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Regulatory Framework
The FNFA is governed by the First Nations Fiscal and Statistical Management Act. In order to participate in First Nations Finance Authority (FNFA) debt issues, First Nations will demonstrate a high degree of fiscal responsibility. Membership in the FNFA borrowing group and approval for specific borrowing requests will be strictly regulated. Independent regulatory functions will be provided by the First Nations Tax Commission (FNTC) and the Financial Management Board (FMB). There is a clear and fair process for admitting First Nations to the FNFA as Borrowing Members. The legislation, regulations and standards set the rules for Borrowing.
Not every First Nation will be able to qualify to participate in FNFA borrowings. Becoming a Borrowing Member will require a review of a specific First Nation’s financial administration and financial health. The FMB, independent of the FNFA, will act as a ‘gatekeeper’ and certify a First Nation as financially sound to become a Borrowing Member. The FNFA Board will confirm Borrowing Member status. Factors that will be considered include: financial record; asset management; political structure; audit requirements; revenue base. In addition, the FNTC will confirm that a First Nation has properly enacted tax laws and has been collecting property tax in compliance with FNTC policies.
In addition to having a role in determining entry into the FNFA, there will be criteria that have to be met for continuing to qualify to borrow and this will be regulated by the FMB. This will be minimal given the requirements for participation will be strict. Once participating, First Nations will be contractually bound, as well as under statute obliged, to meet the requirements for participation.
Once a First Nation has become a Borrowing Member, for debentures based on property tax, the FNTC will regulate the capital financing. In addition to approving the core taxation laws enacted by a First Nation, the FNTC will approve First Nation’s borrowing laws. A borrowing law will be enacted for each project to be financed by a First Nation through the FNFA. In approving a borrowing law the FNTC will confirm that all requirements for the borrowing have been met including that there is sufficient borrowing room available to that First Nation. This will be part of the FNTC’s primary responsibility in regulating First Nations’ property taxation systems. |
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