Specialized Financing (Cooperative Credit Associations) Regulations

The Specialized Financing (Cooperative Credit Associations) Regulations are a set of rules that govern the ownership and control of specialized financing entities by cooperative credit associations in Canada. The regulations aim to prevent excessive risk-taking and ensure the financial stability of these associations.

The regulations apply to associations, other than retail associations, that acquire or hold shares of, or ownership interests in, specialized financing entities. These entities are defined as those controlled by an association or in which the association has a substantial investment.

To comply with these regulations, associations must adhere to certain restrictions on their acquisition and holding of specialized financing entities. For example, they cannot acquire or hold control of such entities if the value of outstanding debt obligations exceeds twice the sum of assets over liabilities or regulatory capital.

The regulations also impose a 13-year limit on an association's holding of control or substantial investment in a specialized financing entity. This is to prevent prolonged exposure to excessive risk and ensure the financial stability of the association.

Additionally, these regulations do not require approvals for certain investments made by associations in accordance with the Act. However, they do provide guidelines for associations to follow when acquiring or increasing their stakes in specialized financing entities.

Overall, the Specialized Financing (Cooperative Credit Associations) Regulations are designed to protect the financial interests of cooperative credit associations and maintain their stability and soundness.