Current Uniform Acts

Income Trusts Act Working Group Report 2007


PART 3 – Unit-holder Ricghts and Remedies

Recommendation 10: The Act provide that all units of the same class or series are equal in all respects but that a controlled subsidiary entity not be permitted to vote any units that it holds in its parent income trust.

Unit-holder rights

10 (1) Despite a provision of the trust instrument to the contrary, if an income trust has only one class of units, the rights of the unit-holders are equal in all respects, and include the right

(a) to vote at any meeting of unit-holders of the trust;

(b) to receive any distributions made with respect to the trust; and

(c) to receive the remaining trust assets on dissolution.

(2) Unless the trust instrument otherwise provides, each unit of a trust entitles the holder to one vote at a meeting of unit-holders.

(3) If units of a parent trust are held through a subsidiary trust, or if a body corporate or other entity that is controlled by the trustees of an income trust holds units of that income trust, the trustees of the subsidiary trust, the body corporate or the other entity, as the case may be, shall not vote those units.

(4) A trust instrument may provide for more than one class of units and, if it so provides,

(a) the rights, privileges, restrictions and conditions attaching to the units of each class shall be as set out in the trust instrument; and

(b) the rights set out in subsection (1) shall be attached to at least one class of units but all such rights are not required to be attached to one class.

Recommendation 11: The Act provide that trustees of an income trust may be elected or appointed at unit-holder meetings by the unit-holders or subset of unit-holders entitled to vote thereon in accordance with the declaration of trust. Before the first annual meeting, trustees in office shall have the right to appoint additional trustees in accordance with the declaration of trust. Between annual meetings, trustees in office shall have the right to appoint replacement trustees to fill any vacancies and, if the declaration of trust so provides, appoint up to 1/3rd the number of trustees elected at the last annual meeting. Unit-holders entitled to elect any particular subset of the trustees would have the exclusive right to fill any vacancies within that subset.

Election of trustees

11 (1) Before the first meeting of unit-holders, the trustees of an income trust may appoint one or more additional trustees who shall hold office until the close of the first meeting of unit-holders.

(2) Unit-holders of an income trust shall, by resolution at the first meeting of unit-holders and at each succeeding annual meeting at which an election of trustees is required, elect trustees to hold office for a term expiring not later than the close of the third annual meeting of trustees following the election.

(3) It is not necessary that all trustees elected at a meeting of unit-holders hold office for the same term.

(4) A trustee not elected for an expressly stated term ceases to hold office at the close of the first annual meeting of unit-holders following the trustee’s election.

(5) Despite subsections (1) and (3), if trustees are not elected at a meeting of unit-holders, the incumbent trustees continue in office until their successors are elected.

(6) If a meeting of unit-holders fails to elect the number or the minimum number of trustees required by the trust instrument by reason of the lack of consent, disqualification, incapacity or death of any candidates, the trustees elected at that meeting may exercise all the powers of the trustees if the number of trustees elected constitutes a quorum.

(7) After the first meeting of unit-holders, the trustees may, if authorized by the trust instrument, appoint one or more additional trustees, who shall hold office for a term expiring not later than the close of the next annual meeting of unit-holders, but the total number of trustees appointed under this subsection may not exceed one third of the number of trustees elected at the previous annual meeting of unit-holders.

(8) If authorized by the trust instrument, a person designated in accordance with the trust instrument may appoint one or more trustees to hold office for the term provided in the trust instrument.

(9) A person who is elected or appointed to hold office as a trustee is not a trustee and is deemed not to have been elected or appointed to hold office as a trustee unless

(a) the person was present or represented at the meeting when the election or appointment took place and the person did not refuse, directly or through a representative, to hold office as a trustee; or

(b) the person was not present or represented at the meeting when the election or appointment took place and

(i) the person consented to hold office as a trustee in writing before the election or appointment or within ten days after it, or

(ii) the person has acted as a trustee pursuant to the election or appointment.

Recommendation 12: The Act provide that, notwithstanding any contrary provision in a declaration of trust, trustees who are elected or appointed by holders of publicly traded units may be removed or replaced by a simple majority vote (i.e. a majority of votes cast) of those entitled to vote thereon.

Removal of trustees

12 (1) Despite any provision in a trust instrument to the contrary, if the unit-holders of an income trust are entitled to elect a trustee of the income trust, the unit-holders may by ordinary resolution at a special meeting remove the trustee.

(2) Where the holders of any class or series of units of an income trust have an exclusive right to elect one or more trustees, an elected trustee may only be removed by ordinary resolution at a special meeting of the unit-holders of that class or series.

(3) A vacancy created by the removal of a trustee may be filled at the special meeting of the unit-holders at which the trustee is removed or, if not so filled, may be filled under section 11.

Recommendation 13: The Act contain a provision whereby registered or beneficial voting unit-holders of an income trust are entitled to submit a written proposal for circulation in advance of an annual meeting. The provision would be loosely modelled on the shareholder proposal regime set out in the CBCA. This includes proof of beneficial status, timeliness of the submission, grounds upon which to reject the circulation of proposals (including the requirement that the proposal “relate in a significant way to the assets or affairs of the income trust”), word-count and resubmission restrictions and the temporary blacklisting of those who submit, but fail to present, a proposal at the ensuing meeting of unit-holders.

Proposals

13 (1) Subject to subsections (2) and (3), a registered holder or beneficial owner of units of an income trust that are entitled to be voted at an annual meeting of unit-holders may

(a) submit a proposal by giving notice to the trustees of any matter that the person proposes to raise at the meeting; and

(b) discuss at the meeting any matter in respect of which the person would have been entitled to submit a proposal.

(2) To be eligible to submit a proposal, a person must be, for at least the six-month period immediately before the unit-holder submits the proposal, the registered holder or the beneficial owner of one or more units of the income trust.

(3) A proposal submitted under subsection (2) must be accompanied by the name and address of the person.

(4) The information provided under subsection (3) does not form part of the proposal or of the supporting statement referred to in subsection (7) and is not included for the purposes of the maximum word limit set out in subsection (8).

(5) If requested by the trustees within fourteen days after the trustees receive the proposal, a person who submits a proposal must provide proof, within twenty-one days after the request, that the person meets the requirements of subsection (2).

(6) If the trustees solicit proxies, the trustees shall set out the proposal in, or attach the proposal to, an information circular sent to unit-holders.

(7) If requested by the person who submits a proposal, the trustees shall include in an information circular or attach to it a statement in support of the proposal by the person and the name and address of the person.

(8) The statement and the proposal must together not exceed 500 words.

(9) A proposal may include nominations for the election of trustees if the proposal is signed by one or more holders of units representing in the aggregate not less than five per cent of the units, or five per cent of the units of a class or series of units, of the income trust entitled to vote at the meeting to which the proposal is to be presented, but this subsection does not preclude nominations made at a meeting of unit-holders.

(10) The trustees are not required to comply with subsections (6) and (7) if

(a) the proposal is not submitted to the trustees at least ninety days before the anniversary date of the notice of meeting that was sent to unit-holders in connection with the previous annual meeting of unit-holders;

(b) it clearly appears that the primary purpose of the proposal is to enforce a personal claim or redress a personal grievance against the trustees, the trust assets or the unit-holders;

(c) it clearly appears that the proposal does not relate in a significant way to the management, administration, assets or affairs of the income trust;

(d) not more than the two years before the receipt of a proposal, a person failed to present, in person or by proxy, at a meeting of unit-holders, a proposal that, at the person’s request, had been included in a information circular relating to the meeting;

(e) substantially the same proposal was submitted to unit-holders in a management information circular or a dissident’s information circular relating to a meeting of unit-holders held not more than two years before the receipt of the proposal and, of the units entitled to vote at the meeting in respect of the previously submitted proposal, less than ten per cent of the votes were cast in support of that proposal; or

(f) the rights conferred by this section are being abused to secure publicity.

(11) If a person who submits a proposal fails to continue to hold or own a unit referred to in subsection (2) up to and including the day of the meeting, the trustees are not required to set out in any information circular, or attach to it, any proposal submitted by that person for any meeting held within two years following the date of the meeting.

(12) No trustee or person acting on the trustee’s behalf incurs any liability by reason only of circulating a proposal or statement in compliance with this section.

(13) If the trustees refuse to include a proposal in an information circular, the trustees shall, within twenty-one days after the day on which they receive the proposal or the day on which they receive the proof of ownership under subsection (5), as the case may be, notify in writing the person submitting the proposal of their intention to omit the proposal from the information circular and of the reasons for the refusal.

(14) On the application of a person submitting a proposal who claims to be aggrieved by the trustees’ refusal under subsection (13), the court may restrain the holding of the meeting at which the proposal is sought to be presented and make any further order it thinks fit.

(15) The trustees or any person claiming to be aggrieved by a proposal may apply to the court for an order permitting the trustees to omit the proposal from a information circular, and the court, if it is satisfied that subsection (10) applies, may make any order it thinks fit.

Recommendation 14: The Act provide that, notwithstanding any contrary provision in a declaration of trust, registered or beneficial unit-holders of an income trust holding not less than 5% of the voting units may requisition a meeting of unit-holders.

Requisition of meeting

14 (1) The holders of not less than five per cent of the issued units of an income trust that carry the right to vote at a meeting sought to be held may requisition the trustees to call a meeting of unit-holders for the purposes stated in the requisition.

(2) The requisition referred to in subsection (1), which may consist of several documents of like form each signed by one or more unit-holders, shall state the business to be transacted at the meeting and shall be sent to each trustee.

(3) On receiving the requisition referred to in subsection (1), the trustees shall call a meeting of unit-holders to transact the business stated in the requisition, unless

(a) the trustees or other unit-holders have called a meeting of unit-holders and notice of the meeting has been given; or

(b) the business of the meeting as stated in the requisition includes matters described in clauses 13 (10) (b) to (f).

(4) If the trustees do not within twenty-one days after receiving the requisition referred to in subsection (1) call a meeting, and subsection (3) does not apply, any unit-holder who signed the requisition may call the meeting.

(5) A meeting called under this section shall be called as nearly as possible in the manner in which meetings are to be called pursuant to the trust instrument.

(6) Unless the unit-holders otherwise resolve at a meeting called under subsection (4), the trustees shall reimburse the unit-holders the expenses reasonably incurred by them in requisitioning, calling and holding the meeting.

Recommendation 15: The Act set out an investigation regime for income trusts that is similar to Part XIX of the CBCA.

Investigation

15 (1) A unit-holder of an income trust or the Commission may apply, in the absence of the trustees or other respondent or on such notice as the court may require, to the court for an order directing an investigation to be made of the income trust, a subsidiary trust or a trustee of the income trust or subsidiary trust.

(2) If, on an application under subsection (1), it appears to the court that

(a) the administration or affairs of the trust is or was carried on with intent to defraud any person;

(b) the management, administration or affairs of the trust is or was carried on or conducted, or the powers of trustees are or were exercised in a manner that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of a unit-holder;

(c) the income trust or any of its subsidiary trusts was formed for a fraudulent or unlawful purpose; or

(d) a person has acted fraudulently or dishonestly in connection with the formation, management, administration, assets or affairs of the income trust or an affiliated entity,

the court may order an investigation to be made of the trust or a trustee.

(3) An applicant under this section is not required to give security for costs.

(4) An application made under this section in the absence of the trustees or other respondent shall be heard in private.

(5) No person may publish anything relating to a proceeding referred to in subsection (4) except with the authorization of the court or the written consent of the trustees.

Powers of the court - investigation

16 In connection with an investigation under section 15, the court may make any order it thinks fit including, without limiting the generality of the foregoing,

(a) a further or amended order to investigate;

(b) an order appointing an inspector, fixing the remuneration of an inspector, and replacing an inspector;

(c) an order determining the notice to be given to any interested person, or dispensing with notice to any person;

(d) an order authorizing an inspector to enter any premises in which the court is satisfied there might be relevant information, and to examine any thing and make copies of any document or record found on the premises;

(e) an order requiring any person to produce documents or records to the inspector;

(f) an order authorizing an inspector to conduct a hearing, administer oaths, and examine any person on oath, and establishing rules for the conduct of the hearing;

(g) an order requiring any person to attend a hearing conducted by an inspector and to give evidence on oath;

(h) an order giving directions to an inspector or any interested person on any matter arising in the investigation;

(i) an order requiring an inspector to make an interim or final report to the court;

(j) an order determining whether a report of an inspector should be published;

(k) an order requiring an inspector to discontinue an investigation; and

(l) an order requiring the costs of the investigation be paid out of the income trust assets.

Powers and duty of inspector

17 (1) An inspector appointed under an order made under section 15 has the powers set out in the order.

(2) In addition to the powers set out in the order of appointment, an inspector appointed to investigate a trust may furnish to, or exchange information and otherwise cooperate with, any public official in Canada or elsewhere who is authorized to exercise investigatory powers and who is investigating, in respect of the trust, any allegation of improper conduct that is the same as or similar to the conduct described in subsection 15 (2).

(3) An inspector shall, on request, produce to an interested person a copy of any order made under section 15 or 16.

Hearings

18 (1) Any interested person may apply to the court for an order that a hearing conducted by an inspector be heard in private and for directions on any matter arising in the investigation.

(2) A person whose conduct is being investigated or who is being examined at a hearing conducted by an inspector has a right to be represented by counsel.

Privilege (defamation)

19 Any oral or written statement made by an inspector or any other person in an investigation has absolute privilege.

Solicitor-client privilege

20 Nothing in sections 15, 16 and 17 shall be construed as affecting solicitor-client privilege.

Recommendation 16: The Act provide a counterpart to the corporate oppression remedy modelled on s. 241 of the CBCA, except that the oppression remedy would apply only if the applicable declaration of trust opts-in to the remedy. The remedy would apply to conduct at the level of the income trust or at the level of any controlled subsidiary entity.

Interpretation

21 In sections 23 and 24,

“action” means an action under section 23 or 24;

“complainant” means

(a) a registered holder or beneficial owner, or a former registered holder or beneficial owner, of a unit of an income trust, or

(b) a trustee or a former trustee of an income trust.

Application of section 23

22 Section 23 does not apply to or in respect of an income trust or subsidiary trust unless the trust instrument of the income trust states that a complainant has the rights set out in section 23.[2]

Application to court re oppression

23 (1) A complainant may apply to the court for an order under this section.

(2) If, on an application under subsection (1), the court is satisfied that in respect of an income trust or of an affiliated entity

(a) any act or omission of a trustee of the trust effects a result,

(b) the management of the assets or the administration of the affairs of the trust are or were carried on or conducted in a manner, or

(c) the powers of the trustees of the trust are or were exercised in a manner,

that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of any unit-holder or trustee, the court may make an order to rectify the matters complained of.

(3) In connection with an application under this section, the court may make any interim or final order it thinks fit including, without limiting the generality of the foregoing,

(a) an order restraining the conduct complained of;

(b) an order appointing a receiver or receiver-manager of the whole or any part of the assets of the income trust or of an affiliated entity;

(c) an order to regulate the management of the assets or administration of the affairs of the trust;

(d) an order amending the trust instrument;

(e) an order directing an issue or exchange of units or other securities;

(f) an order appointing trustees in place of or in addition to all or any of the trustees then in office;

(g) an order directing the trustees to purchase on behalf of the remaining unit-holders the units of a unit-holder with payment to be made out of the income trust assets;

(h) an order directing the trustees or any other person to pay, out of the income trust assets, a unit-holder any part of the money that the unit-holder paid for the unit;

(i) an order varying or setting aside a transaction or contract to which a trustee is a party and compensating the unit-holders or any party to the transaction or contract;

(j) an order requiring the trustees, within a time specified by the court, to produce to the court or an interested person financial statements in the form required under the Securities Act or an accounting in such other form as the court may determine;

(k) an order compensating an aggrieved person;

(l) an order directing rectification of the registers or other records of the trustees of an income trust;

(m) an order liquidating the trust assets;

(n) an order directing an investigation under section 15 to be made; and

(o) an order requiring the trial of any issue.

(4) A unit-holder is not entitled to dissent under section 26 if an amendment to the trust instrument is effected under this section.

Recommendation 17: The Act provide a counterpart to the corporate derivative action modelled on ss. 239 and 240 of the CBCA, except that an applicant would only have the right to apply for leave to bring a derivative action if the applicable declaration of trust opts-in to the statutory provision. Leave could be granted to bring an action on behalf of the trustees or on behalf of any controlled subsidiary entity.

Commencing representative action

24 (1) This section does not apply to or in respect of an income trust or a subsidiary trust of an income trust unless the trust instrument of the income trust states that a complainant has the rights set out in subsection (2).[3]

(2) Subject to subsection (3), a complainant may apply to the court for leave to bring an action, or intervene in an action, on behalf of the unit-holders of an income trust or a subsidiary trust for the purpose of prosecuting, defending or discontinuing the action on behalf of the unit-holders.

(3) No action may be brought and no intervention in an action may be made under subsection (2) unless the court is satisfied that

(a) the complainant has given notice to the trustees of the income trust of the complainant’s intention to apply to the court under subsection (2) not less than fourteen days before bringing the application, or as otherwise ordered by the court, if the trustees of the trust do not bring, diligently prosecute or defend or discontinue the action;

(b) the complainant is acting in good faith; and

(c) it appears to be in the interests of the unit-holders that the action be brought, prosecuted, defended or discontinued.

Powers of the court - representative action

25 In connection with an action brought or intervened in under section 24, the court may at any time make any order it thinks fit including, without limiting the generality of the foregoing,

(a) an order authorizing the complainant or any other person to control the conduct of the action;

(b) an order giving directions for the conduct of the action;

(c) an order directing that any amount adjudged payable by a defendant in the action shall be paid, in whole or in part, directly to former and present unit-holders of the trust; and

(d) an order requiring the trustees to pay reasonable legal fees incurred by the complainant in connection with the action.

Recommendation 18: The Act include a general dissent and appraisal right, modelled on s. 190 of the CBCA, except that the right would apply only: (a) to the extent, and upon the triggering events, specified in the applicable declaration of trust, or, where the declaration of trust so provides, to specific transactions designated by the trustees; or (b) where specifically ordered by the court as part of a statutory arrangement.

Right to dissent

26 (1) A holder of units of any class of units of an income trust may dissent with respect to a resolution of the unit-holders of the income trust if

(a) the trustees resolve that the rights under this section apply to a transaction or proposed transaction, or

(b) a resolution is submitted to the unit-holders that, under the terms of the trust instrument, give rise to the rights under this section.

(2) In addition to any other right the unit-holder may have, a unit-holder who complies with this section is entitled, when the action approved by the resolution from which the unit-holder dissents or an order made under subsection 43 (2) (d) becomes effective, to be paid by the trustees, out of the income trust assets, the fair value of the units in respect of which the unit-holder dissents, determined as of the close of business on the day before the resolution was adopted or the order was made.

(3) A dissenting unit-holder may claim under this section only with respect to all the units of a class held on behalf of any one beneficial owner of units.

(4) A dissenting unit-holder shall send to the trustees, at or before any meeting of unit-holders at which a resolution referred to in subsection (1) is to be voted on, a written objection to the resolution, unless the trustees did not give notice to the unit-holder of the purpose of the meeting and of the unit-holder's right to dissent.

(5) The trustees shall, within ten days after the unit-holders adopt the resolution, send to each unit-holder who has filed the objection referred to in subsection (4) notice that the resolution has been adopted, but such notice is not required to be sent to any unit-holder who voted for the resolution or who has withdrawn the unit-holder’s objection.

(6) A dissenting unit-holder shall, within twenty days after receiving a notice under subsection (5) or, if the unit-holder does not receive such notice, within twenty days after learning that the resolution has been adopted, send to the trustees a written notice containing

(a) the unit-holder ’s name and address;

(b) the number and class of units in respect of which the unit-holder dissents; and

(c) a demand for payment of the fair value of such units.

(7) On sending a notice under subsection (6), a dissenting unit-holder ceases to have any rights as a unit-holder other than to be paid the fair value of the unit-holder’s units as determined under this section except where

(a) the unit-holder withdraws that notice before the trustees make an offer under subsection (8),

(b) the trustees fail to make an offer in accordance with subsection (8) and the unit-holder withdraws the notice, or

(c) the trustees revoke a resolution or abandon the transaction that gave rise to the dissent right,

in which case the unit-holder ’s rights are reinstated as of the date the dissenting unit-holder sent notice under subsection (6).

(8) The trustees of an income trust shall, not later than seven days after the later of the day on which the action approved by the resolution is effective or the day the trustees received the notice referred to in subsection (6), send to each dissenting unit-holder who has sent such notice a written offer to pay for the unit-holder’s units in an amount considered by the trustees to be the fair value, accompanied by a statement showing how the fair value was determined.

(9) Every offer made under subsection (8) for units of the same class or series shall be on the same terms.

(10) The trustees of an income trust shall pay for the units of a dissenting unit-holder within ten days after an offer made under subsection (8) has been accepted, but the offer lapses if the trustees do not receive, within thirty days after the offer has been made, written notice that the offer has been accepted.

(11) If the trustees fail to make an offer under subsection (8), or if a dissenting unit-holder fails to accept an offer, the trustees may, within fifty days after the action approved by the resolution is effective or within such further period as the court may allow, apply to the court to fix a fair value for the units of any dissenting unit-holder.

(12) If the trustees fail to apply to the court under subsection (11), a dissenting unit-holder may apply to the court for the same purpose within a further period of twenty days or within such further period as the court may allow.

(13) A dissenting unit-holder is not required to give security for costs in an application made under subsection (11) or (12).

(14) On an application to the court under subsection (11) or (12),

(a) all dissenting unit-holders whose units have not been paid for shall be joined as parties and are bound by the decision of the court; and

(b) the trustees shall notify each affected dissenting unit-holder of the date, place and consequences of the application and of their right to appear and be heard in person or by counsel.

(15) On an application to the court under subsection (11) or (12), the court may determine whether any other person is a dissenting unit-holder who should be joined as a party, and the court shall then fix a fair value for the units of all dissenting unit-holders.

(16) The court may in its discretion appoint one or more appraisers to assist the court to fix a fair value for the units of the dissenting unit-holders.

(17) The final order of the court shall be rendered in favour of each dissenting unit-holder for the amount of the units, as fixed by the court, and directing that the trustees shall make payment of the amount out of the income trust assets.

(18) The court may in its discretion allow a reasonable rate of interest on the amount payable to each dissenting unit-holder from the date the action approved by the resolution is effective until the date of payment.

part 4 - powers and duties of trustees

Recommendation 25: The Act confirm that trustees of an income trust or a subsidiary trust can consist of individuals or corporations. An income trust may have a corporate trustee that is a trust company or, if the Provincial securities regulator grants a specific exemption, a business corporation. The corporate trustee of a subsidiary trust may, provided its securities are not held by the public and the Provincial securities regulator does not order otherwise, be any corporation formed under the laws of Canada or any Province, not necessarily a licenced trust company.

Disqualification of individual trustees – income, subsidiary trusts

27 An individual is disqualified from being a trustee of a trust if the individual

(a) is less than eighteen years of age;

(b) is of unsound mind and has been so found by a court in the province or elsewhere; or

(c) has the status of bankrupt.

Qualification of corporate trustees – income trusts

28 (1) Subject to subsection 30 (1), a body corporate is qualified to be a trustee of an income trust if it is incorporated

(a) under [insert name of local enactment for incorporation of trust companies]; or

(b) under the law of Canada, or of another province or territory of Canada, providing for the incorporation of trust companies.

(2) Despite subsection (1), if a body corporate is incorporated under a law other than a law referred to in subsection (1), on application by an income trust or the body corporate, the Commission may order that the body corporate is qualified to be a trustee of an income trust if the Commission is satisfied that to do so is not prejudicial to the public interest.

(3) The Commission may impose conditions, restrictions or requirements in an order made under subsection (2).

Qualification of corporate trustees – subsidiary trusts

29 Subject to section 30, a body corporate is qualified to be a trustee of a subsidiary trust if it is incorporated

(a) under [insert name of local enactment for incorporation of trust companies], or

(b) under the law of Canada or of another province or territory of Canada providing for the incorporation of trust companies.

Disqualification of corporate trustees

30 (1) A body corporate is disqualified from being a trustee of a trust if the body corporate has the status of bankrupt.

(2) If it considers it in the public interest to do so, the Commission may, on its own motion or on application by an interested person, order that section 29 does not apply to a trust or a class of trusts.

Recommendation 30: The Act provide that trustees are free to resign at any time provided that at least one trustee remains. The last trustee of an income trust or subsidiary trust be permitted to resign at any time if: (a) approved by the court; or (b) on or after the appointment of a trustee in bankruptcy, receiver, receiver-manager or interim receiver to administer the whole, or substantially the whole, of the assets of the trust.

Ceasing to be trustee

31 (1) A trustee of a trust ceases to hold office,

(a) in the case of an individual, when the trustee dies;

(b) in the case of a body corporate, when the body corporate dissolves;

(c) when the trustee resigns;

(d) when the trustee is removed in accordance with section 12; or

(e) when the trustee becomes disqualified under sections 27 or 30.

(2) A resignation of a trustee becomes effective at the time a written resignation is sent to the other trustees, or at the time specified in the resignation, whichever is later.

(3) Despite subsection (2), if a resignation of a trustee of an income trust will result in no trustees remaining in office with respect to the trust, the resignation is not effective unless

(a) approved by the court, or

(b) delivered on or after the appointment of a trustee in bankruptcy, receiver, receiver-manager or interim receiver to administer all or substantially all of the income trust assets.

Recommendation 19: The Act set out mandatory rules whereby trustees of an income trust have the power to manage, or supervise the management of, the property and affairs of the income trust and, similarly, trustees of a subsidiary trust have the power to manage, or supervise the management of, the property and affairs of the subsidiary trust. In addition, unit-holders would no longer have the power to direct or compel the trustees to take particular actions. These provisions would not apply to trusts formed in the Province before the Act goes into effect.

Duty to manage or supervise management

32 (1) The trustees of a trust shall

(a) administer or supervise the administration of the affairs of the trust, and

(b) manage or supervise the management of the assets of the trust.

(2) The trustees of a trust may, but are not obliged to, comply with a direction of the unit-holders of a trust.

(3) Unless the trust instrument otherwise provides, subsection (2) does not apply to a trust established before this Act came into force.

Recommendation 20: The Act codify the power of trustees of an income trust or a subsidiary trust to delegate any part of their authority to internal (including a committee of trustees) or external management. There will be certain non-delegable powers, viz.: submitting questions for the approval of unit-holders; appointing or removing trustees except to fill vacancies or as otherwise provided in the Act; appointing or removing an auditor; approving management information circulars; and approving audited financial statements. Trustees would be able to delegate the power to issue or repurchase units in the trust. These rules will not apply retroactively to income trusts or subsidiary trusts that were formed before the Act goes into effect.

Delegation

33 (1) The trustees of a trust may appoint,

(a) from their number, a managing trustee or a committee of trustees;

(b) a manager pursuant to a management agreement,

and delegate to the managing trustee, committee or manager any of the powers of the trustees.

(2) Despite subsection (1), no managing trustee, committee or manager has authority to

(a) submit to the unit-holders any question or matter requiring the approval of the unit-holders;

(b) fill a vacancy among the trustees or in the office of auditor;

(c) appoint additional trustees;

(d) approve a management information circular required under the Securities Act;

(e) approve a take-over bid circular or trustees’ circular prepared in relation to a take-over bid;

(f) approve any financial statements required under the Securities Act; or

(g) amend the trust instrument.

Recommendation 21: The Act state that trustees of an income trust owe their fiduciary duties exclusively to unit-holders as a general body and that trustees of a subsidiary trust owe their fiduciary duties exclusively to beneficiaries of the subsidiary trust as a general body.

Recommendation 22: The Act also state that trustees of an income trust owe their respective duties of care exclusively to unit-holders as a general body, that trustees of a subsidiary trust owe their respective duties of care to beneficiaries of the subsidiary trust as a general body and that, in both cases, the standard of care be to exercise the care, diligence and skill of a reasonably prudent person with comparable skills and experience.

Recommendation 23: The Act state that no provision in a declaration of trust, contract or a resolution relieves a trustee from the duty to act in accordance with the Act or relieves the trustee from liability for breach of the Act.

Duties of trustees

34 Every trustee of a trust, in exercising the trustee’s powers and discharging the trustee’s duties to the unit-holders, shall

(a) act honestly, in good faith and with a view to the best interests of all unit-holders generally; and

(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

No exculpation

35 No provision in a contract, the trust instrument or a resolution relieves a trustee from the duty to act in accordance with this Act or the regulations or relieves the trustee from liability for a breach of this Act or the regulations.

Recommendation 24: The Act contain a minimum conflict of interest code modelled on s. 120 of the CBCA providing that material conflicts of interest must be disclosed at the earliest moment, that, except in limited circumstances, trustees abstain from voting for the approval of contracts or transactions in which they are interested, that a majority of the disinterested trustees or not less than 2/3rds of the votes cast by voting unit-holders approve the interested contract or transaction and that the contract or transaction must be reasonable and fair to the unit-holders at the time that it is made. If these conditions are satisfied, the contract or transaction is not void or voidable, and the trustees have no liability to account for any profit they may make as a result of the contract or transaction. However, trustees should be expressly permitted to vote on their own compensation as trustees, contracts of indemnity or insurance in their own favour and contracts or transactions involving subsidiary or affiliated entities.

Disclosure of interest

36 (1) A trustee of a trust shall disclose to the other trustees of the trust, in writing or by requesting to have it entered in the minutes of meetings of trustees or of meetings of committees of trustees, the nature and extent of any interest that the trustee has in a material contract or material transaction, whether made or proposed, with the trust, if the trustee

(a) is a party to the contract or transaction;

(b) is a trustee, director or an officer, or a person acting in a similar capacity, of a party to the contract or transaction; or

(c) has a material interest in a party to the contract or transaction.

(2) Subject to subsection (3), the disclosure required by subsection (1) shall be made

(a) at the meeting at which a proposed contract or transaction is first considered;

(b) if the trustee was not, at the time of the meeting referred to in clause (a), interested in a proposed contract or transaction, at the first meeting after the trustee becomes so interested;

(c) if the trustee becomes interested after a contract or transaction is made, at the first meeting after the trustee becomes so interested; or

(d) if a person who is interested in a contract or transaction later becomes a trustee, at the first meeting after the person becomes a trustee.

(3) If a material contract or material transaction, whether entered into or proposed, is one that, in the course of the management of the trust assets or administration of the affairs of the trust, would not require approval by the trustees or unit-holders, a trustee shall disclose, in writing to the other trustees of the trust, or request to have it entered in the minutes of the meeting of trustees or of the meeting of a committee of trustees, the nature and extent of the trustee’s interest immediately after the trustee becomes aware of the contract or transaction.

(4) A trustee required to make a disclosure under subsection (1) shall not vote on any resolution to approve the contract or transaction unless the contract or transaction

(a) relates primarily to the trustee’s remuneration as a trustee of the trust;

(b) is for indemnity under section 40 or insurance under section 41; or

(c) is with an affiliated entity.

(5) For the purposes of this section, a general notice to the other trustees declaring that a trustee is to be regarded as interested, for any of the following reasons, in a contract or transaction made with a party, is a sufficient declaration of interest in relation to the contract or transaction:

(a) the trustee is a trustee, director or officer, or a person acting in a similar capacity, of a party referred to in clause (1) (b) or (c);

(b) the trustee has a material interest in the party; or

(c) there has been a material change in the nature of the trustee’s interest in the party.

(6) The unit-holders of the income trust may examine the portions of any minutes of meetings of trustees or of committees of trustees that contain disclosures under this section, and any other documents that contain those disclosures, during usual business hours.

(7) A contract or transaction for which disclosure is required under subsection (1) is not invalid, and the trustee is not accountable to the unit-holders for any profit realized from the contract or transaction, because of the trustee’s interest in the contract or transaction or because the trustee was present or was counted to determine whether a quorum existed at the meeting of trustees or a committee of trustees that considered the contract or transaction, if

(a) disclosure of the interest was made in accordance with subsections (1) to (5);

(b) the trustees approved the contract or transaction; and

(c) the contract or transaction was reasonable and fair to the unit-holders when it was approved.

(8) Even if the conditions of subsection (7) are not met, a trustee, acting honestly and in good faith, is not accountable to the unit-holders for any profit realized from a contract or transaction for which disclosure is required under subsection (1), and the contract or transaction is not invalid by reason only of the interest of the trustee in the contract or transaction, if

(a) the contract or transaction is approved or confirmed by a special resolution;

(b) disclosure of the interest was made to the unit-holders in a manner sufficient to indicate its nature before the contract or transaction was approved or confirmed; and

(c) the contract or transaction was reasonable and fair to the unit-holders when it was approved or confirmed.

(9) If a trustee fails to comply with this section, the court may, on application of another trustee or any unit-holder, set aside the contract or transaction on any terms that it thinks fit, or require the trustee to account to the unit-holders for any profit or gain realized on it, or do both those things.

Recommendation 26: Unless the debt instrument or other contract expressly states otherwise, the liability of trustees of an income trust or a subsidiary trust under any debt instrument or other contract expressly entered into in their capacity as trustees be limited to the corpus of the trust. This rule does not apply retroactively to debt instruments or other contracts entered into by trustees in their capacity as such. Nor does it derogate from an exclusion or limitation of liability contained in any debt instrument or other contract whether entered into before or after the Act becomes effective.

Trustee liability – debt, contract

37 (1) This section does not apply in respect of a debt instrument or contract

(a) entered into before this section comes into force; or

(b) that specifically provides for the personal liability of a trustee that is a party to the instrument or contract.

(2) If a liability of a trustee arises as a result of or in relation to the performance of the trustee’s duties as trustee under a contract or in respect of any debt obligation issued by a trustee, the trustee is not liable for any amount in excess of the realizable value of the trust assets less the aggregate of all liabilities associated with the trust.

Recommendation 27:Trustees of an income trust or subsidiary trust be placed in a similar position as directors insofar as it relates to their liabilities in tort. Recourse against trustees for claims sounding in tort would be limited to the corpus of the trust if, in the same circumstances, a director would not be personally liable for the tort committed. Conversely, the liability of trustees would not be limited to the corpus of the trust if, in the same circumstances, a director would be personally liable for the tort. These rules would not apply retroactively and would not apply to statutory liability such as for breach of the duties of loyalty or care set out in the Act or for misrepresentation under securities legislation.

Trustee liability - general

38 (1) This section does not apply in respect of

(a) a liability arising under section 34 or 36;

(b) a liability arising from disclosure made, or the failure to make disclosure required, under the Securities Act; or

(c) a liability arising under a debt instrument or contract.

(2) If a trustee of a trust is required to make a payment under this Act, or if any other liability of a trustee arises as a result of or in relation to the performance of the trustee’s duties as trustee, the trustee is not liable for any amount in excess of the realizable value of the trust assets less the aggregate of all liabilities associated with the trust.

Recommendation 28: Trustees of an income trust or a subsidiary trust have rights of indemnification out of trust assets similar to those available to directors under the CBCA, provided that the trustees comply with their fiduciary duties and, in the case of criminal or administrative proceedings enforced by a monetary penalty, have reasonable grounds to believe that their conduct is lawful. If these conditions are satisfied, a trustee would have the right to be indemnified so long as the trustee was not found by the court, or other competent authority, to have committed any fault or omitted to do anything that he or she ought to have done.

Indemnification – specific payments

39 (1) In this section, a reference to indemnity means indemnity to be paid out of the assets held in trust.

(2) If a trustee of a trust makes a payment under section 23, 26, 37, 38, 40 or 43 the trustee shall be indemnified with respect to the payment and against all costs, charges and expenses related to the payment.

(3) A payment referred to in subsection (2) may be paid directly to the intended recipient out of the assets held in trust.

Indemnification - general

40 (1) In this section, a reference to indemnity means indemnity to be paid out of the assets held in trust.

(2) The trustees of a trust may indemnify a trustee, a former trustee or another person who acts or acted, at the trustees’ request, as a trustee, director, officer or a person acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred in respect of any civil, criminal, administrative, investigative or other proceeding in which the trustee, former trustee or other person is involved because of the association with the income trust, subsidiary trust or other entity.

(3) The trustees may advance money to a trustee, former trustee or other person for the costs, charges and expenses of a proceeding referred to in subsection (2).

(4) A trustee, former trustee or other person that has received money under subsection (2) shall repay the money if the person does not fulfill the conditions of clause (5) (a) or (b).

(5) The trustees may not approve indemnity under subsection (2) unless the trustee, former trustee or other person

(a) acted honestly and in good faith with a view to the best interests of the unit-holders generally, or, as the case may be, the best interests of the other entity for which the person acted as a trustee, director, officer or a person acting in a similar capacity at the trustees’ request; and

(b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the trustee, former trustee or other person had reasonable grounds for believing the conduct was lawful.

(6) The trustees may, with the approval of the court, approve indemnity for a trustee, former trustee or other person referred to in subsection (2), or advance money under subsection (3), in respect of an action by or on behalf of the trustees or other entity to procure a judgment in favour of the unit-holders, the trustees or the other entity, to which the person is made a party because of the person’s association with the trust or other entity as described in subsection (2), against all costs, charges and expenses reasonably incurred by the person in connection with the action, if the person fulfils the conditions set out in clause (5) (a) or (b).

(7) Despite subsection (2), a trustee, former trustee or other person referred to in that subsection is entitled to indemnity in respect of all costs, charges and expenses reasonably incurred in connection with the defence of any civil, criminal, administrative, investigative or other proceeding to which the person is subject because of the person’s association with the trust or other entity as described in subsection (2), if the person

(a) was not judged by the court or other competent authority to have committed any fault or omitted to do anything that the person ought to have done; and

(b) fulfils the conditions set out in clause (5) (a) or (b).

(8) A trustee, former trustee or other person referred to in subsection (2) may apply to the court for an order approving an indemnity under this section and the court may make the order and make any further order that it sees fit.

(9) On an application under subsection (8), the court may order notice to be given to any interested person and the person is entitled to appear and be heard in person or by counsel.

Recommendation 29: The Act expressly permit trustees of income trusts or subsidiary trusts to approve the purchase of liability insurance out of trust monies and to vote thereon despite the conflict of interest.

Insurance

41 The trustees of a trust may purchase and maintain insurance for the benefit of a trustee, former trustee or other person referred to in subsection 40 (2) against any liability incurred

(a) by the person in the person’s capacity as a trustee; or

(b) by the person in the person’s capacity as a trustee, director, officer or a person acting in a similar capacity, of another entity, if the person acts or acted in that capacity at the trustees’ request.

Recommendation 31 The Act declare that unsecured creditors, including unsecured trade creditors and persons with unliquidated claims, of an income trust or a subsidiary trust have a direct unsecured claim against the corpus of the trust subject to the terms of their claim.

Unsecured creditors

42 If a debt or other liability arises as a result of or in relation to the assets or affairs of a trust, a person to whom the debt or other liability is owed may claim against the assets held in trust.

Part 5

Arrangements and Compulsory Acquisitions

Recommendation 32: The Act include a statutory arrangement provision modelled on s. 192 of the CBCA empowering the court to approve arrangements that effect fundamental changes in the affairs of an income trust provided that the arrangement satisfies the statutory conditions and the fair and reasonable test. A trust arrangement would become effective in accordance with the terms of the court order.

Arrangement

43 (1) In this section, “arrangement” includes

(a) an amendment to the trust instrument;

(b) a transfer of all or substantially all the assets of an income trust or an affiliated entity to another entity, subsidiary trust or body corporate in exchange for assets, money or securities of the other entity;

(c) an exchange of securities of an income trust for assets, money or other securities of another entity;

(d) the occurrence of any event specified in the trust instrument;

(e) the occurrence of any event specified by the trustees if the trust instrument authorizes the trustees to specify events that are arrangements for the purposes of this section; and

(f) any combination of the foregoing.

(2) In connection with an application under this section, the court may make any interim or final order it thinks fit, including, without limiting the generality of the foregoing,

(a) an order determining the notice to be given to any interested person or dispensing with notice to any person;

(b) an order appointing counsel, the fees and expenses of which are to be paid by the trustees out of the trust assets, to represent the interests of the unit-holders;

(c) an order requiring the trustees to call, hold and conduct a meeting of the unit-holders or options or rights to acquire units in such manner as the court directs;

(d) an order permitting a unit-holder to dissent under section 26; and

(f) an order approving an arrangement as proposed by the trustees or as amended in any manner the court may direct.

(3) An arrangement becomes effective on the date ordered by the court.

Recommendation 33: The Act include a statutory reorganization provision modelled on s. 191 of the CBCA empowering the court to amend declarations of trust, authorize the issue of debt obligations or appoint additional or replacement trustees where the court has made an order in respect of the income trust under the Bankruptcy and Insolvency Act (Canada) or the Companies’ Creditors Arrangement Act (Canada). Again, the reorganization would become effective in accordance with the terms of the court order.

Reorganization

44 (1) In this section, “reorganization” means a court order made under

(a) section 23;

(b) the Bankruptcy and Insolvency Act (Canada) approving a commercial proposal; or

(c) the Companies’ Creditors Arrangement Act (Canada) approving a plan of arrangement.

(2) If an income trust or subsidiary trust is subject to an order referred to in subsection (1), the trust instrument may be amended by an order of the court to effect any change that the court considers appropriate.

(3) If the court makes an order referred to in subsection (1), the court may also

(a) authorize the issue of debt obligations associated with the trust, whether or not convertible into units of any class or having attached any rights or options to acquire units of any class, and fix the terms thereof; and

(b) appoint trustees in place of or in addition to all or any of the trustees then in office.

(4) A reorganization becomes effective on the date ordered by the court and the trust instrument is amended accordingly.

(5) A unit-holder is not entitled to dissent under section 26 if an amendment to the trust instrument is effected under this section.

Recommendation 34: The Act include a compulsory acquisition provision to facilitate take-over bids for all units of income trusts patterned after s. 206 of the CBCA. A dissenting offeree would be entitled to challenge the fair value of the offeror’s buyout price.

Take-over bids - compulsory and compelled acquisitions

45 (1) In this section and section 46,

“dissenting offeree” means, where a take-over bid is made for all the units of a class of units, a holder of a unit of that class who does not accept the take-over bid and includes a subsequent holder of that unit who acquires it from the first-mentioned holder;

“offer” includes an invitation to make an offer;

“offeree” means a person to whom a take-over bid is made;

offeree income trust” means an income trust the units of which are the object of a take-over bid;

“offeror” means a person, other than an agent, who makes a take-over bid, and includes two or more persons who, directly or indirectly,

(a) make a take-over bid jointly or in concert; or

(b) intend to exercise, jointly or in concert, voting rights attached to units for which a take-over bid is made;

“take-over bid” means an offer made by an offeror to unit-holders of an income trust at approximately the same time to acquire all of the units of a class of issued units, and includes an offer made by the trustees of an income trust to repurchase all of the units of a class of the units of the income trust;

“unit” means a unit, with or without voting rights, and includes

(a) a security currently convertible into a unit of an income trust; and

(b) currently exercisable options and rights to acquire a unit of an income trust or a security convertible into units of an income trust.

(2) If, within one hundred twenty days after the date of a take-over bid, the bid is accepted by the holders of not less than ninety per cent of the units of any class of units to which the take-over bid relates, other than units held at the date of the take-over bid by or on behalf of the offeror or an affiliated entity or associate of the offeror, the offeror is entitled, on complying with this section, to acquire the units held by the dissenting offerees.

(3) An offeror may acquire units held by a dissenting offeree by sending by registered mail within sixty days after the date of termination of the take-over bid and in any event within one hundred eighty days after the date of the take-over bid, an offeror’s notice to each dissenting offeree stating that

(a) the offerees holding not less than ninety per cent of the units to which the bid relates accepted the take-over bid;

(b) the offeror is bound to take up and pay for or has taken up and paid for the units of the offerees who accepted the take-over bid;

(c) a dissenting offeree is required to elect

(i) to transfer the dissenting offeree’s units to the offeror on the terms on which the offeror acquired the units of the offerees who accepted the take-over bid, or

(ii) to demand payment of the fair value of the units in accordance with subsections (12) to (20) by notifying the offeror within twenty days after receiving the offeror’s notice; and

(d) a dissenting offeree who does not notify the offeror in accordance with clause (4) (b) is deemed to have elected to transfer the units to the offeror on the same terms that the offeror acquired the units from the offerees who accepted the take-over bid.

(4) A dissenting offeree to whom an offeror’s notice is sent under subsection (3) shall, within twenty days after receiving the notice, elect

(a) to transfer the units to the offeror on the terms on which the offeror acquired the units of the offerees who accepted the take-over bid; or

(b) to demand payment of the fair value of the units in accordance with subsections (12) to (20) by notifying the offeror within those twenty days.

(5) A dissenting offeree who does not notify the offeror in accordance with clause (4) (b) is deemed to have elected to transfer the units to the offeror on the same terms on which the offeror acquired the units from the offerees who accepted the take-over bid.

(6) Within twenty days after the offeror sends an offeror’s notice under subsection (3), the offeror shall pay or transfer to the trustees of the offeree income trust the amount of money or other consideration that the offeror would have had to pay or transfer to a dissenting offeree if the dissenting offeree had elected to accept the take-over bid under clause (4) (b).

(7) If the trustees of the offeree income trust receive money under subsection (6), the trustees shall deposit the money in a separate account in a bank or other body corporate any of whose deposits are insured by the Canada Deposit Insurance Corporation, and shall place the other consideration in the custody of a bank or such other body corporate.

(8) The trustees of the offeree income trust are deemed to hold in trust the money or other consideration the trustees receive under subsection (6) and that trust is deemed to be separate and distinct from the income trust.

(9) The trustees of an income trust that are making a take-over bid to repurchase all of the units of a class of its units are deemed to hold in trust for the dissenting unit-holders the money and other consideration that they would have had to pay or transfer to a dissenting offeree if the dissenting offeree had elected to accept the take-over bid under clause (4) (b) and that trust is deemed to be separate and distinct from the income trust.

(10) The trustees of an income trust that are making a take-over bid shall, within twenty days after a notice is sent under subsection (3), deposit the money in a separate account in a bank or other body corporate any of whose deposits are insured by the Canada Deposit Insurance Corporation, and shall place the other consideration in the custody of a bank or such other body corporate.

(11) Within thirty days after the offeror sends a notice under subsection (3), the trustees of the offeree income trust shall,

(a) if the payment or transfer required by subsection (6) is made, register the offeror as the holder of the units that were held by dissenting offerees;

(b) give to each dissenting offeree who elects to accept the take-over bid terms under clause (4) (b) the money or other consideration to which the offeree is entitled, disregarding fractional units, which may be paid for in money; and

(c) if the payment or transfer required by subsection (6) is made and the money or other consideration is deposited as required by subsection (7), send to each other dissenting unit-holder a notice stating that

(i) the dissenting unit-holder ’s units have been cancelled,

(ii) the trustees or some designated person holds in trust for the dissenting unit-holder the money or other consideration to which that unit-holder is entitled as payment for or in exchange for the units, and

(iii) the trustees will, subject to subsections (12) to (20), send that money or other consideration to that unit-holder.

(12) If a dissenting offeree has elected to demand payment of the fair value of the units under clause (4) (b), the offeror may, within twenty days after it has paid the money or transferred the other consideration under subsection (6), apply to the court to fix the fair value of the units of that dissenting offeree.

(13) If an offeror fails to apply to the court under subsection (12), a dissenting offeree may apply to the court for the same purpose within a further period of twenty days.

(14) Where no application is made to the court under subsection (13) within the period set out in that subsection, a dissenting offeree is deemed to have elected to transfer the dissenting offeree’s units to the offeror on the same terms that the offeror acquired the units from the offerees who accepted the take-over bid.

(15) A dissenting offeree is not required to give security for costs in an application made under subsection (12) or (13).

(16) On an application under subsection (12) or (13)

(a) all dissenting offerees referred to in clause (4) (b) whose units have not been acquired by the offeror shall be joined as parties and are bound by the decision of the court; and

(b) the offeror shall notify each affected dissenting offeree of the date, place and consequences of the application and of dissenting offeree’s right to appear and be heard in person or by counsel.

(17) On an application to the court under subsection (12) or (13), the court may determine whether any other person is a dissenting offeree who should be joined as a party, and the court shall then fix a fair value for the units of all dissenting offerees.

(18) The court may in its discretion appoint one or more appraisers to assist the court to fix a fair value for the units of a dissenting offeree.

(19) The final order of the court shall be made against the offeror in favour of each dissenting offeree and for the amount for the units as fixed by the court.

(20) In connection with proceedings under this section, the court may make any order it thinks fit and, without limiting the generality of the foregoing, it may

(a) fix the amount of money or other consideration that is required to be held in trust under subsection (7) or (8);

(b) order that that money or other consideration be held in trust by a person other than the trustees of the income trust that is the subject of the bid;

(c) allow a reasonable rate of interest on the amount payable to each dissenting offeree from the date that the offeror receives notice of the election under clause (4) (b) to the date of payment; and

(d) order that any money payable to a unit-holder who cannot be found be paid to the Uniform Law Conference of Canada [and, if necessary, specify means by which a payment can be made out of the consolidated revenue fund].

Recommendation 35: To protect minority unit-holders in a change of control transaction, the Act contain a compelled acquisition provision patterned after s. 206.1 of the CBCA.

Obligation to acquire units

46 (1) If a unit-holder does not receive an offeror’s notice under subsection 45 (3), the unit-holder may

(a) within ninety days after the date of termination of the take-over bid, or

(b) if the unit-holder did not receive an offer pursuant to the take-over bid, within ninety days after the later of

(i) the date of termination of the take-over bid; and

(ii) the date on which the unit-holder learned of the take-over bid,

require the offeror to acquire those units.

(2) If a unit-holder requires the offeror to acquire units under subsection (1), the offeror shall acquire the units on the same terms under which the offeror acquired or will acquire the units of the offerees who accepted the take-over bid.

Part 6

General

Power to make regulations

47 The Lieutenant Governor in Council may make regulations respecting those matters for which this Act provides that requirements or other matters be prescribed.

Consequential Amendments

Recommendation 9: The partnership legislation be amended to stipulate that the relationship among unit-holders in an income trust, a subsidiary trust or a mutual fund is not a partnership.

Partnerships Act[4]

48 Section 2 of the Partnerships Act is repealed and the following substituted:

Partnership

2 (1) Partnership is the relation that subsists between persons carrying on a business in common with a view to profit.

(2) Despite subsection (1), the following are not partnerships within the meaning of this Act:

(a) the relation between the members of a company or association that is incorporated by or under the authority of any special or general Act in force in the Province or elsewhere, or registered as a corporation under any such Act;

(b) the relation between unit-holders of an income trust, subsidiary trust or mutual fund within the meaning of the Income Trusts Act.

Commencement of Act

49 This Act shall come into force on a day fixed by Proclamation.


FOOTNOTES

[1] Some jurisdictions may wish to prescribe specific marketplaces by regulation.

[2] This provision, and the one that follows, establish an optional oppression remedy for unit-holders – the remedy is not available unless the trust instrument ‘opts in’. If a trust instrument opts in, this legislation provides certainty for unit-holders as to the scope of the remedy. Alternatively, jurisdictions may wish to make the remedy available to unit-holders with respect to all income trusts, regardless of whether a particular trust instrument opts in.

[3] This provision, and those that follow, establish an optional legal remedy for unit-holders – the remedy is not available unless the trust instrument ‘opts in’. If a trust instrument opts in, this legislation provides certainty for unit-holders as to the scope of the remedy. Alternatively, jurisdictions may wish to make the remedy available to unit-holders with respect to all income trusts, regardless of whether a particular trust instrument opts in.

[4] This amendment does not constitute all consequential amendments that may be necessary in an enacting jurisdiction. The following has been structured as an amendment in accordance with Recommendation #9 of the Report. It refers to the Partnerships Act R.S.O. 1990, c. P.5 for illustration purposes. Complimentary amendments to trust companies, conflicts of laws regarding trusts, business corporations and securities legislation may be necessary.

Next Annual Meeting

2018 Conference (Centennial)

Delta Hotel

Québec City, QC

August 12 - 16, 2018