Reduction of Stated Capital

Information Requirements

The applicant is generally expected to provide:

1. the rationale for seeking the reduction of stated capital;

2. statements showing the number of shares by class of the applicant that are issued and outstanding;

3. the proposed timing and amount of the reduction of stated capital;

4. proof of publication of the notice of intention to apply for approval of the Superintendent to reduce the stated capital of the applicant (the Notice)^{Footnote 1};

5. a confirmation from the applicant that it has not, since publication of the Notice, received any objections related to the Notice or otherwise with regard to the proposed reduction of stated capital, or has addressed any objection received (together with a description of the manner in which each objection has been addressed);

6. an executed copy of the special resolution authorizing the reduction of stated capital and specifying the stated capital account or accounts from which the reduction of stated capital effected by the special resolution will be deducted (the Special Resolution)^{Footnote 2};

7. results of voting by class of shares in respect of the Special Resolution; and

8. an analysis of the effect of the reduction of stated capital on the financial position and risk profile of the applicant, including:

   1. a comparative pro forma balance sheet (pre- and post-reduction of stated capital) including relevant assumptions,

   2. a comparative pro forma capital position and liquidity position^{Footnote 3} (pre- and post- reduction of stated capital) that confirms compliance with the applicant's internal target(s) and with OSFI's requirements applicable to the applicant, together with relevant assumptions and a breakdown of:

      1. in the case of a deposit-taking institution, all elements used to calculate:

         1. the capital ratios, in accordance with the Capital Adequacy Requirements Guideline,

         2. the leverage ratio, in accordance with the Leverage Requirements Guideline, and

         3. the liquidity coverage ratio, in accordance with the Liquidity Adequacy Requirements Guideline,

      2. in the case of a life insurance company, all elements used to calculate the Life Insurance Capital Adequacy Test, or

      3. in the case of a property and casualty insurance company, all elements of the Minimum Capital Test or the Mortgage Insurer Capital Adequacy Test, as applicable, and

   3. a confirmation that, following the reduction of stated capital, the applicant will be in compliance with its relevant policies, which may include those related to liquidity, capital management, risk management and investments.

Administrative Guidance

1. OSFI expects the Notice to set out, among other things:

   1. the name of the applicant;

   2. a copy of the actual or proposed^{Footnote 4} Special Resolution; and

   3. the Legislative Authority under which the Notice is given.

2. An application pursuant to any of the Legislative Authorities must be made within 3 months after the time of the passing of the Special Resolution, and the Notice must be published in the Canada Gazette prior to making the application^{Footnote 5}. The applicant may publish the Notice in the Canada Gazette prior to the passing of the Special Resolution provided that the applicant indicates in the Notice the date on which the Special Resolution will be presented to its shareholders or members, and if the Special Resolution passed differs substantively from the proposed Special Resolution published in the Notice, OSFI will expect the applicant to republish the Notice.

3. Federally regulated entities are expected to maintain adequate capital and liquidity at all times^{Footnote 6} and applicants should ensure that any planned reduction of stated capital will not impede their ability to meet capital and liquidity targets required by OSFI or its internal processes.^{Footnote 7}

4. The following email address should be used for the initial submission of documents in support of requests for approval(s) that are addressed in this document: approvals-approbations@osfi-bsif.gc.ca​. Once the initial submission has been received, a case officer will be assigned to the matter. Thereafter, all case-related documents and correspondence should be directed to the case officer.

5. Requests for approval(s) that are addressed in this document are not subject to a service charge.^{Footnote 8}