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RSNL1990 CHAPTER M-21

MUNICIPAL FINANCING CORPORATION ACT

Amended:

RSN1990 cR-8 s44; 2001 c42 s30; 2001 cN-3.1 s2; 2005 c36;
2006 c40 s21

CHAPTER M-21

AN ACT RESPECTING THE MUNICIPAL
FINANCING CORPORATION OF THE PROVINCE

Analysis



Short title

        1. This Act may be cited as the Municipal Financing Corporation Act.

RSN1970 c266 s1

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Definitions

        2. In this Act,

             (a)  "board" means the board of directors of the corporation;

             (b)  "corporation" means the Newfoundland and Labrador Municipal Financing Corporation;

             (c)  "minister" means the minister appointed under the Executive Council Act to administer this Act; and

             (d)  "municipal corporation" means the City of St. John's, the City of Corner Brook, the City of Mount Pearl or another municipality created under a special Act, a council of a town, community or region constituted or continued under the Municipalities Act, a regional service board under the Regional Service Boards Act and a Board of Trustees of a Power Distribution District constituted under the Electrical Power Control Act.

RSN1970 c266 s2; 1973 No48 s2; 1979 c33 Sch C; 1988 c35 s443(15); RSN1990 cR-8 s44; 2001 cN-3.1 s2; 2006 c40 s21

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Corporation

        3. (1) The Newfoundland and Labrador Municipal Financing Corporation is continued as a corporation.

             (2)  The membership of the corporation shall consist of not less than 3 and not more than 9 members to be appointed by the Lieutenant-Governor in Council.

             (3)  The members of the corporation shall be the board of directors of the corporation; and may exercise all the powers of the corporation.

             (4)  The Lieutenant-Governor in Council may appoint 1 of the directors to be chairperson and 1 to be vice-chairperson.

             (5)  The Lieutenant-Governor in Council may fill a vacancy in the corporation, or may remove and replace a member of it.

             (6)  The board shall not be disabled from acting because of a temporary vacancy in its number; however, the number of members shall not be permitted to fall below 3.

             (7)  A majority of the board constitutes a quorum for the transaction of business and the affirmative votes of a majority of the directors present at a meeting of the board at which a quorum is present are sufficient to pass a resolution which the board is competent to make.

             (8)  The Lieutenant-Governor in Council may by order determine the remuneration and terms of service of the members of the board.

RSN1970 c266 s4; 2001 cN-3.1 s2

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Status of corporation

        4. (1) The corporation is an agent of the Crown.

             (2)  The corporation may, on behalf of the Crown, enter into contracts or other agreements and acquire and dispose of and otherwise deal with real and personal property and rights of all kinds in the name of the corporation.

             (3)  Notwithstanding that the corporation is an agent of the Crown, it may

             (a)  acquire from the Crown in right of Canada , of the province or of the other provinces of Canada or from an agency of the Crown in right of Canada or of the provinces of Canada real and personal property and rights of all kinds;

             (b)  enter into contracts with the Crown in all or any of the rights referred to in paragraph (a) or an agency of the Crown; and

             (c)  appoint agents to act on its behalf for the purposes of this Act and on conditions that the board considers necessary.

             (4)  A member of the corporation or of the board or a person employed by the corporation does not become, because of the office or employment only, an officer or employee of the Crown.

RSN1970 c266 s5

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Staff

        5. The corporation may, subject to the approval of the Lieutenant-Governor in Council, appoint the staff that it considers necessary or may procure the temporary or permanent transfer of members of the public service to its staff.

RSN1970 c266 s6

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Offices

        6. (1) The head office of the corporation shall be at St. John's .

             (2)  The corporation may with the approval of the Lieutenant-Governor in Council establish other offices and agencies in the province that it considers expedient.

RSN1970 c266 s7

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Objects of corporation

        7. The objects of the corporation are

             (a)  the borrowing of money for short or long terms by the issue of debentures or otherwise;

             (b)  the purchase and sale or other disposal of debentures and other securities of incorporated cities, towns, rural districts, communities or other municipal corporations or boards of trustees or similar bodies constituted to perform public administration functions and established under the present or future laws of the province;

             (c)  the lending of money to any of the municipal corporations or bodies on the security of debentures and other securities;

             (d)  the receipt, holding and investment of money deposited by the municipal corporations or bodies with this corporation; and

             (e)  the acquisition of debentures or other securities of municipal corporations or statutory bodies for sale to the citizens of the province or elsewhere.

RSN1970 c266 s8

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Powers of corporation

        8. (1) Notwithstanding that it is an agent of the Crown, the corporation has the following powers:

             (a)  the power to borrow or raise or secure the payment of money in the manner that the corporation thinks appropriate and by the issue of bonds, debentures or other securities, and the power to purchase, redeem or pay off the securities;

             (b)  the power to pay interest on its borrowings and upon money deposited with it and to charge and receive interest on loans made by it;

             (c)  the power to enter into with governments or authorities, municipal, local or otherwise, agreements that may seem conducive to the corporation's objects, the power to obtain from the government or authority rights, privileges and concessions that the corporation considers it desirable to obtain, and the power to carry out, exercise and comply with the arrangements, rights, privileges, and concessions;

             (d)  the power to purchase, take or lease or in exchange, hire, or otherwise acquire and hold real property and rights or privileges that the corporation considers necessary or convenient for the purposes of its business;

             (e)  the power to sell, improve, manage, exchange, lease, dispose of, turn to account, or otherwise deal with all or a part of the property and rights of the corporation;

              (f)  the power to invest and deal with, in the manner that may be determined, the money of the corporation or on deposit with the corporation that is not immediately required;

             (g)  the power to procure the corporation to be registered and recognize in a foreign country or place, and the power to designate persons there, according to the laws of the foreign country or place, to represent the corporation, and to accept service for and on behalf of the corporation of a process or suit;

             (h)  the power to draw, make, accept, endorse, execute and issue promissory notes, bills of exchange, and other negotiable or transferable instruments;

              (i)  the power to lend money to municipal corporations within the province and to accept and receive debentures, to purchase the debentures of the municipal corporations and to sell, hypothecate or otherwise dispose or deal with the debentures;

              (j)  the power to make temporary loans of money to a municipal corporation;

             (k)  the power, subject in each case to the approval of the Lieutenant-Governor in Council, to establish and support or assist in the establishment and support of associations, institutions, funds, trusts and conveniences calculated to benefit members and employees or ex-employees of the corporation, or the dependants or connections of those persons, and the power to grant pensions and allowances, and to make payments towards insurance;

              (l)  the power to carry out the objects of the corporation, and to do all or any of the above things as principals, agents, contractors, or otherwise; and

            (m)  the power to do all other things that are incidental or conducive to the attainment of the objects and exercise of the powers of the corporation.

             (2)  The corporation may exercise its powers by resolution of the board except where some other mode of exercising a power is prescribed by this Act or the by-laws.

             (3)  The money authorized to be borrowed under subsection (1) may be borrowed and repaid in Canadian or United States of America currency, as the corporation may approve, and authority for borrowing or repaying the money shall include authority to pay the exchange charges that may be applicable to the currency and the interest and premium incurred in respect of the borrowing and to make sinking fund payments.

RSN1970 c266 s9; 1974 No55 s2

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By-laws

        9. (1) The board may make by-laws relating to those matters or things that appear to the board to be necessary or appropriate for the conduct or regulation of the business or affairs of the corporation.

             (2)  The board may make by-laws relating to

             (a)  the appointment, functions, duties and removal of officers, employees or agents of the corporation;

             (b)  the time and place for the holding of the annual general meeting of the corporation, the calling of regular and special meetings of the board, and the procedure in all things at general meetings and board meetings;

             (c)  the conduct of the business of the corporation;

             (d)  the disposal of all money received in respect of the business of the corporation, the institutions in which the money is to be deposited, the manner in which the accounts are to be kept and managed, and the manner in which withdrawals are to be made from the accounts;

             (e)  the establishment of reserve funds and the control, management and disposition of the funds and the purposes for which payments are to be made out of the reserve funds;

              (f)  the borrowing by way of temporary loans from chartered banks or treasury branches by way of overdraft or line of credit or by pledging debentures as security, or in another manner and the execution of cheques, promissory notes or other instruments used in connection with temporary borrowings;

             (g)  the execution of bonds, debentures and other securities of the corporation, and the provision of facsimile seals and signatures;

             (h)  the sale and pledging of securities and the appointment of financial agents to negotiate loans and sell securities of the corporation;

              (i)  the creation and application of sinking funds; and

              (j)  the management and administration of the corporation's property.

             (3)  By-laws made under this section shall be subject to the approval of the Lieutenant-Governor in Council.

             (4)  The rates of remuneration of the officers, employees and agents of the corporation shall be subject to the approval of the Lieutenant-Governor in Council.

RSN1970 c266 s10

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Members of House of Assembly

     10. Notwithstanding the Legislative Disabilities Act, where a member of the House of Assembly is a member of the corporation or of the board, his or her seat does not become vacant because of his or her appointment and acceptance of remuneration as a member of the corporation or the board.

RSN1970 c266 s11

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Deposit account

     11. (1) Subject to the approval of the Lieutenant-Governor in Council, the corporation may make provisions for the establishment of a deposit account into which funds and investments received from a municipal corporation may be held.

             (2)  Money credited to the deposit account may be used by the corporation for loans to a municipal corporation.

             (3)  Interest at a rate which shall be prescribed by the regulations may be paid by the corporation on money deposited with the corporation.

             (4)  The repayment of money deposited with the corporation under this section together with interest as prescribed by the regulations may be guaranteed by the province under the Loan and Guarantee Act.

RSN1970 c266 s12

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Authorization

     12. The corporation shall not borrow money or start a business until authorized by the Lieutenant-Governor in Council to start business.

RSN1970 c266 s13

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Annual statement

     13. (1) The corporation shall annually make a report on its business and transactions, the report to be made up to March 31 and provided as soon as possible to the minister.

             (2)  A statement of the amounts borrowed by the corporation in a year shall be included in the annual report of the corporation for the year.

             (3)  The minister shall lay a copy of the report before the Legislature within 15 days after it received, if the Legislature is then in session and if not, then within 15 days after the beginning of the next session.

RSN1970 c266 s14; 1973 No40 s2

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Annual estimates

     14. Not later than January 31 in a calendar year, the corporation shall present to the minister a budget or set of estimates for the year to begin on April 1 immediately following, which shall include an estimate of the amounts required to be borrowed by the corporation in that year, together with other information that the minister may prescribe.

1973 No40 s3

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Guarantee of loans

      15. (1) Subject to the prior approval of the Lieutenant-Governor in Council, the minister, acting on behalf of the Crown, may unconditionally guarantee as to principal, interest, including interest on overdue interest, premium and sinking fund payments, loans, in Canadian or United States of America currency or partly in one currency and partly in the other, as the Lieutenant-Governor in Council shall determine, not exceeding the total referred to in subsection (2), to be raised by the corporation, the loan to be raised by bonds, debentures or loan notes issued by the corporation, the bonds, debentures or loan notes to be issued

             (a)  in a principal amount not exceeding the sum;

             (b)  at a rate of interest;

             (c)  on the terms and conditions; and

             (d)  with provisions for redemption at the time

that may be approved by the Lieutenant-Governor in Council, or where the authority to do so is delegated to the minister by the Lieutenant-Governor in Council, by the minister, and the bonds, debentures or loan notes may be issued or sold in the numbers and amounts, at the times, at the prices and upon the terms that the Lieutenant-Governor in Council, or the minister, may approve.

             (2)  The total of guarantees under this section shall not exceed a limit to be fixed by the Lieutenant-Governor in Council, and it shall be the duty of the minister to see that this total is not exceeded.

             (3)  Pending the issue and sale of an issue referred to in subsection (1), the minister may guarantee the repayment by the corporation of an interim loan, with or without interest, not exceeding the principal sum of the loan to be raised by bonds, debentures or loan notes, where provision satisfactory to the Minister of Justice is made for the repayment of the interim loan together with interest out of the proceeds of the bond, debenture or loan note issue and for making the repayment of the interim loan and interest a 1st charge upon the proceeds, after deducting the costs and expenses, including commission charges of and incidental to the floating of the bonds, debentures or loan notes, and after deducting all other sums required to be deducted under a trust deed, trust indenture or agreement executed and delivered under section 20.

             (4)  The repayment of a bond, debenture or loan note issue may be guaranteed under subsection (1) even if an interim loan to the corporation has already been guaranteed under this section and even though pending the repayment of the interim loan the liability of the Crown will exceed the principal sum of the loan to be raised by bonds, debentures or loan notes, but the liability of the Crown in respect of the bond, debenture or loan note issue and in respect of the interim loan shall not exceed double the principal sum of the loan to be raised by bonds, debentures or loan notes.

RSN1970 c266 s16; 1973 No13 s2; 1974 No55 s3; 2005 c36 s1

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Endorsement on bonds

     16. Notwithstanding section 56 or another provision of the Financial Administration Act, when a guarantee is given under section 15 of this Act, it shall be given in the manner and form that the Lieutenant-Governor in Council approves, and the form of guarantee shall be signed on behalf of the province by the minister, and the signature of the minister may be engraved, lithographed or otherwise mechanically reproduced on the bonds, debentures or loan notes.

RSN1970 c266 s17; 1974 No55 s4; 1981 c85 s14

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Guarantee payment

     17. Notwithstanding subsection 15(4), where the payment of any interest, premium or sinking fund payment has been guaranteed under this Act, the Crown may incur liability in excess of the principal sum of the loan to be raised by bonds, debentures or loan notes to the extent of the guarantee of the interest, premium and sinking fund payment.

RSN1970 c266 s18; 1974 No55 s4

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Guarantee repayment

     18. The power conferred by section 15 to guarantee the repayment of bond, debenture or loan note issues or an interim loan includes the power to guarantee the repayment of part of the issues of bonds, debentures or loan notes or part of the interim loan but, with respect to an individual loan, the total of the principal sums guaranteed by the Crown, exclusive of an interim loan guaranteed under that section and exclusive of interest, premium and sinking fund payments, shall not exceed the principal sum of the individual loan.

RSN1970 c266 s19; 1974 No55 s4

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Temporary loans

      19. (1) Subject to the prior approval of the Lieutenant-Governor in Council, the minister, acting on behalf of the Crown, may unconditionally guarantee as to principal and interest temporary loans, other than the interim loans referred to in section 15, to be raised by the corporation, in Canadian currency, not exceeding the total referred to in subsection (2), from a source approved by the Lieutenant-Governor in Council, the loan to be repaid by the corporation within a period, not exceeding 24 months, as may be approved by the Lieutenant-Governor in Council and to be

             (a)  in a principal amount not exceeding the sum;

             (b)  at a rate of interest, including interest on overdue interest and premium;

             (c)  at the discount; and

             (d)  on those other terms and conditions

that may be approved by the Lieutenant-Governor in Council, or where the authority to do so is delegated to the minister by the Lieutenant-Governor in Council, by the minister.

             (2)  The total of guarantees under this section shall not exceed a limit to be fixed by the Lieutenant-Governor in Council, and it shall be the duty of the minister to see that this total is not exceeded.

RSN1970 c266 s20; 1973 No13 s2; 2005 c36 s2

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Agreements

     20. The minister acting on behalf of the Crown may enter into, execute and deliver a trust deed, trust indenture or an agreement with the corporation, a lender, a trustee acting for the holders of bonds, debentures or loan notes or other person or company setting out the terms and conditions of a guarantee of a loan to be made in accordance with this Act.

RSN1970 c266 s21; 1973 No13 s2; 1974 No55 s4

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Performance under guarantee

     21. A payment that the Crown may be required to make under this Act shall be paid by the minister out of the Consolidated Revenue Fund of the province, or it may be paid out of funds provided in the manner prescribed by section 55 of theFinancial Administration Act.

RSN1970 c266 s22

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Documents for minister

     22. (1) The corporation shall provide the minister with a copy of

             (a)  the report referred to in section 13; and

             (b)  the budget, set of estimates and other information referred to in section 14.

             (2)  The auditor general shall provide the minister with a copy of the report referred to in section 25.

RSN1970 c266 s23; 1973 No48 s2

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Securities to be properly authorized

     23. The corporation shall not accept securities of a municipality, city or town unless all the requirements of the governing Acts have been complied with by the municipality, city or town issuing the security.

RSN1970 c266 s24

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Audit

     24. (1) The auditor general shall be the auditor of the corporation and shall make the examination that will enable him or her to report to the board as required under subsection (2).

             (2)  The auditor general shall make a report to the board on the financial statement to be laid before the board in a general meeting and shall state in the report whether in his or her opinion the financial statement referred to presents fairly the financial position of the corporation, the results of its operations for the period under review and the changes in its financial position, in accordance with generally accepted accounting principles applied on a basis consistent with that of the preceding period.

             (3)  The auditor general in the report shall make the statements that he or she considers necessary where

             (a)  the financial statement of the corporation is not in agreement with the accounting records;

             (b)  the financial statement of the corporation is not in accordance with the requirements of this Act;

             (c)  he or she has not received all the information and explanations that he or she has required; or

             (d)  proper accounting records have not been kept, so far as appears from his or her examination.

             (4)  The auditor general shall have access at all times to all records, documents, books, accounts and vouchers of the corporation, and is entitled to require from the directors, managers and officers of the corporation

             (a)  the information and explanations;

             (b)  the access to all records, documents, books, accounts and vouchers of a subsidiary company; and

             (c)  the information and explanations from the directors, managers and officers of a subsidiary company,

that in his or her opinion may be necessary to enable him or her to report as required by subsection (2).

             (5)  In the auditor general's report, the auditor general shall specifically call to the attention of the board every matter connected with or arising out of the accounts of the corporation that should, in the auditor general's opinion, be drawn to the attention of the board.

             (6)  The auditor general is entitled to attend a general meeting of the corporation and to receive all notices and other communications relating to the meeting, unless waived by him or her, and to be heard at the meeting that the auditor general attends on a part of the business of the meeting that concerns him or her as auditor.

             (7)  The corporation, upon receipt, not less than 7 days before a general meeting of the members, of a written request of not less than 2 members that the auditor general be requested to attend the meeting, shall immediately in writing request the auditor general to attend that meeting of the members, and the auditor general or his or her representative shall so attend.

RSN1970 c266 s25; 1975-76 No60 s2

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Auditor general's report to be tabled

     25. A copy of the auditor general's report signed by the auditor general shall be deposited with the minister, and the minister shall lay a copy of the report before the Legislature within 15 days after it is made, if the Legislature is then in session; and if not, then within 15 days after the beginning of the next session.

RSN1970 c266 s26

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Government may purchase the securities of corporation

     26. Notwithstanding the Financial Administration Act or this or another Act or law and notwithstanding that the corporation is an agent of the Crown, the government of the province may purchase the securities of the corporation and the minister shall pay all expenses and charges of or incidental to a purchase made under this section out of the Consolidated Revenue Fund of the province.

RSN1970 c266 s27

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Financial agent

     27. The corporation may act as financial agents or otherwise for a municipality, city or town, in negotiating loans, refinancing of the municipality, city or town, or in another capacity authorized by the regulations.

RSN1970 c266 s28

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Powers subject to regulations

     28. In the exercise of the powers set out in this Act the corporation is subject to regulations prescribing the securities that the corporation may purchase or accept and the form of investments that the corporation may make.

RSN1970 c266 s29

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Regulations

     29. The Lieutenant-Governor in Council may make regulations

             (a)  prescribing the rates of interest that the corporation may

                      (i)  pay upon deposits, and

                     (ii)  charge upon loans;

             (b)  prescribing the fees and charges the corporation may make in respect of services offered by it;

             (c)  governing the manner of making loans, the purposes for which loans may be made and prescribing the terms and conditions of the loans; and

             (d)  generally, to give effect to the purpose of this Act.

RSN1970 c266 s30

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Ranking of loans

     30. Loans by the corporation to municipal corporations, and debentures or other securities of municipal corporations purchased or held by the corporation, rank equally with loans, debentures and other securities outstanding in respect of such municipal corporations.

RSN1970 c266 s31

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Securities Act

     31. TheSecurities Act does not apply with respect to securities or transactions of the corporation.

RSN1970 c266 s32

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Confirmation of guarantee limits

      32. For the purpose of subsections 15(2) and 19(2), the total of guarantees shall be considered always to have been, and to continue to be, until a new limit is fixed by the Lieutenant-Governor in Council, the amount of $700 million, and all guarantees given and debentures issued before the coming into force of this section are considered to have been lawfully given and issued.

2001 c42 s30