Vol. 149, No. 15 — July 29, 2015

Registration

SOR/2015-185 July 15, 2015

CANADIAN PAYMENTS ACT

By-laws Amending Certain By-laws Made Under the Canadian Payments Act

The Board of Directors of the Canadian Payments Association, pursuant to subsection 18(1) (see footnote a) of the Canadian Payments Act (see footnote b), makes the annexed By-laws Amending Certain By-laws Made Under the Canadian Payments Act.

Ottawa, June 11, 2015

JANET COSIER
Chairperson of the Board of Directors
of the Canadian Payments Association

The Minister of Finance, pursuant to subsection 18(2) (see footnote c) of the Canadian Payments Act (see footnote d), approves the annexed By-laws Amending Certain By-laws Made Under the Canadian Payments Act made by the Board of Directors of the Canadian Payments Association.

Ottawa, July 14, 2015

JOE OLIVER
Minister of Finance

BY-LAWS AMENDING CERTAIN BY-LAWS MADE UNDER THE CANADIAN PAYMENTS ACT

BY-LAW NO. 7 RESPECTING THE LARGE VALUE TRANSFER SYSTEM

1. The portion of section 51 of the By-law No. 7 Respecting the Large Value Transfer System (see footnote 1) before paragraph (a) is replaced by the following:

51. For greater certainty, nothing in sections 43 to 50 affects any right or remedy that a participant or any person may have under the general law, including, without limitation, the law governing mistake, unjust enrichment or restitution to recover the amount or excess amount of a payment message from any person after that amount was erroneously made available under this by-law including, without limitation, on the basis of

CANADIAN PAYMENTS ASSOCIATION BY-LAW NO. 1 — GENERAL

2. (1) The definitions “Advisory Council”, “bank” “employee” and “secretary” in section 1 of the Canadian Payments Association By-law No. 1 — General (see footnote 2) are repealed.

(2) The definition “stakeholder” in section 1 of the By-law is replaced by the following:

“stakeholder”
« intervenant »

“stakeholder” means a person or an entity that is a payment system user or a payment service provider, or that represents the interests of a group of payment system users or payment service providers, but that is not a member of or eligible for membership in the Association.

(3) Section 1 of the By-law is amended by adding the following in alphabetical order:

“Stakeholder Advisory Council”
« comité consultatif des intervenants »

“Stakeholder Advisory Council” means the Stakeholder Advisory Council established by section 21.2 of the Act.

3. Sections 2 to 35 of the By-law are repealed.

4. The heading before section 36 of the By-law is replaced by the following:

STAKEHOLDER ADVISORY COUNCIL

5. Section 38 of the By-law is replaced by the following:

Term — Stakeholder Advisory Council members

38. The members of the Stakeholder Advisory Council that are referred to in subsection 21.2(4) of the Act may be re-appointed for any number of additional terms.

6. Sections 40 to 42 of the By-law are repealed.

7. The portion of section 43 of the By-laws before paragraph (a) is replaced by the following:

Primary criteria for appointment

43. The Board, in consultation with the Minister of Finance, shall evaluate each nomination for membership on the Stakeholder Advisory Council on the basis of the membership requirements and shall

8. Section 45 of the By-law is repealed.

9. Subsection 48(2) of the English version of the Regulations is replaced by the following:

Effect of vacancy

(2) If a vacancy occurs under paragraph 46(b) one year or more before the expiry of the member’s term, the Board shall appoint a substitute Stakeholder Advisory Council member for the remainder of the term. If less than one year of the term remains, the vacancy shall not be filled.

10. Sections 49 to 72 of the By-law are repealed.

11. Paragraph 73(2)(c) of the Regulations is replaced by the following:

12. Subsection 74(3) of the By-law is replaced by the following:

Effect of membership

(3) Every member is liable to pay membership dues in accordance with Canadian Payments Association – By-Law No. 2 – Finance.

13. Paragraph 75(b) of the By-law is replaced by the following:

14. Paragraphs 76(e) and (f) of the By-law are replaced by the following:

15. Subsection 77(2) of the By-law is replaced by the following:

Effect of membership

(2) An applicant is liable to pay membership dues on the day on which it becomes a member.

16. Sections 79 to 103 of the By-law are repealed.

17. Sections 107 to 111 of the By-law are repealed.

18. The Bylaw is amended by replacing “Advisory Council” with “Stakeholder Advisory Council” in the following provisions:

CANADIAN PAYMENTS ASSOCIATION BY-LAW NO. 2 — FINANCE

19. Subsection 2(1) of the Canadian Payments Association By-Law No. 2 — Finance (see footnote 3) is replaced by the following:

Dues based on budgets

2. (1) The Board shall calculate and impose dues on members for a fiscal year on the basis of the operating and capital budgets for that fiscal year that it prepares under subsection 22(1) of the Act.

20. Section 3 of the By-law is replaced by the following:

Changes to budgets

3. If the Board amends the operating or capital budget for a fiscal year, it shall adjust the dues payable for that fiscal year on the basis of the amendment.

CANADIAN PAYMENTS ASSOCIATION BY-LAW NO. 3 — PAYMENT ITEMS AND AUTOMATED CLEARING SETTLEMENT SYSTEM

21. Section 1 of the Canadian Payments Association By-law No. 3 — Payment Items and Automated Clearing Settlement System (see footnote 4) is amended by adding the following in alphabetical order:

“federal credit union”
« coopérative de crédit fédérale »

“federal credit union” has the same meaning as in section 2 of the Bank Act.

22. Paragraph 28(1)(b) of the By-law is replaced by the following:

23. Subsection 33(1) of the French version of the By-law is replaced by the following:

Agents de compensation — nomination

33. (1) Le conseil peut nommer agent de compensation l’adhérent ou l’adhérentcorrespondant de groupe qui en fait la demande conformément aux règles s’il satisfait, notamment, aux exigences techniques, financières et de toute autre nature prévues par les règles.

24. Paragraph 39(3)(b) of the By-law is replaced by the following:

25. Paragraph 43.1(2)(d) of the By-law is replaced by the following:

CANADIAN PAYMENTS ASSOCIATION BY-LAW NO. 6 — COMPLIANCE

26. The definition “secretary” in subsection 1(1) of the Canadian Payments Association By-law No. 6 — Compliance (see footnote 5) is replaced by the following:

“secretary”
« secrétaire »

“secretary” means the secretary of the Association appointed by the Board.

27. Section 26 of the Bylaws and the heading before it are replaced by the following:

NOTICES AND DOCUMENTS

Method of giving notices

26. (1) Any notice to be given under this by-law is sufficiently given if it is given by personal delivery, transmitted by facsimile or electronic mail, or sent by registered mail (except during periods of actual or threatened interruption of normal postal service because of labour disturbance) addressed to the intended recipient at the recipient’s address as recorded on the membership list or in the records of the Association.

Delivered notice

(2) A notice given by personal delivery is considered to have been given on the day it is delivered.

Mailed notice

(3) A notice sent by registered mail is considered to have been given on the fifth day after it was mailed.

Notices sent by other means

(4) A notice transmitted by facsimile or electronic mail is considered to have been given on the day it is transmitted.

Change of address

(5) The secretary may change or cause to be changed in the records of the Association the address of any member, director, officer, auditor or member of a committee of the Board in accordance with any reliable information.

Notice of change of address

(6) Members shall inform the secretary of any change in their address.

COMING INTO FORCE

28. These By-laws come into force on August 1, 2015.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the By-laws.)

Issues

Amendments to the Canadian Payments Act introduced a new governance structure for the Canadian Payments Association (the CPA or the Association), as well as new accountability measures. In addition, the legislative amendments provide that certain by-laws “respecting the internal administration of the business of the Association” made by the CPA Board of Directors do not require approval of the Minister of Finance or publication in the Canada Gazette. Amendments to the CPA by-laws would better align the existing CPA by-laws with the new legislation. Amendments to the CPA by-laws would also address concerns raised by the Standing Joint Committee for the Scrutiny of Regulations.

Background

The CPA is a statutory body created by the Canadian Payments Act with a mandate to establish and operate national systems for the exchange, clearing, and settlement of payments between banks, credit unions, and other CPA members. Two systems operated by the CPA are the Automated Clearing Settlement System (ACSS) and the Large Value Transfer System (LVTS). The Association operates on a not-for-profit basis, with annual operating and capital expenditure budgets prepared by the Board of Directors, funded by dues paid by members.

The structure and composition of the Board will change as a result of recent legislative amendments. The Economic Action Plan 2014 Act, No. 2 received royal assent on December 16, 2014. This Act implements a series of amendments to the Canadian Payments Act that change the governance structure of the CPA. As a result, some by-laws referred to outdated legislation and needed to be amended.

The legislation also established a new type of by-law that does not require approval of the Minister of Finance or publication in the Canada Gazette, specifically a by-law “respecting the internal administration of the business of the Association,” including procedures for business conducted at Board meetings and other meetings, the remuneration of independent directors, and nomination, selection and appointment procedures. CPA By-law No. 1 — General covers much of the “internal administration” of the Association. Amending sections of CPA By-law No. 1 — General will avoid overlap between existing by-law provisions and the upcoming administrative by-law provisions.

Amendments to various CPA by-laws made under the Canadian Payments Act help to implement the new governance framework and other legislative changes, as well as to implement changes recommended by the Standing Joint Committee for the Scrutiny of Regulations. In particular, the following by-laws are amended:

  1. By-law No. 1 — General
  2. By-law No. 2 — Finance
  3. By-law No. 3 — Payment Items and Automated Clearing Settlement System
  4. By-law No. 6 — Compliance
  5. By-law No. 7 — LVTS

Objectives

The objectives of the amendments are to

  1. align CPA by-laws with newly amended legislation;
  2. remove outdated provisions that are no longer applicable given the new legislative amendments; and
  3. address technical issues identified by the Standing Joint Committee for the Scrutiny of Regulations.

Description

1. By-law No. 1 — General

Section 18 of the Canadian Payments Act was revised to contemplate a new type of by-law that does not require approval from the Minister of Finance: a by-law “respecting the internal administration of the business of the Association.” Much of this “internal administration” falls under the purview of By-law No. 1. As a result, the amendments repeal the internal administration items from By-law No. 1. The repealed items will be included in a new by-law that will come into force after its approval by the new CPA Board of Directors at its first meeting in July 2015.

Additional minor amendments are made to some of the provisions that will remain in By-law No.1, which include the Stakeholder Advisory Council eligibility criteria, requirements and obligations for CPA membership, and suspension of member rights. In accordance with subsection 18(2) of the Canadian Payments Act, these by-law matters remain subject to ministerial approval.

2. Consequential amendments to By-law No. 2 — Finance, By-law No. 3 — Payment Items and Automated Clearing Settlement System and By-law No. 6 — Compliance

The amendments to several sections in By-law No. 2 and No. 3 are consequential to the legislative changes. These amendments update section references and wording to reflect the revised wording in the Act (e.g. removal of member class representation on the Board).

Similarly, some amendments to By-law No. 6 — Compliance are consequential to the legislative changes in the Act. The sections no longer incorporate references to specific sections in By-law No. 1 that have been repealed (specifically, the definition of “secretary” and the manner of giving notice).

3. Amendments to By-law No. 3 — Payment Items and Automated Clearing Settlement System and By-law No. 7 Respecting the Large Value Transfer System (Standing Joint Committee for the Scrutiny of Regulations recommendations)

Following recommendations made by the Standing Joint Committee for the Scrutiny of Regulations, an amendment is made to By-law No. 3 to correct an inconsistency between the English and French versions of subsection 33(1) regarding the appointment requirements for clearing agents. Additionally, paragraphs 39(3)(b) and 43.1(2)(d) are amended to clarify the requirement for giving notice in ceasing to act for an indirect clearer or group entity — specifically by replacing the word “attempt” with “in so far as is practicable.”

An amendment to By-law No. 7 is also made to add the wording “for greater certainty” at the beginning of section 51 to provide greater clarity to LVTS participants on their rights of recourse as opposed to altering legal rights.

“One-for-One” Rule

The “One-for-One” Rule does not apply, as the amendments do not impose new administrative burden costs on a commercial business.

Small business lens

The small business lens does not apply to these amendments, as there are no costs to small business.

Consultation

The changes to the by-laws are technical in nature and only affect the CPA. The CPA consulted with its membership through various Board-level and management advisory committees. The Stakeholder Advisory Council was consulted on amendments affecting that Council.

Rationale

The by-law amendments are needed to align existing by-laws with recent changes to the Canadian Payments Act and to implement a number of minor updates and clarifications.

Implementation, enforcement and service standards

The amendments do not require any new mechanisms to ensure compliance and enforcement. The CPA is responsible for ensuring that its members comply with the by-laws, as applicable.

Contact

Deborah Wilson
Director, Legal and Senior Legal Counsel
Canadian Payments Association
Constitution Square, Tower II
350 Albert Street, Suite 800
Ottawa, Ontario
K1R 1A4
Email: dwilson@cdnpay.ca