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Call for comment – Proposed rule amendments re: finance company

The call for comment is now closed.

The Law Society sought input on proposed amendments to clarify the meaning of  ‘finance company’ in the lawyer’s Rules of Professional Conduct. The rules provide an exception to the conflict of interest rules by specifying that a lawyer may act for both a lender and a borrower where the lender is a ‘lending client’, which is defined in the rules as including a finance company. The rules do not, however, include a definition of finance company.

In order to provide clarity with respect to the meaning of finance company, the Law Society is proposing the following underlined amendments:

In Rules 3.4-14 to 3.4-16 a ‘lending client’ is any of the following:
a) a bank, trust company, insurance company, or credit union;
b) a finance company that is a corporation or partnership:

  1.  whose material business involves making or refinancing loans, or entering into other similar arrangements for advancing funds or credit; and,
  2. whose shares or ownership interests (or another person or entity with which it is affiliated) are listed on a stock exchange within or outside Canada that is a Designated Stock exchange for the purposes of the Income Tax Act (Canada); or

c) a person designated as an approved lender under the National Housing Act (Canada).

For more information read the consultation paper

The Law Society’s Professional Regulation Committee is considering the comments received and will report back to Convocation (the Law Society’s Board of Directors) with its recommendations.