On March 26, 2018, the Government of Canada released the final version of the bail-in regulations under the Bank Act and the CDIC Act (Bail-in Regulations). The Bail-In Regulations will come into force on September 23, 2018, being the 180th day after the date on which they were registered.
The bail-in regime provides for the conversion of certain eligible shares and liabilities of Canada’s six designated domestic systemically important banks (D-SIB) into common equity of the bank (or any of its affiliates) in the event the D-SIB becomes non-viable. The Bail-in Regulations set out the scope of shares and liabilities that are eligible for bail-in conversion, their conversion terms and their issuance requirements.
A draft version of the Bail-in Regulations was published for consultation on June 16, 2017. See Osler’s Update, “Canada Publishes Bail-In Regulations,” dated June 21, 2017 for a detailed discussion of the bail-in process and the draft Bail-in Regulations. The final Bail-in Regulations are substantially the same as the draft regulations, with one new key requirement: DSIBs are prohibited from promoting bail-in instruments to Canadian purchasers as a “deposit” (or any variation thereof). As a result, DSIBs will need to update any applicable marketing materials commencing effective as of September 23, 2018.