Education Act
ONTARIO REGULATION 471/97
ELIGIBLE INVESTMENTS
Note: This Regulation was revoked on February 26, 2010. See: O. Reg. 45/10, ss. 1, 2.
Last amendment: O. Reg. 45/10.
This is the English version of a bilingual regulation.
1. A board does not have the power under section 241 of the Act to invest in a security other than a security prescribed under this Regulation. O. Reg. 471/97, s. 1.
2. The following are prescribed, for the purposes of clause 241 (1) (a) of the Act, as securities that a board may invest in:
1. Bonds, debentures, promissory notes or other evidence of indebtedness issued or guaranteed by,
i. Canada or a province or territory of Canada,
ii. an agency of Canada or of a province or territory of Canada,
iii. a country other than Canada,
iv. a municipality in Canada,
v. the Municipal Finance Authority of British Columbia,
vi. a board or similar entity in Canada, including the board making the investment, or
vii. a local board as defined in the Municipal Affairs Act or a conservation authority established under the Conservation Authorities Act.
2. Bonds, debentures, promissory notes or other evidence of indebtedness of a corporation if,
i. the bond, debenture or other evidence of indebtedness is secured by the assignment to a trustee, as defined in the Trustee Act, of payments that Canada or a province or territory of Canada has agreed to make or is required to make under a federal, provincial or territorial statute, and
ii. the payments referred to in subparagraph i are sufficient to meet the amounts payable under the bond, debenture or other evidence of indebtedness, including the amounts payable at maturity.
3. Deposit receipts, deposit notes, certificates of deposit or investment, acceptances or similar instruments issued, guaranteed or endorsed by,
i. a bank listed in Schedule I or II to the Bank Act (Canada),
ii. a loan corporation or trust corporation registered under the Loan and Trust Corporations Act,
iii. a credit union or league to which the Credit Unions and Caisses Populaires Act, 1994 applies, or
iv. the Province of Ontario Savings Office.
4. Bonds, debentures or evidences of long-term indebtedness issued or guaranteed by an institution listed in paragraph 3.
5. Short term securities, the terms of which provide that the principal and interest shall be fully repaid no later than three days after the day the investment was made, that are issued by,
i. the board of governors of a college of applied arts and technology established under the Ontario Colleges of Applied Arts and Technology Act, 2002,
ii. an institution authorized to grant a degree under the Post-secondary Education Choice and Excellence Act, 2000, or
iii. a board as defined in the Public Hospitals Act.
6. Bonds, debentures or other securities issued or guaranteed by the International Bank for Reconstruction and Development.
7. Asset-backed securities, as defined in subsection 50 (1) of Regulation 733 of the Revised Regulations of Ontario, 1990 made under the Loan and Trust Corporations Act.
8. Negotiable promissory notes or commercial paper, other than asset-backed securities, maturing one year or less from the date of issue, if that note or commercial paper has been issued by a corporation that is incorporated under the laws of Canada or a province of Canada. O. Reg. 471/97, s. 2; O. Reg. 147/04, s. 1.
3. (1) A board shall not invest in a security under subparagraph 1 iii of section 2 or paragraph 4 of section 2 unless the bond, debenture, promissory note or evidence of indebtedness is rated,
(a) Revoked: O. Reg. 147/04, s. 2 (2).
(b) by Dominion Bond Rating Service Limited as “AA(low)” or higher;
(c) by Moody’s Investors Services Inc. as “Aa3” or higher; or
(d) by Standard and Poor’s as “AA–” or higher. O. Reg. 471/97, s. 3; O. Reg. 147/04, s. 2 (1-3).
(2) If an investment made under subparagraph 1 iii of section 2 or paragraph 4 of section 2 falls below the standard required under subsection (1), the board shall sell the investment within 90 days after the day the investment falls below the standard. O. Reg. 471/97, s. 3; O. Reg. 147/04, s. 2 (4).
(3) A board shall not invest in an asset-backed security under paragraph 7 of section 2 that matures more than one year from the date of issue unless the security is rated,
(a) by Dominion Bond Rating Service Limited as “AAA”;
(b) by Moody’s Investors Services Inc. as “Aaa”; or
(c) by Standard and Poor’s as “AAA”. O. Reg. 147/04, s. 2 (5).
(4) A board shall not invest in an asset-backed security under paragraph 7 of section 2 that matures one year or less from the date of issue unless the security is rated,
(a) by Dominion Bond Rating Service Limited as “R-1(high)”;
(b) by Moody’s Investors Services Inc. as “Prime-1”; or
(c) by Standard and Poor’s as “A-1+”. O. Reg. 147/04, s. 2 (5).
(5) A board shall not invest in a security under paragraph 8 of section 2 unless the promissory note or commercial paper is rated,
(a) by Dominion Bond Rating Service Limited as “R-1(mid)” or higher;
(b) by Moody’s Investors Services Inc. as “Prime-1”; or
(c) by Standard and Poor’s as “A-1+”. O. Reg. 147/04, s. 2 (5).
(6) If an investment made under paragraph 7 or 8 of section 2 falls below the standard required under subsection (3), (4) or (5), as the case may be, the board shall sell the investment within 30 days after the day the investment falls below the standard. O. Reg. 147/04, s. 2 (5).
3.1 A board shall not invest in a security under paragraph 7 of section 2 or in a promissory note or commercial paper under paragraph 8 of section 2 unless, on the date that the investment is made, all of the board’s long-term debt obligations are rated,
(a) by Dominion Bond Rating Service Limited as “AA(low)” or higher;
(b) by Moody’s Investors Services Inc. as “Aa3” or higher; or
(c) by Standard and Poor’s as “AA–” or higher. O. Reg. 147/04, s. 3.
4. A board shall not invest in a security issued or guaranteed by a board or similar entity unless the money raised by issuing the security is to be used for school purposes. O. Reg. 147/04, s. 4.
5. (1) A board shall not invest in a security that is expressed or payable in any currency other than Canadian dollars.
(2) Subsection (1) does not prevent a board from continuing an investment, made before this Regulation comes into force, that is expressed and payable in the currency of the United States of America or the United Kingdom. O. Reg. 471/97, s. 5.
5.1 A board shall not invest money from its general fund, its capital fund or a reserve fund in a security unless,
(a) the money is made repayable on or before the day on which the board requires the money; or
(b) any interest or other earnings from the investment are credited to the fund from which the money was invested. O. Reg. 137/00, s. 1.
6. (1) Before a board invests in a security prescribed under this Regulation, the board shall, if it has not already done so, adopt a statement of the board’s investment policies and goals. O. Reg. 471/97, s. 6.
(2) In preparing the statement of the board’s investment policies and goals under subsection (1), the board shall consider,
(a) the board’s risk tolerance and the preservation of its capital;
(b) the board’s need for a diversified portfolio of investments; and
(c) obtaining legal advice and financial advice with respect to the proposed investments. O. Reg. 147/04, s. 5.
7. (1) If a board has an investment in a security prescribed under this Regulation, the board shall require the treasurer of the board to prepare and provide to the board, each year or more frequently if so required by the board, an investment report.
(2) The investment report referred to in subsection (1) shall contain,
(a) a statement about the performance of the portfolio of investments of the board during the period covered by the report;
(b) a description of the estimated proportion of the total investments of a board that are invested in its own long-term and short-term securities to the total investment of the board and a description of the change, if any, in that estimated proportion since the previous year’s report;
(c) a statement by the treasurer as to whether or not, in his or her opinion, all investments were made in accordance with the investment policies and goals adopted by the board;
(d) a record of the date of each transaction in or disposal of its own securities, including a statement of the purchase and sale price of each security; and
(e) such other information that the board may require or that, in the opinion of the treasurer, should be included. O. Reg. 471/97, s. 7.
8. (1) Despite this Regulation, an investment by an old board or a school authority in bonds, debentures or other indebtedness of a corporation made before the day this Regulation comes into force may be continued if the bond, debenture or other indebtedness is rated,
(a) Revoked: O. Reg. 147/04, s. 6 (1).
(b) by Dominion Bond Rating Service Limited as “AA(low)” or higher;
(c) by Moody’s Investors Services Inc. as “Aa3” or higher; or
(d) by Standard and Poor’s as “AA–” or higher. O. Reg. 471/97, s. 8 (1); O. Reg. 147/04, s. 6.
(2) If the rating of an investment continued under subsection (1) falls below the standard required by that subsection, the board shall sell the investment within 90 days after the day the investment falls below the standard. O. Reg. 471/97, s. 8 (2).
9. Omitted (provides for coming into force of provisions of this Regulation). O. Reg. 471/97, s. 9.
