As the population ages, banks and brokerages increasingly find
that their customers are acting as attorneys for property for their
elderly parents. This is giving rise to potential issues arising
from the Accredited Investor rules in National Instrument 45-106.
These rules can apply to securities that are sold without a
prospectus (referred to as an "exempt market sale" or a
"private placement" of securities). A common scenario is
that the attorney for property qualifies as an accredited investor
but the elderly parent does not. The attorney quite naturally wants
his parent to have the same quality of financial advice as he does,
and opens a power of attorney trading account with his broker. This
is the point at which caution is required. The beneficial owner of
the account is the person who granted the power of attorney, and it
is she who must be an accredited investor in order for an exempt
market purchase be made from that account. That is, even though the
son who acts as an attorney for property is an accredited investor,
he cannot make the exempt market purchase using his mother's
assets unless she is also an accredited investor. What he can do is
open a managed account, on behalf of his mother, with a registered
portfolio manager who is given discretion to make investment
decisions, and who may make an exempt purchase of securities on
behalf of the account. Before opening such an account it is
necessary to confirm both that the power of attorney document (and
relevant provincial statute) give the attorney the authority to
grant discretionary trading authority to a portfolio manager, and
that the discretionary account is appropriate for a fiduciary
caring for a vulnerable, mentally incapable older person. It will
then be the portfolio manager's obligation to determine whether
the "exempt purchase" is a suitable investment for that
account. Brokers who are acting for millennial and baby boomer
customers should consider establishing an intake process for power
of attorney accounts, and may wish to offer managed account
services to address situations such as that discussed above.
Properly implemented, such managed accounts can allow the financial
services industry to better meet the needs of an aging
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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).