Ontario has finally passed legislation to provide certainty to unitholders of publicly traded trusts that their exposure to claims against the trust will be limited to their investment.
Bill 106, the Budget Measures Act, 2004 (No. 2) ("Bill 106"), which proposes the enactment of the Trust Beneficiaries' Liability Act, 2004 (the "Act"), received Royal Assent yesterday and the Act has been proclaimed in force as of December 16, 2004.
The Act applies to unitholders of any trust that is a "reporting issuer" under the Securities Act (Ontario) if its declaration of trust selects Ontario as its governing law. The Act provides that investors in a publicly traded trust are not liable, as beneficiaries of the trust, for any act, default, obligation or liability of the trust or any of its trustees. Furthermore, the Act applies to all activities or obligations of a trust or its trustees that occur or arise after December 16, 2004, the date on which Bill 106 received Royal Assent.
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