Information on significant interest holders

Introduction

The provision of mortgage services in B.C. is governed by the Mortgage Services Act (“MSA”), Mortgage Services Regulation (“Regulation”), and Mortgage Services Rules (“Rules”). The information below outlines requirements regarding significant interest holders.  

Understanding significant interest holders

Defining significant interest holders

The persons¹ captured by the term “significant interest holder” vary depending on the type of person involved in a mortgage services entity. Different criteria apply depending on whether the person is a corporation with issued shares, a partner in a partnership, or another type of person. The applicable definitions are set out below. 

Corporation with Issued Shares

In the case of a corporation with issued shares, a significant interest holder is any person who:

• Is the registered or beneficial owner of, or who directly or indirectly controls, 10% or more of the issued shares of the corporation, or

• Is the registered or beneficial owner of, or who directly or indirectly controls, issued shares of the corporation that carry 10% or more of the rights to vote at general meetings.

Partnership

In the case of a partnership, other than a limited partnership, a significant interest holder is a partner of the partnership.

Any Other Person

In the case of any other person, a significant interest holder is any person who:

• Is entitled, directly or indirectly, to 10% or more of the profits of the other person,

• Is entitled, directly or indirectly, to 10% or more of the assets of the other person on winding up or dissolution of the other person, or

• Holds, owns or controls, directly or indirectly, 10% or more of the voting rights in respect of the other person. 

Requirements regarding significant interest holders

There are limited, but important requirements regarding significant interest holders of licensees under the Rules. The information below outlines these requirements.  

Court or bankruptcy proceedings

A licensee must promptly notify BCFSA, in writing, if any of the following circumstances apply:

• A court proceeding is started against a significant interest holder of the licensee.

• Any court order or judgment is made against a significant interest holder of the licensee, related to misappropriation, fraud, or breach of trust.

• Any business owned by a significant interest holder, or that the significant interest holder has been a controlling person² of at any time within the past two years, has a court order or judgment made against the business related to misappropriation, fraud, or breach of trust.

• Any proceeding is started under section 3 of the Civil Forfeiture Act, in which the licensee knows, or reasonably ought to know, that any of the following are named as a party or have filed a response to the proceeding: a significant interest holder of the licensee, or a person of which the licensee has been a controlling person or significant interest holder at any time during the past two years.

• A significant interest holder of the licensee is charged with or convicted of an offence under federal or British Columbia laws, or the laws of another province or country.³

Failure to promptly notify BCFSA of the circumstances above, may result in an administrative penalty and/or other enforcement measures. 

Giving notice of business changes

A mortgage brokerage must promptly notify BCFSA, in writing, of any change in the significant interest holders of the brokerage (e.g., adding or removing significant interest holders of the brokerage).

More information on communicating with BCFSA can be found on BCFSA’s Mortgage Services Knowledge Base.  

Applicable Section of Mortgage Services Act, its Regulations, or the Mortgage Services Rules

MSA rules

s. 1 [Definitions and interpretive provisions]

s. 26 [Licensee must give notice of discipline, bankruptcy, criminal or other proceedings]

s. 27 (g) [Mortgage brokerage must give notice of business changes]