It has been over three years since the Government of Canada implemented the legislative framework to enable provincial credit unions and caisses populaires to incorporate or continue as federal credit unions under the Bank Act (Canada). At that time, some commentators thought this new framework would attract provincial credit unions looking to expand across Canada and diversify their sources of investment in order to fund growth.
At the time of this post, we could only identify one group of caisses populaires that has taken formal steps to continue under the Bank Act (Canada). Last year, a group of 15 caisses populaires from New Brunswick, the Caisses Populaires acadiennes, filed a Notice pursuant to the Disclosure on Continuance Regulations (Federal Credit Unions) disclosing their intent to amalgamate and make an application to continue the amalgamated entity federally under the Bank Act (Canada). A link to that notice can be found here: http://www.acadie.com/pdf/NoticeDisclosure.pdf. Earlier this year, the group merged into one Caisse and became known as the “Uni Financial Cooperation“. Yesterday, the Canada Deposit Insurance Corporation (CDIC) announced that the Uni Financial Cooperation became the first federal credit union to be continued under the Bank Act (Canada). You can read the announcement here.
Notably, the Federal Government recently proposed legislative measures to facilitate the continuance process for provincial credit unions under the Bank Act (Canada). These measures date back to 2014, when the Federal Government indicated it would provide temporary transitional support to eligible provincial credit unions to enable them to continue to operate seamlessly under the federal regime (you can read the announcement here). Earlier this year, in the 2016 Budget, the Federal Government again recognized that credit unions considering the federal framework may face transition challenges, and indicated that it would propose further legislative measures to provide targeted protection against transitional risks and to facilitate a smooth entry process (you can read the relevant portion of the 2016 Budget here). Some of these legislative measures were introduced earlier this year and recently received Royal Assent.
Given the time which has passed since the implementation of the Federal regime, the lack of activity in this regard (other than the Uni Financial continuance), as well as the recently introduced legislative measures, we thought it would be timely to review some of the key differences between the statutory regimes governing Saskatchewan credit unions and federal credit unions.
Accordingly, this is the first in a series of related blog posts that will consider the following:
- the impact on deposit insurance coverage;
- the impact on corporate powers;
- the impact on a credit union’s capital structure;
- the implications for board governance; and
- the legislative measures that have been introduced to facilitate federal continuance.
The related blog posts on this topic will follow in subsequent weeks.