Canada’s complex, well-regulated banking system falls under the jurisdiction of the federal government.
The governing statute is the Bank Act.
It authorizes domestic banks (Schedule I), foreign subsidiary banks that are controlled by eligible foreign institutions and foreign bank branches of foreign institutions.
The five largest Canadian banks command most of the market. They provide debt financing, cash management and investment services.
Other non-bank financial institutions also provide debt financing.
It is usually in the form of asset-based loans or mezzanine debt.
In Ontario the most common non-bank financial institutions are trust and loan companies, credit unions, and insurance companies.
New regulations are changing the way banks and other financial institutions do business.
Their activities must strictly conform to rules in the Bank Act and its supporting regulations.
In the wake of the financial crisis, new regulations have emerged in numerous areas, such as the recent changes in the mortgage business or the rules set out in the new global Basel III regulatory standard.
Further, new technology like smart phones, wireless networking and the Internet has led to such innovations as new payment systems. If you have a similar new business idea, you will want to seek legal advice to ensure it would be allowed under the rules.
Our financial services legal experts at HLF are here to help. We can advise you on how the myriad of banking and financing laws affect your particular business and any expansion and innovation ideas you might have. So don’t hesitate to call us.