(a), 48, 61 and 76
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
BRITISH COLUMBIA, ALBERTA, MANITOBA, SASKATCHEWAN,
ONTARIO, QUÉBEC, NEW BRUNSWICK, NOVA SCOTIA,
PRINCE EDWARD ISLAND AND NEWFOUNDLAND
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
LA CAISSE CENTRALE DESJARDINS DU QUÉBEC
NATIONAL DECISION DOCUMENT
THE SECURITIES LEGISLATION OF
BRITISH COLUMBIA, ALBERTA, MANITOBA, SASKATCHEWAN,
ONTARIO, QUÉBEC, NEW BRUNSWICK, NOVA SCOTIA,
PRINCE EDWARD ISLAND AND NEWFOUNDLAND
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
LA CAISSE CENTRALE DESJARDINS DU QUÉBEC
NATIONAL DECISION DOCUMENT
WHEREAS the Canadian securities regulatory authority or regulator (the “Decision Maker”) in each of British Columbia Securities Commission, the Alberta Securities Commission, the Manitoba Securities Commission, the Saskatchewan Securities Commission, the Ontario Securities Commission, the Commission des valeurs mobilières du Québec, the Office of the Administrator of New Brunswick, the Securities Division of Newfoundland, the Nova Scotia Securities Commission and the Registrar of Securities of Prince Edward Island (the “Jurisdictions”) have received an application from La Caisse Centrale Desjardins du Québec (“Caisse Centrale”) for a decision pursuant to the securities legislation of the Jurisdictions (the “Legislation”) that the requirements contained in the Legislation to be registered to trade in a security and to file a preliminary prospectus and a prospectus and receive receipts therefor (the “Registration and Prospectus Requirements”) shall not apply to trades in short term depository bills governed by the Depository Bills and Notes Act (Canada) (the “Depository Act”) unconditionally accepted by Caisse Centrale and eligible for trading under the Debt Clearing Service (the “DSC”) of the Canadian Depository for Securities, Limited (“CDS”);
AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Commission des valeurs mobilières du Québec is the Principal Regulator for this application;
AND WHEREAS Caisse centrale has represented to the Decision Makers that:
- 1. Caisse Centrale was established on June 22, 1979 by an act of the Québec legislature which was replaced on June 22, 1989 by an Act respecting the Mouvement des caisses Desjardins. Caisse Centrale is also governed by the provisions of the Savings and Credit Unions Act (Québec), as amended.
2. Caisse Centrale is a reporting issuer which is not in default pursuant to the Legislation.
3. Caisse Centrale is an eligible issuer under the POP System set out in National Policy No. 47 and has maintained with the Jurisdictions a permanent information record since 1986.
4. Most of the capital stock of Caisse Centrale is held by the 11 federations of caisses of the Mouvement des Caisses Desjardins (the “Desjardins Group”) and by the three federations of caisses populaires of Ontario, Manitoba and New Brunswick. The federations of caisses of the Desjardins Group are full members of Caisse Centrale.
5. The principal function of Caisse Centrale is to act as financial agent for the Desjardins Group, and mainly for its 11 member federations and their 1,275 affiliated caisses. In this capacity, Caisse Centrale is group direct clearer at the Canadian Payments Association for the purpose of receiving and settling for payments items drawn on the federations and their affiliated caisses and a direct clearer of CDS. Caisse Centrale is also a primary distributor of Canadian government securities with the Bank of Canada.
6. Caisse Centrale grants loans to its member federations and institutions and corporations of the Desjardins Group, to large and medium size business corporations and to governmental and paragovernmental institutions, provides its members with better access to the Canadian and international financial markets and offers a range of financial services to governments, public-sector institutions and large and medium size business corporations. Caisse Centrale is the sole representative of the Desjardins Group dealing with foreign banks and maintains business relations with other banks in several countries.
7. Caisse Centrale is duly registered with the Régie de l'assurance-dépôts du Québec, the Québec equivalent of the Canadian Deposit Insurance Corporation. Caisse Centrale's activities are subject to the supervision and control of the Inspector General of Financial Institutions of Québec, the Québec equivalent of the Superintendent of Financial Institutions.
8. Caisse Centrale proposes to offer to its clients loan facilities through depository bills governed by the Depository Act unconditionally accepted by Caisse Centrale. These depository bills accepted by Caisse centrale are called, on a preliminary basis, "Acceptations Desjardins". The Acceptations Desjardins will also be eligible securities under the rules governing the DSC of CDS.
9. The Acceptations Desjardins are essentially bankers' acceptances. In Canada, a bankers' acceptance is a bill of exchange for the purposes of the Bills of Exchange Act (Canada) (the "Bills Act"); it is an unconditional order drawn by a person (a drawer who is often a bank customer), addressed to another person (usually a bank), in a certain amount payable in the future and accepted (stamped) by the bank.
10. Section 127 of the Bills Act indicates that the acceptor of a bill of exchange, by accepting it, engages that he will pay it according to the tenor of his acceptance. Upon acceptance of a bill of exchange, an acceptor becomes liable on it and is indebted in accordance with the terms of the bill.
11. The only difference between the bankers' acceptances and the Acceptations Desjardins lies in the fact that Caisse centrale is not a bank under the Bank Act (Canada).
12. The Depository Act was adopted on March 19, 1998 and came into force on June 11, 1998. The Depository Act is designed to permit trades in money market instruments including depository bills to be cleared through depositories such as CDS. Under the Depository Act, obligations similar in substance to conventional bankers' acceptances may be created. Pursuant to section 11 of the Depository Act, the acceptor of a depository bill is liable to provide the clearing house to which it is payable with funds so that the clearing house can pay on the due date and in accordance with its terms, the participants who have an interest in the depository bill.
13. A depository bill under the Depository Act differs from a bankers' acceptance in that the bill must be made payable to a clearing house and deposited with the clearing house to which it is payable.
14. The Acceptations Desjardins will be depository bills governed by the Depository Act.
15. Under the Legislation, evidence of indebtedness of a bank listed in Schedule I or II of the Bank Act (Canada) are exempt from the Registration and Prospectus Requirements. "Indebtedness" is broadly defined as the state of being in debt and includes obligations yet to become due as well as those already due. On acceptance of a bill of exchange, a bank immediately becomes liable on it and is indebted in accordance with the terms thereof. The instrument representing said bill is evidence of such indebtedness.
16. The analysis applicable to bankers' acceptances is similarly applicable to depository bills, including Acceptations Desjardins, governed by the Depository Act.
17. The Legislation in most provinces of Canada also indicate that evidence of indebtedness of trust corporations, loan corporations or insurance companies registered in the applicable province, like those of banks, are exempt from the Registration and Prospectus Requirements.
18. Caisse centrale does not qualify as a trust corporation, a loan corporation or an insurance company under the applicable legislation of the relevant provinces.
AND WHEREAS the Decision Makers are of the opinion that it would not be prejudicial to the public interest to make the Decision;
THE DECISION OF THE Decisions Makers pursuant to the Legislation is that the requirement contained in the Legislation to be registered to trade in a security and to file a preliminary prospectus and a prospectus and receive receipts therefor shall not apply to trades in short term depository bills governed by the Depository Act unconditionally accepted by Caisse Centrale.
DATED at Montreal, Québec this 17 th day of December 1998.
Johanne Duchesne
Director of Capital Market