Canadian Payments Act

This Act may be cited as the Canadian Payments Act.

In this Act,

Association means the Canadian Payments Association established by section 3; (Association)

authorized foreign bank means a foreign bank in respect of which an order under subsection 524(1) of the Bank Act has been made but does not include a foreign bank that is subject to the restrictions and requirements referred to in subsection 524(2) of that Act; (banque étrangère autorisée)

Board means the Board of Directors of the Association; (conseil)

by-law means a by-law of the Association; (règlement administratif)

central cooperative credit society and central mean a cooperative credit society incorporated by or under an Act of the legislature of a province, one of whose principal purposes is to provide liquidity support to local cooperative credit societies, and

whose membership consists wholly or primarily of local cooperative credit societies, or

whose directors are wholly or primarily individuals elected or appointed by local cooperative credit societies; (société coopérative de crédit centrale ou centrale)

Chairman[Repealed, 2001, c. 9, s. 219]

Chairperson means the Chairperson of the Board referred to in section 15; (président du conseil)

cooperative credit association means an association to which the Cooperative Credit Associations Act applies; (association coopérative de crédit)

entity includes a corporation, trust, partnership, fund, agency and unincorporated association or organization; (entité)

Executive Committee[Repealed, 2014, c. 39, s. 334]

federation of cooperative credit societies or federation[Repealed, 2001, c. 9, s. 219]

General Manager[Repealed, 2007, c. 6, s. 422]

Inspector[Repealed, R.S., 1985, c. 18 (3rd Supp.), s. 33]

life insurance company means

a life company within the meaning of subsection 2(1) of the Insurance Companies Act,

a foreign life company within the meaning of section 571 of that Act, acting in respect of its insurance business in Canada, or

a body corporate that carries on under a constating instrument issued under an Act of the legislature of a province a business substantially similar to the business of a life company referred to in paragraph (a); (société d’assurance-vie)

loan company means a corporation that accepts deposits transferable by order and that

is a company to which the Trust and Loan Companies Act applies and that is not a trust company pursuant to subsection 57(2) of that Act, or

carries on, under an Act of the legislature of a province or a constating instrument issued under provincial jurisdiction, a business substantially similar to the business of a company referred to in paragraph (a); (société de prêt)

local cooperative credit society and local mean a cooperative credit society incorporated by or under an Act of the legislature of a province

whose members consist substantially of individuals, and

whose principal purpose is to receive deposits from, and make loans to, its members; (société coopérative de crédit locale)

member means any of those persons who are members of the Association pursuant to section 4; (membre)

Minister means the Minister of Finance; (ministre)

money market mutual fund means a fund

the assets of which are fully or principally invested in short-term and highly liquid debt securities, and

that satisfies conditions prescribed by regulation; (fonds mutuel en instruments du marché monétaire)

payment item means an item within a class of items prescribed by by-law; (instrument de paiement)

person includes an entity; (personne)

President means the President of the Association appointed under section 16; (président)

qualified corporation means a body corporate

that has issued shares to the public under a prospectus, filed in accordance with the laws of the province in which the shares were issued, having conditions attached to the shares requiring the body corporate to accept the surrender of any fully-paid shares, or fractions or portions of the shares,

at the demand of their holder, and

at prices determined and payable in accordance with specified conditions,

whose shares referred to in paragraph (a) have a fair market value, determined without regard to any voting rights attached to the shares, that is not less than 95% of the fair market value of all of the issued shares of the capital stock of the body corporate, and

having assets that constitute a money market mutual fund; (société admissible)

qualified trust means an inter vivos trust

in which the interest of its beneficiaries is described by reference to units of the trust that have been issued to the public under a prospectus, filed in accordance with the laws of the province in which the units were issued, having conditions attached to the units requiring the trustee to accept the surrender of any fully-paid units, or fractions or portions of the units,

at the demand of their holder, and

at prices determined and payable in accordance with specified conditions,

whose units referred to in paragraph (a) have a fair market value, determined without regard to any voting rights attached to the units, that is not less than 95% of the fair market value of all of the issued units of the trust, and

whose assets constitute a money market mutual fund; (fiducie admissible)

rule means a rule of the Association; (règle)

securities dealer means a body corporate that is registered or licensed under the laws of a province to trade in securities, as agent or for its own behalf; (courtier en valeurs mobilières)

Superintendent[Repealed, 2001, c. 9, s. 219]

trust company means a corporation that accepts deposits transferable by order and that

is a company to which the Trust and Loan Companies Act applies and that is a trust company pursuant to subsection 57(2) of that Act, or

carries on, under an Act of the legislature of a province or a constating instrument issued under provincial jurisdiction, a business substantially similar to the business of a company referred to in paragraph (a); (société de fiducie)

trustee, in respect of a qualified trust, means a trustee that is a body corporate; (fiduciaire)

user means

in Part 1, a person who is a user of payment services but is not a member, and

in Part 2, a person who is a user of services provided by a participant of a payment system but is not a participant in the system. (usager)

For the purposes of Part 1, a local cooperative credit society, a cooperative credit association, a central cooperative credit society or a federation of cooperative credit societies is deemed not to be a loan company or a trust company.

Rules, statements of principle and standards made by the Board and orders made under a by-law are not statutory instruments for the purposes of the Statutory Instruments Act.

This Act is binding on Her Majesty in right of Canada.

If Her Majesty in right of a province becomes a member of the Association, this Act is binding on Her Majesty in right of the province.

A corporation is hereby established to be called the Canadian Payments Association.

The Association is not an agent of Her Majesty.

The Association shall consist of the following members:

the Bank of Canada;

every bank;

every authorized foreign bank;

every cooperative credit association, loan company or trust company that is designated as a bridge institution under the Canada Deposit Insurance Corporation Act; and

any other person who is entitled under this Part to be a member and who, on application to the Association for membership in the Association, establishes entitlement to be a member.

Each of the following persons is entitled to be a member of the Association if they meet the requirements set out in the regulations and the by-laws:

a central, a trust company, a loan company, a local and any other person that accepts deposits transferable by order;

a clearing house, as defined in section 2 of the Payment Clearing and Settlement Act, of a clearing and settlement system designated under subsection 4(1) of that Act;

Her Majesty in right of a province or an agent or mandatary of Her Majesty in right of a province, if Her Majesty in right of a province or the agent or mandatary accepts deposits transferable by order;

a life insurance company;

a securities dealer;

a cooperative credit association;

the trustee of a qualified trust;

a qualified corporation, on behalf of its money market mutual fund; and

a payment service provider, as defined in section 2 of the Retail Payment Activities Act, that performs retail payment activities, as defined in that section.

Membership in the Association commences

in the case of a bank and an authorized foreign bank, on the day on which an order is made under the Bank Act approving its commencement and carrying on of business; and

in the case of a person referred to in paragraph (1)(d), on the day on which the person’s application for membership in the Association is approved by the Board.

A suspension, imposed in accordance with the by-laws, of any of a member’s membership rights is not effective unless the Association has, in advance, sent the Minister a notice of the suspension.

A member, other than a member referred to in paragraphs (1)(a) to (c), ceases being a member of the Association if

the member gives the Association notice of its intention to cease being a member at least ninety days prior to the effective date thereof or such longer notice as the by-laws may require; and

the member satisfies its liabilities to the Association.

A member, other than a member referred to in paragraphs (1)(a) to (c), ceases being a member of the Association three days after the day on which the Board adopts a resolution, by a majority of not less than two-thirds of the votes cast by directors voting in respect of the resolution, declaring that, in the opinion of the Board, the member does not meet the requirements set out in the regulations and the by-laws.

A member to which a resolution of the Board described in subsection (6) is applicable is not

eligible to vote at any meeting of members held in the three days following the day on which the resolution is adopted;

eligible, despite any other provision of this Part, for readmission to the Association as a member until a resolution is adopted by the Board, by a majority of not less than two-thirds of the votes cast by directors voting in respect of the resolution, declaring that, in the opinion of the Board, the member or former member concerned meets the requirements set out in the regulations and the by-laws; or

relieved of the obligation to pay to the Association its liabilities to the Association on the day it ceases being a member.

Each member shall have one vote on all matters to be decided by members.

A member entitled to vote at a meeting of members may, by means of a proxy, appoint a proxyholder or one or more alternate proxyholders to attend and act at the meeting in the manner and to the extent authorized by the proxy and within the authority conferred by the proxy.

At a meeting of members, the members present, in person or by proxy, constitute a quorum if, together, they represent the majority of all members.

The objects of the Association are to

establish and operate national systems for the clearing and settlement of payments and other arrangements for the making or exchange of payments;

facilitate the interaction of its clearing and settlement systems and related arrangements with other systems or arrangements involved in the exchange, clearing or settlement of payments; and

facilitate the development of new payment methods and technologies.

In pursuing its objects, the Association shall promote the efficiency, safety and soundness of its clearing and settlement systems and take into account the interests of users.

The Association may, in carrying out its objects,

arrange the exchange of payment items at such places in Canada as the Association considers appropriate;

require the payment of dues by members and establish the amount thereof;

employ such officers and employees and engage the services of such advisers, agents and consultants as it considers necessary for the proper conduct of its business, and fix the terms and conditions of their employment or engagement and remuneration; and

provide or procure the provision of pension, insurance or other benefits for officers and employees of the Association.

For the purpose of carrying out its objects, the Association has the capacity, rights, powers and privileges of a natural person.

The head office of the Association shall be at such place in Canada as may be designated in the by-laws of the Association.

There shall be a Board of Directors of the Association consisting of the following 13 directors:

the President;

three directors who are directors, officers or employees of members that, in the normal course of business, maintain a settlement account at the Bank of Canada;

two directors who are directors, officers or employees of members other than those described in paragraph (b); and

seven directors who are independent of the Association and of its members.

The directors referred to in paragraphs (1)(b) to (d) are to be elected by the members.

At a meeting of the Board, the directors present constitute a quorum if at least seven directors are present and a majority of the directors present are directors referred to in paragraph (1)(d).

No individual is eligible to be a director if they are

a director, officer or employee of the Bank of Canada;

employed in any capacity in the federal public administration or the public service of a province or hold any office or position for which any salary or other remuneration is payable out of public moneys; or

a member of the Senate or House of Commons or a member of a provincial legislature.

When a director, officer or employee of a member is a director of the Association, no other director, officer or employee of that member, or of an affiliate of that member, is eligible to be a director of the Association.

For the purposes of this section,

one corporation is affiliated with another corporation if one of them is the subsidiary of the other or both are subsidiaries of the same corporation or each of them is controlled by the same person; and

if two corporations are affiliated with the same corporation at the same time, they are deemed to be affiliated with each other.

In paragraph (3)(a), control means control in any manner that results in control in fact, whether directly through the ownership of securities or indirectly through a trust, agreement or arrangement, the ownership of any corporation or otherwise.

The elected directors hold office for a term of three years and are eligible to be elected for two further terms.

If a resolution passed by a two-thirds majority of the members who are present at a special meeting of members called to consider the resolution provides for the recall of an elected director, then, despite subsection (1), that director ceases to be a director of the Association at the time notice of the resolution is given to the director or at any other time that may be fixed by by-law.

A director referred to in paragraph 8(1)(d) shall be paid by the Association the remuneration that is fixed by by-law.

A vacancy on the Board does not impair the right of the remaining directors to act.

If a vacancy among the elected directors occurs, the directors shall cause a meeting to be held of the members for the purpose of electing a director to fill the vacancy for the remainder of the term of the director whose departure resulted in the vacancy.

If the meeting is called and there is no quorum or the meeting fails to elect a director to fill the vacancy, the Board shall elect a director for the remainder of the term of the director whose departure from the Board resulted in the vacancy.

[Repealed, 2014, c. 39, s. 338]

[Repealed, 2014, c. 39, s. 338]

At least three quarters of the directors of the Association must be Canadian citizens ordinarily resident in Canada.

The elected directors shall elect a Chairperson of the Board and a Deputy Chairperson of the Board from among the directors referred to in paragraph 8(1)(d) for a renewable term of up to three years. However, the Chairperson and Deputy Chairperson shall each serve no more than six years in office in total.

The Chairperson shall preside at meetings of the Board and perform the duties that are assigned by the by-laws.

If the Chairperson is unable to act by reason of absence or incapacity, the Deputy Chairperson shall perform the duties of the Chairperson.

The Chairperson or, in the absence or incapacity of the Chairperson, the Deputy Chairperson has, in the event of a tie vote on any matter before the Board at a meeting of the Board, a second vote.

The elected directors shall appoint the President of the Association.

The President is the chief executive of the Association and has, on behalf of the Board, the direction and management of the business of the Association with authority to act in all matters that are not by the by-laws or by resolution of the Board specifically reserved to be done by the Chairperson or the Board.

Except as otherwise provided by the President, and subject to any terms and conditions that may be specified by the President, an officer or employee of the Association may exercise any power and perform any duty or function of the Association if the officer or employee is appointed to serve in a capacity appropriate to the exercise of the power or performance of the duty or function.

Every director and officer of the Association, in exercising their powers and performing their duties, shall

act honestly and in good faith with a view to the best interests of the Association; and

exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

The Board shall direct and manage the affairs of the Association and may for such purposes exercise all the powers of the Association.

Subject to the by-laws, the Board may

borrow money on the credit of the Association;

issue, reissue, sell or pledge debt obligations of the Association; and

mortgage, pledge or otherwise create a security interest in all or any property of the Association owned or subsequently acquired, to secure any obligation of the Association.

For the purposes of this section,

debt obligation means a bond, debenture, note or other evidence of indebtedness or guarantee of the Association, whether secured or unsecured; (titre de créance)

security interest means an interest in or charge on the property of the Association by way of mortgage, pledge or otherwise, taken by a creditor to secure payment of an obligation of the Association. (sûreté)

The Board may make any by-laws that it considers advisable for the attainment of the objects of the Association, including by-laws

providing for eligibility criteria for membership in the Stakeholder Advisory Council or the Member Advisory Council and their number of members;