RISK FACTORS
Your investment in the notes entails significant risks, many of which differ from those of a conventional fixed-rate debt security. Your decision to purchase the
notes should be made only after carefully considering the risks of an investment in the notes, including those discussed below and under “Risk Factors” beginning on S-2 of the accompanying prospectus supplement, with your advisors in light of your
particular circumstances. The notes are not an appropriate investment for you if you are not knowledgeable about significant elements of the notes or financial matters in general.
Structure- and Credit-Related Risks
The notes are subject to our early redemption. We may redeem the notes, in whole but not in part, on any interest payment date on or after
July 27, 2022 (other than the maturity date). By purchasing the notes, you must be willing to have your notes redeemed as early as that date. We are generally more likely to elect to redeem the notes during periods when the interest accruing on the
notes is greater than that which we would pay on our other interest bearing debt securities having a maturity comparable to the remaining term of the notes. No further payments will be made on the notes after they have been redeemed.
If we redeem the notes prior to the maturity date, you may not be able to reinvest your proceeds from the redemption in an investment with a return that is as high as the return on
the notes would have been if they had not been redeemed, or that has a similar level of risk.
The notes are subject to interest rate risk and may be more risky than an investment in notes with a shorter term. The notes have a term of
5.5 years, subject to our right to redeem the notes as set forth herein. By purchasing notes with a relatively longer term, you are more exposed to fluctuations in interest rates than if you purchased a note with a shorter term. In particular, you
may be negatively affected if interest rates begin to rise, because the likelihood that we will redeem your notes will decrease and the interest rate on the notes may be less than the amount of interest you could earn on other investments with a
similar level of risk available at that time. In addition, if you tried to sell your notes at such time, their value in any secondary market transaction would also be adversely affected.
The notes are subject to the risk of conversion in whole or in part — by means of a transaction or series of transactions and in one or more steps —
into common shares of BNS or any of its affiliates, under Canadian bank resolution powers. Under Canadian bank resolution powers, if the CDIC were to take action under the Canadian bank resolution powers with respect to BNS, this could
result in holders or beneficial owners of bail-inable notes such as the notes being exposed to losses and conversion of the notes in whole or in part — by means of a transaction or series of transactions and in one or more steps — into common shares
of BNS or any of its affiliates, and, in such an event, you will be obligated to accept those common shares. As a result, you should consider the risk that you may lose all or part of your investment, including the principal amount plus any accrued
but unpaid interest, if the CDIC were to take action under the Canadian bank resolution powers, including the bail-in regime, and that any remaining outstanding notes, or common shares of BNS or any of its affiliates into which bail-inable notes are
converted, may be of little value at the time of a bail-in conversion and thereafter. You are urged to also read the discussion in the accompanying prospectus under “Risk Factors — Risks Related to the Bank’s Debt Securities” and “Description of the
Debt Securities We May Offer ― Canadian Bank Resolution Powers” for additional information.
Payments on the notes are subject to our credit risk, and actual or perceived changes in our creditworthiness are expected to affect the value of the
notes. The notes are our unsecured unsubordinated debt obligations and are not, either directly or indirectly, an obligation of any third party. As further described in the accompanying prospectus and prospectus supplement, the notes will
rank on par with all of our other unsecured and unsubordinated debt obligations, except such obligations as may be preferred by operation of law. All payments on the notes depend on our ability to satisfy our obligations as they come due. As a
result, our actual and perceived creditworthiness of BNS may affect the market value of the notes and, in the event we were to default on our obligations, you may not receive the amounts owed to you under the terms of the notes.
In addition, our credit ratings are an assessment by ratings agencies of our ability to pay our obligations. Consequently, our perceived creditworthiness and actual or anticipated
decreases in our credit ratings or increases in the spread between the yield on our securities and the yield on U.S. Treasury securities (the “credit spread”) prior to the maturity date may adversely affect the market value of the notes. However,
because your return on the notes depends upon factors in addition to our ability to pay our obligations, such as market interest rates, an improvement in our credit ratings will not reduce the other investment risks related to the notes.
The COVID-19 Virus may Have an Adverse Impact on BNS. On March 11, 2020, the World Health Organization declared the outbreak of a strain of
novel coronavirus disease, COVID-19, a global pandemic. Governments in affected areas have imposed a number of measures designed to contain the outbreak, including business closures, travel restrictions, quarantines and cancellations of gatherings
and events. The spread of COVID-19 has had disruptive effects in countries in which BNS operates and the global economy more widely, as well as causing increased volatility and declines in financial markets. COVID-19 has materially impacted and
continues to materially impact the markets in which BNS operates. If the pandemic is prolonged, or further diseases emerge that give rise to similar effects, the adverse impact on the global economy could deepen and result in further declines in
financial markets. A substantial amount of BNS’ business involves making loans or otherwise committing resources to specific companies, industries or countries. The COVID-19 pandemic’s impact on such borrowers, industries and countries could have a
material adverse effect on BNS’ financial results, businesses, financial condition or liquidity. The COVID-19 pandemic may also result in disruption to BNS’ key suppliers of goods and services and result in increased unavailability of staff adversely
impacting the quality and continuity of service to customers and the reputation of BNS. As a result, the business, results of operations, corporate reputation and financial condition of BNS could be adversely impacted for a substantial period of
time.
Valuation- and Market-Related Risks
We have included in the terms of the notes the costs of developing,
hedging, and distributing them, and the price, if any, at which you may sell the notes in any secondary market transactions
will likely be lower than the public offering price due to, among other things, the inclusion of these costs. In determining the economic terms of the notes, and consequently the potential return on the notes to you, a number of factors are
taken into account. Among these factors are certain costs associated with developing, hedging, and offering the notes.
Assuming there is no change in market conditions or any other relevant factors, the price, if any, at which the agent(s) or another purchaser might be willing to purchase the notes
in a secondary market transaction is expected to be lower than the price that you paid for them. This is due to, among other things, the inclusion of these costs, and the costs of unwinding any related hedging.
The quoted price of any of our affiliates for the notes could be higher or lower than the price that you paid for them.
We cannot assure you that a trading market for the notes will ever develop or be maintained. We will not list the notes on any securities
exchange. We cannot predict how the notes will trade in any secondary market, or whether that market will be liquid or illiquid.
The development of a trading market for the notes will depend on our financial performance and other factors. The number of potential buyers of the notes in any secondary market may
be limited. We anticipate that one or more of BofAS or its affiliates will act as a market-maker for the notes, but none of BofAS nor any of its affiliates is required to do so. BofAS and its affiliates may discontinue their market-making activities
as to the notes at any time. To the extent that BofAS or any of its affiliates engages in any market-making activities, it may bid for or offer the notes. Any price at which BofAS or any of its affiliates may bid for, offer, purchase, or sell any
notes may differ from the values determined by pricing models that each may use, whether as a result of dealer discounts, mark-ups, or other transaction costs. These bids, offers, or completed transactions may affect the prices, if any, at which the
notes might otherwise trade in the market.
In addition, if at any time any entity were to cease acting as a market-maker for the notes, it is likely that there would be significantly less liquidity in the secondary market and
there may be no secondary market at all for the notes. In such a case, the price at which the notes could be sold likely would be lower than if an active market existed, and you should be prepared to hold the notes until maturity.
Many economic and other factors will impact the market value of the notes. The market for, and the market value of, the notes may be affected
by a number of factors that may either offset or magnify each other, including:
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the time remaining to maturity of the notes;
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the aggregate amount outstanding of the notes;
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our right to redeem the notes on the dates set forth above;
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the level, direction, and volatility of market interest rates generally (in particular, increases in U.S. interest rates, which may cause the market value of the notes to decrease);
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general economic conditions of the capital markets in the United States;
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geopolitical conditions and other financial, political, regulatory, and judicial events that affect the capital markets generally;
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our financial condition and creditworthiness; and
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any market-making activities with respect to the notes.
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Conflict-Related Risks
Trading, hedging and business activities by us, the agents and our other or their respective affiliates may create conflicts of interest with you. We,
the agents or our or their respective affiliates may engage in trading activities related to the notes that are not for your account or on your behalf. We expect to enter into arrangements to hedge the market risks associated with our obligation to
pay the amounts due under the notes. We may seek competitive terms in entering into the hedging arrangements for the notes, but are not required to do so, and we may enter into such hedging arrangements with BofAS or its affiliates. This hedging
activity is expected to result in a profit to those engaging in the hedging activity, which could be more or less than initially expected, but which could also result in a loss for the hedging counterparty.
In addition, in the ordinary course of their business activities, the agents and our other or their respective affiliates may hold and trade our or our affiliates’ debt and equity
securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. The agents and our other or their respective affiliates may also have lending or other
capital markets relationships with us. In order to hedge such exposure, they may enter into transactions such as the purchase of credit default swaps or the creation of short positions in our or our affiliates’ securities. With respect to
BofAS or its affiliates, such securities may include the notes offered hereby, and any such short positions could adversely affect future trading prices of the notes.
We, the agents or one or more of our other or their respective affiliates may also, at present or in the future, publish research reports with respect to movements in interest rates
generally. This research is modified from time to time without notice and may express opinions or provide recommendations that are inconsistent with purchasing or holding the notes. Any of these activities may affect the market value of the notes.
These trading, hedging and business activities may present a conflict of interest between your interest in the notes and the interests we, the agents and our other or their
respective affiliates may have in our or their proprietary accounts, in facilitating transactions for our or their other customers, and in accounts under our or their management.
There are potential conflicts of interest between you and the calculation agent. We have the right to appoint and remove the calculation agent. The
calculation agent will, among other things, determine the amount of your payment for any interest payment date on the notes. Our affiliate, Scotia Capital Inc., will serve as the calculation agent. We may change the calculation agent after the issue
date without notice to you. For additional information as to the calculation agent’s role, see “Summary of Terms—Calculation Agent” herein. The calculation agent will exercise its judgment when performing its functions and may take into consideration
BNS’ ability to unwind any related hedges. Since this discretion by the calculation agent may affect payments on the notes, the calculation agent may have a conflict of interest if it needs to make any such decision.
SUPPLEMENTAL DISCUSSION OF CANADIAN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal Canadian federal income tax considerations generally applicable to a purchaser who acquires, as beneficial owner, notes, including
entitlements to all payments thereunder, pursuant to this document, or shares of BNS or an affiliate of BNS on any notes subject to a bail-in conversion (“Common Shares”), and who, at all relevant times, for purposes of the application of the Income
Tax Act (Canada) and the Income Tax Regulations (collectively, the “Act”) is not, and is not deemed to be, resident in Canada; deals at arm’s length with BNS, any issuer of Common Shares, and with any transferee resident (or deemed to be resident) in
Canada to whom the purchaser disposes of the notes; does not use or hold the notes in a business carried on in Canada; is not a “specified shareholder” and is not a person who does not deal at arm’s length with a “specified shareholder” (as defined
for purposes of subsection 18(5) of the Act) of BNS; and does not receive any payment of interest on the notes in respect of a debt or other obligation to pay an amount to a person with whom BNS does not deal at arm’s length (a “Non-Resident
Holder”). Special rules, which are not discussed in this summary, may apply to a Non-Resident Holder that is an insurer that carries on an insurance business in Canada and elsewhere.
This summary is based upon the current provisions of the Act and an understanding of the current administrative practices and assessing policies of the Canada Revenue Agency
published in writing prior to the date hereof. This summary takes into account all specific proposals to amend the Act publicly announced by or on behalf of the Minister of Finance prior to the date hereof (the “Proposals”) and assumes that all
Proposals will be enacted in the form proposed. However, no assurance can be given that the Proposals will be enacted as proposed or at all. This summary does not otherwise take into account any changes in law or in administrative practices or
assessing policies, whether by legislative, administrative or judicial action, nor does it take into account any provincial, territorial or foreign income tax considerations, which may differ from those discussed herein.
This summary is of a general nature only and is not intended to be legal or tax advice to any particular purchaser. This summary is not exhaustive of all Canadian
federal income tax considerations. Accordingly, purchasers of the notes should consult their tax advisors with respect to their particular circumstances.
Currency Conversion
Generally, for purposes of the Act, all amounts relating to the acquisition, holding or disposition of the notes or Common Shares not denominated in Canadian dollars must be
converted into Canadian dollars based on the exchange rates as determined in accordance with the Act. The amounts subject to withholding tax and any capital gains or capital losses realized by a Non-Resident Holder may be affected by fluctuations in
the relevant exchange rate.
Notes
No Canadian withholding tax will apply to interest or principal paid or credited to a Non-Resident Holder by BNS or to proceeds received by a Non-Resident Holder on the disposition
of a note, including on a redemption, payment on maturity, bail-in conversion, repurchase or purchase for cancellation.
No other tax on income or gains will be payable by a Non-Resident Holder on interest or principal, or on proceeds received by a Non-Resident Holder on the disposition of a note,
including on a redemption, payment on maturity, repurchase or purchase for cancellation.
Common Shares
Dividends paid or credited, or deemed under the Act to be paid or credited, on Common Shares of BNS or of any affiliate of BNS that is a Canadian resident corporation to a
Non-Resident Holder will generally be subject to Canadian non-resident withholding tax at the rate
of 25% on the gross amount of such dividends unless the rate is reduced under the provisions of an applicable income tax treaty or convention between Canada and the country of residence of the
Non-Resident Holder.
A Non-Resident Holder will not be subject to tax under the Act in respect of any capital gain realized on a disposition or deemed disposition of a Common Share unless the Common
Share is or is deemed to be “taxable Canadian property” of the Non-Resident Holder for the purposes of the Act and the Non-Resident Holder is not entitled to an exemption under an applicable income tax convention between Canada and the country in
which the Non-Resident Holder is resident.