The Pension Policy Branch of the Ontario Ministry of Finance has
issued a call for comments on proposed amendments to eliminate the
"30% Rule" for investments by Ontario
pension plans. Submissions are due by April 29, 2016.
The 30% Rule restricts pension plans from, directly or
indirectly, investing the moneys of the plan in the securities of a
corporation to which are attached more than 30% of the votes that
may be cast to elect the directors of a corporation. It is one of
the most onerous quantitative limits on investments by pension
plans contained in the federal pension regulations and incorporated
by reference into the Ontario regulations.
As noted in our December 2, 2015 Update, Ontario to
Eliminate the 30% Pension Investment Rule, Move Forward with the
ORPP and Provide Solvency Funding Relief, the Ontario
government's Economic and Fiscal Review released on November
26, 2015 contained a surprise announcement of the government's
intention to eliminate the 30% Rule.
As promised in the Economic and Fiscal Review, the government
has now posted a description of the proposed regulation
Call for Comments
Comments are being sought on all aspects of the proposal
including, in particular the following:
1. Should there be disclosure requirements or undertakings
requested from a corporation if a plan invests in more than a
threshold percentage of the voting shares (e.g., 30%) of that
corporation? If so,
a) what should the required disclosure or undertakings consist
b) what is the appropriate threshold?
2. Should the same disclosure and undertakings be required from
all types of corporations?
3. Should the disclosure requirements and undertakings depend on
the features of the plan (e.g., size of plan, governance structure,
4. Are there any other considerations or concerns associated
with eliminating the 30% Rule? For example, should measures be
introduced to reduce the potential for conflicts of interest?
Amendments Being Considered
The amendments being considered contemplate that a plan
administrator would no longer be prevented from investing in more
than 30% of the voting shares of any corporation.
In order to make such an investment, the target corporation may
be required to comply with certain disclosure requirements and
undertakings. These are similar to the obligations currently
applicable to real estate corporations, resource corporations and
investment corporations that are exempt from the 30% Rule. Namely,
the target corporation would be required to:
1. file with the Superintendent of Financial Services: its
financial statements, a list of its officers, directors and
shareholders, a list of assets of the corporation and the
"fair value" (as opposed to "market value" as
currently applicable to real estate, resource and investment
corporations) of each asset, and a certificate of compliance with
2. permit FSCO staff to visit its head office and examine its
books and records;
3. obtain an appraisal at the request of the Superintendent (for
4. adhere to the "Related Party Rule", which restricts
the lending of any assets to, or investment of any monies in, a
related party of the pension plan;
5. restrict its investments and loans to those authorized under
the Pension Benefits Act; and
6. not invest, or hold an investment, in securities of any other
corporation to which are attached more than a threshold percentage
(e.g. 30%) of the votes that may be cast to elect the directors of
that corporation, unless the corporation deposits an undertaking by
the other corporation not to invest in the securities of any other
corporation. This is similar to the "stacking
restriction" currently applicable to investment corporations
and would effectively limit the number of investments over a
specified voting threshold in an investment structure to two.
Lastly, any financial statements filed by the pension plan must
value the common shares of the corporation in accordance with a
It is important to note that the disclosure requirements and
undertakings being considered may not automatically apply once a
30% voting share threshold is crossed. Rather, the government is
calling for comments on the appropriate voting threshold that would
trigger these obligations, leaving open the possibility that they
may be triggered at higher investment levels (for example, over 50%
Interested parties may wish to make submissions before the April
The content of this article does not constitute legal advice
and should not be relied on in that way. Specific advice should be
sought about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).