Non-Financial Limits for Trust and Loan Firms

Summary#

The government published the proposed Non-Financial Activities (Trust and Loan Companies) Regulations in the Canada Gazette on October 17, 2026. The proposal would limit and report how much trust and loan companies can do non-financial business and would set rules for acquisitions and investments; comments are invited for 30 days.

What it does#

• Defines when an entity is a “majority” financial-services business as 60% or more, measured by the largest of:
  • revenue, or
  • operating expenses, or
  • assets — each measured over the four most recent quarterly statements or the most recent annual statement.
• Limits non-financial business by revenue:
  • companies with equity less than $12 billion: non-financial revenue plus related subsidiaries’ non-financial revenue must not exceed 15% of annual revenue at year‑end;
  • companies with equity $12 billion or more: that limit is 10% of annual revenue.
• Limits investments in non-financial or majority financial-services entities to 10% of a company’s regulatory capital. This includes shares, loans and guarantees (with some federal financial institutions exempted).
• Forces larger companies (those with equity $12 billion or more) to give information to the Deputy Minister of Finance:
  • within 30 days after acquiring control or a substantial investment (details of the deal and business activities),
  • within 30 days after taking a substantial, non‑controlling stake,
  • and an annual report within six months after year‑end describing non‑financial activities and the way the limits were calculated.
• Declares all information sent to the Department of Finance under these rules to be confidential, with some limited exceptions.
• Prohibits companies from engaging in, or buying entities whose business includes, providing customers temporary possession of personal property (for example, motor vehicles) when the purpose is not financing the customer’s purchase.
• Provides some exemptions and transition rules:
  • certain previously approved activities are excluded from the calculations;
  • a temporary two‑year exemption for some activities carried on outside Canada;
  • repeals older Information Technology Activities regulations for trust and loan companies.
• The regulations are proposed under the Trust and Loan Companies Act and would come into force on the day that section 313 of the Budget Implementation Act, 2018 comes into force (or on registration if later). The Canada Gazette notice asks for comments for 30 days.

Who's affected#

• Primarily federal trust and loan companies regulated under the Trust and Loan Companies Act and their subsidiaries.
• Large companies and groups with equity around or above $12 billion will face new reporting duties.
• Firms that sell or provide non-financial services that a trust or loan company might buy (for example, tech, fintech or service firms) could see limits on potential buyers from this sector.
• The Department of Finance will receive more acquisition and annual reporting information.
• It is unclear from the text whether and how these rules interact directly with banks and insurers; the proposal cross-references related regulations for banks and insurance companies.

Why it matters#

• These rules would limit how far trust and loan companies can expand into non-financial lines of business. That could change buyouts and investment plans, especially for large firms.
• The caps and reporting increase transparency and give the government better oversight of where financial institutions’ money is going.
• The prohibition on certain rental-type businesses (for example, temporary vehicle possession not tied to financing) closes a potential business model for these companies.
• For consumers, the changes aim to reduce mixing of unrelated non‑financial businesses with core financial services, which proponents argue reduces risk to depositors and the financial system. For businesses that sell non-financial services, the rules may narrow the pool of potential buyers in this sector.