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2002 Legislative Session: 3rd Session, 37th Parliament

FIRST READING

The following electronic version is for informational

purposes only.

The printed version remains the official version.

HONOURABLE GEOFF PLANT

ATTORNEY GENERAL AND MINISTER

RESPONSIBLE FOR TREATY NEGOTIATIONS

BILL 30 – 2002

TRUSTEE INVESTMENT STATUTES

AMENDMENT ACT, 2002

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province of British Columbia, enacts as follows:

Architects Act

Section 82 (2) of the Architects Act, R.S.B.C. 1996, c. 17, is amended by adding

"property or" before "securities" .

Cemetery and Funeral Services Act

Section 45 (4) of the Cemetery and Funeral Services Act, R.S.B.C. 1996, c. 45, is repealed and the following substituted:

(4) The provisions of the Trustee Act respecting the investment of trust property by a trustee apply to care funds.

College and Institute Act

Section 30 of the College and Institute Act, R.S.B.C. 1996, c. 52, is repealed and the following substituted:

Investments

30 The board may invest for the benefit of the institution money belonging to it and available for investment only as permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee.

Company Act

Section 288 (4) of the Company Act, R.S.B.C. 1996, c. 62, is repealed and the following substituted:

(4) Until required for distribution to creditors and members, cash balances held by the liquidator may be invested as follows and any dividends or interest received from the investments form part of the assets of the company:

(

a) in an interest bearing account with any savings institution;

(

b) as permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee.

Farmers and Womens Institutes Act

Section 7 (2) of the Farmers and Womens Institutes Act, R.S.B.C. 1996, c. 133, is amended by adding

"property or" before "securities" .

Financial Administration Act

Section 40 of the Financial Administration Act, R.S.B.C. 1996, c. 138, is amended

(

a) by repealing subsection (1) and substituting the following:

(1) The Minister of Finance may invest money of the consolidated revenue fund not immediately required for payments. ,

(

b) by repealing subsection (4) and substituting the following:

(

c) by repealing subsections (6) to (8) and substituting the following:

(6) When investing any money other than under subsection (4), the Minister of Finance must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments.

Section 60 (1) (

b) is amended by striking out "section 40 (1)" and substituting

"section 40 (6)" .

Financial Institutions Act

Section 272 (1) (

a) of the Financial Institutions Act, R.S.B.C. 1996, c. 141, is repealed.

Institute of Technology Act

Section 31 of the Institute of Technology Act, R.S.B.C. 1996, c. 225, is repealed and the following substituted:

Investments

31 The board may invest for the benefit of the institute money belonging to it and available for investment only as permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee.

Islands Trust Act

Section 43 (3) of the Islands Trust Act, R.S.B.C. 1996, c. 239, is repealed and the following substituted:

(3) Subject to the approval of the minister, the property of the trust fund may be invested as permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee.

Medical Practitioners Act

Section 98 (2) of the Medical Practitioners Act, R.S.B.C. 1996, c. 285, is amended adding

"property or" after "invested in" .

Municipal Finance Authority Act

Section 16 (3) (

e) of the Municipal Finance Authority Act, R.S.B.C. 1996, c. 325, is repealed and the following substituted:

(

e) investments permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee; .

Public Guardian and Trustee Act

Section 8 of the Public Guardian and Trustee Act, R.S.B.C. 1996, c. 383, is amended by adding

"the regulations," after "this Act," .

Section 14 (

a) is amended by striking out "registered, despite

section 20 of the

Trustee Act ," and substituting "registered" .

Section 28 is amended

(

a) by repealing subsection (2) (

b) and substituting the following:

(

b) authorizing the Public Guardian and Trustee to invest in specified types of investments in addition to investments permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee; , and

(

b) by repealing the second subsection (3).

Real Estate Act

Section 21 (8) of the Real Estate Act, R.S.B.C. 1996, c. 397, is amended by striking out everything after "trust funds" .

Section 27 (1) is repealed and the following substituted:

(1) The corporation may invest any part of the insurance fund not presently required for disposition, as permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee.

Section 29.4 (1) as enacted by

section 20 of the Finance and Corporate Relations Statutes Amendment Act, 1998, S.B.C. 1998, c. 7, is repealed and the following substituted:

(1) The special compensation corporation may invest any part of the compensation fund, not presently required for disposition, as permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee.

Science Council Act

Section 10 (6) of the Science Council Act, R.S.B.C. 1996, c. 415, is repealed and the following substituted:

(6) The council may invest money in its hands as permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee.

Society Act

Section 32 (2) and (3) of the Society Act, R.S.B.C. 1996, c. 433, is repealed and the following substituted:

(2) A society that has and exercises powers within the scope of

section 14 must adhere to prudent standards as defined in

section 136 (1) of the Financial Institutions Act in investing its funds.

(3) A society to which subsection (2) does not apply may invest its funds in investments authorized by its constitution or bylaws, but if that investment is not authorized, the society must invest its funds only as permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee.

Strata Property Act

Section 95 (2) (

a) of the Strata Property Act, S.B.C. 1998, c. 43, is repealed and the following substituted:

(

a) those investments permitted by the regulations; .

Section 292 (2) is amended by adding the following paragraph:

(l.1) specifying permitted investments for the purposes of

section 95 (2) (a); .

Trustee Act

Section 15 of the Trustee Act, R.S.B.C. 1996, c. 464, is repealed and the following sections are added:

Investment of trust property

15.1

(1) A trustee may invest property in any form of property or security in which a prudent investor might invest, including a security issued by a mutual fund as defined in the Securities

Act .

(2) Subsection (1) does not authorize a trustee to invest in a manner that is inconsistent with the trust.

(3) Without limiting subsection (1), a trustee may invest trust property in a common trust fund managed by a trust company, whether or not the trust company is a co-trustee.

Standard of care

15.2 In investing trust property, a trustee must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments.

Trustee not liable if overall investment strategy is prudent

15.3 A trustee is not liable for a loss to the trust arising from the investment of trust property if the conduct of the trustee that led to the loss conformed to a plan or strategy for the investment of the trust property, comprising reasonable assessments of risk and return, that a prudent investor would adopt under comparable circumstances.

Abrogation of common law rules: anti-netting rules

15.4

(1) The rule of general trust law that requires the assessment of the decisions of a trustee on an investment by investment basis if the decisions are called into question is abrogated.

(2) The rule for the assessment of damages for breach of trust that prohibits losses from being off set by gains is abrogated except in respect of circumstances in which the breach is associated with dishonesty on the part of the trustee.

Delegation of authority with respect to investment

15.5

(1) In this section, "agent" means any person to whom a trustee delegates investment responsibility.

(2) A trustee may delegate to an agent the degree of authority with respect to the investment of trust property that a prudent investor might delegate in accordance with ordinary business practice.

(3) A trustee who delegates authority under subsection (2) must determine the investment objectives for the trust and exercise prudence in

(

a) selecting an agent,

(

b) establishing the terms and limits of the authority delegated,

(

c) acquainting the agent with the investment objectives, and

(

d) monitoring the performance of the agent to ensure compliance with the terms of the delegation.

(4) In performing a delegated function, an agent owes a duty to the trust to exercise reasonable care to comply with the terms of the delegation.

(5) A trustee who complies with the requirements of subsection (3) is not liable to the beneficiaries or to the trust for the decisions or actions of the agents to whom the function was delegated.

(6) This

section does not authorize a trustee to delegate authority under circumstances in which the trust requires the trustee to act personally.

(7) Investment in a mutual fund referred to in

section 15.1 (1) or a common trust fund referred to in

section 15.1 (3) is not a delegation of authority with respect to the investment of trust property.

Interpretation of trust instrument in relation to sections 15.1 to 15.5

15.6 For the purposes of sections 15.1 to 15.5 and any investment made after the coming into force of this section, if the terms of the instrument that created a trust express the powers of the trustee as powers to invest property of the trust in the investments permitted under

section 15 as that

section read at any time before its repeal, the instrument is to be interpreted as authorizing the investments permitted under sections 15.1 to 15.5, unless a particular investment would be expressly authorized or expressly prohibited by the terms of the instrument.

24 Sections 16, 17, 18 and 20 are repealed and the following substituted:

Corporate trustee not to invest trust money in own securities

17.1 Except as provided in

section 15.1 (3), a corporation that is a trustee must not invest trust money in its own securities.

Workers Compensation Act

Section 67 (2) of the Workers Compensation Act, R.S.B.C. 1996, c. 492, is amended by striking out everything after

"reinvested" and substituting "and in doing so must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments."

Commencement

26 This Act comes into force by regulation of the Lieutenant Governor in Council.

Explanatory Notes

Architects Act

SECTION 1: [Architects Act, amends

section 82 (2)] is consequential to the amendments to

the Trustee Act enacted by this Bill.

Cemetery and Funeral Services Act

SECTION 2: [Cemetery and Funeral Services Act, repeals and replaces

section 45 (4)] is

consequential to the amendments to the Trustee Act enacted by this Bill.

College and Institute Act

SECTION 3: [College and Institute Act, re-enacts

section 30] is consequential to the

amendments to the Trustee Act enacted by this Bill.

Company Act

SECTION 4: [Company Act, repeals and replaces

section 288 (4)] is consequential to the

amendments to the Trustee Ac t enacted by this Bill.

Farmers and Womens Institutes Act

SECTION 5: [Farmers and Womens Institutes Act, amends

section 7 (2)] is consequential

to the amendments to the Trustee Act enacted by this Bill.

Financial Administration Act

SECTION 6: [Financial Administration Act, amends

section 40] is consequential to the

amendments to the Trustee Act enacted by this Bill.

SECTION 7: [Financial Administration Act, amends

section 60 (1) (b)] is consequential to

the amendments to the Trustee Act enacted by this Bill.

Financial Institutions Act

SECTION 8: [Financial Institutions Act, repeals

section 272 (1) (a)] is consequential to the

amendments to the Trustee Act enacted by this Bill.

Institute of Technology Act

SECTION 9: [Institute of Technology Act, re-enacts

section 31] is consequential to the

amendments to the Trustee Act enacted by this Bill.

Islands Trust Act

SECTION 10: [Islands Trust Act, repeals and replaces

section 43 (3)] is consequential to the

amendments to the Trustee Act enacted by this Bill.

Medical Practitioners Act

SECTION 11: [Medical Practitioners Act, amends

section 98 (2)] is consequential to the

amendments to the Trustee Act enacted by this Bill.

Municipal Finance Authority Act

SECTION 12: [Municipal Finance Authority Act, repeals and replaces

section 16 (3) (e)] is

consequential to the amendments to the Trustee Act enacted by this Bill.

Public Guardian and Trustee Act

SECTION 13: [Public Guardian and Trustee Act, amends

section 8] is consequential to the

amendments to the Trustee Act enacted by this Bill.

SECTION 14: [Public Guardian and Trustee Act, amends

section 14 (a)] is consequential to

the amendments to the Trustee Act enacted by this Bill.

SECTION 15: [Public Guardian and Trustee Act, amends

section 28] is consequential to the

amendments to the Trustee Act enacted by this Bill.

Real Estate Act

SECTION 16: [Real Estate Act, amends

section 21 (8)] is consequential to the amendments

to the Trustee Act enacted by this Bill.

SECTION 17: [Real Estate Act, repeals and replaces

section 27 (1)] is consequential to the

amendments to the Trustee Act enacted by this Bill.

SECTION 18: [Real Estate Act, repeals and replaces

section 29.4 (1)] is consequential to the

amendments to the Trustee Act enacted by this Bill.

Science Council Act

SECTION 19: [Science Council Act, repeals and replaces

section 10 (6)] is consequential to

the amendments to the Trustee Act enacted by this Bill.

Society Act

SECTION 20: [Society Act, repeals and replaces

section 32 (2) and (3)] is consequential to

the amendments to the Trustee Act enacted by this Bill.

Strata Property Act

SECTION 21: [Strata Property Act, repeals and replaces

section 95 (2) (a)] is consequential

to the amendments to the Trustee Act enacted by this Bill.

SECTION 22: [Strata Property Act, amends

section 292 (2)] is consequential to the amendments

to the Trustee Act enacted by this Bill.

Trustee Act

SECTION 23: [Trustee Act, repeals

section 15 and enacts sections 15.1 to 15.6] enacts provisions

that allow prudent investments by trustees and reflect contemporary

exchange trading methods.

SECTION 24: [Trustee Act, repeals sections 16, 17, 18 and 20 and enacts

section 17.1]

repeals provisions to allow investment of trust property through contemporary

exchange trading methods and enacts a new provision to prohibit a corporation

that is a trustee from investing trust money in its own securities except as

permitted under the new

section 15.1 (3).

Workers Compensation Act

SECTION 25: [Workers Compensation Act, amends

section 67 (2)] is consequential to the

amendments to the Trustee Act enacted by this Bill.

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© 2002: Queen's Printer, Victoria, British Columbia, Canada