Bill 35 2003

An Act respecting
the liability of
beneficiaries of a trust

Her Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows:

Limit on beneficiaries' liability

1.  (1)  The beneficiaries of a trust are not, as beneficiaries, liable for any act, default, obligation or liability of the trust or any of its trustees if, when the act or default occurs or the obligation or liability arises,

(a) the trust is a reporting issuer under the Securities Act; and

(b) the trust is governed by the laws of Ontario.

Exception

(2)  Subsection (1) does not apply with respect to any act or default that occurred or any obligation or liability that arose before this Act came into force.

Governing law

(3)  For the purposes of this section,

(a) a trust shall be deemed to be governed by the laws of Ontario if the trust instrument states that it is governed by the laws of Ontario;

(b) a trust shall be deemed not to be governed by the laws of Ontario if the trust instrument states that the trust is governed by the laws of another jurisdiction; and

(c) in case of a conflict between clauses (a) and (b), the trust is governed by the laws of the jurisdiction specified by the court.

Definition

(4)  In this section,

"trust instrument" means, in relation to a trust, the document or documents that establish and govern the trust, but does not include a judgment or order of a court.

Liability in other circumstances

2.  This Act does not affect the liability, if any, of the beneficiaries of a trust in any other circumstances.

Commencement

3.  This Act comes into force on the day it receives Royal Assent.

Short title

4.  The short title of this Act is the Trust Beneficiaries' Liability Act, 2003.

EXPLANATORY NOTE

The Bill specifies that the beneficiaries of a trust are not liable, as beneficiaries, for any act, default, obligation or liability of the trust or any of its trustees. However, this protection for beneficiaries is restricted: it applies only for acts, defaults, obligations or liabilities that occur when a trust is a reporting issuer under the Securities Act and is governed by the laws of Ontario; and it applies only for acts, defaults, obligations or liabilities that occur after the Bill receives Royal Assent.