Canada Mulls Scrapping Rule That Prevents CPPIB From Owning Companies

By Paul Vieira

OTTAWA--Canada said Tuesday it would consider scrapping a four-decade rule that prevents federally regulated pension plans -- chief among them, the CPP Investment Board -- from acquiring majority control of companies.

Canada revealed its intention in its fall economic update, presented to the country's parliament on Tuesday. The Canadian government has jurisdiction over certain pension plans, such as those operated by companies regulated by Ottawa, like banks and airlines, and the Canada Pension Plan, which pays out benefits to retirees across Canada.

CPP Investment Board, which invests the contributions of the Canada Pension Plan, has assets under management of nearly 600 billion Canadian dollars, or the equivalent of $430 billion, positioning it as one of the world's biggest pension funds.

The government said it wants to further increase the role pension plans play in investing in Canadian equities, real estate, infrastructure and fixed income.

"The federal government believes that continued domestic investments by Canada's pension funds have the potential to boost Canada's economy and create good careers for people across the country," the government said in its economic update. To accomplish this, Canada said it would explore removing a rule that restricts federally regulated pension funds from holding more than 30% of the voting shares of most corporations. The 30% rule has been in place since 1985.

Other big Canadian pension funds, such as the Ontario Teachers' Pension Plan Board and Ontario Municipal Employees Retirement System, are allowed to own companies outright as they fall under provincial regulations.

Canada also said it is proposing that large federally regulated pension plans disclose the distribution of their investments -- both by jurisdiction and asset type -- to the country's banking regulator.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

November 21, 2023 16:51 ET (21:51 GMT)

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