April 2002
Changes to Trustee Act

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Changes to Trustee Act Investment Provisions

We are delighted to advise that on April 17, 2002, Bill 30 - the Trustee Investment Statutes Amendment Act, 2002 was introduced in the British Columbia Legislative Assembly. When enacted, the Act will repeal section 15 of the Trustee Act, the long maligned "legal list" approach to investments permitted for trustees, and adopt the "prudent investor" standard. Other statutes, most notably the College and Institute Act, the Municipal Finance Authority Act and the Society Act, will reference these new provisions. The Bill also proposes other changes more in keeping with current investment practices and brings British Columbia in line with other provinces, such as Ontario, which have already adopted such an approach.

These changes are the result of the dedicated work of the British Columbia Legal Institute's Committee to Modernize the Trustee Act, which is chaired by Donovan Waters, QC, and of which Margaret Mason is a committee member, both of Bull, Housser & Tupper LLP.

Highlights of the proposed changes include:

• Authorized investments are those in which a prudent investor might invest.
• Common trust funds managed by a trust company and mutual funds are permissible investments.
• The standard of care is specified.
• The rule requiring trustees to assess the appropriateness of investments on an investment by investment basis is eliminated.
• A trustee may now delegate investment responsibility to an agent to the extent that a prudent investor would in keeping with ordinary business practice.

The proposed changes permit trustees appointed prior to the coming into force of Bill 30 whose investment powers were previously governed by section 15, to invest, on a going forward basis, according to the new legislation. Not-for-profit organizations and charities incorporated pursuant to the Society Act previously governed by section 15, as well as colleges, institutes and municipalities will also be entitled to invest according to the new standards.

The legislation, when passed, will come into force by regulation of the Lieutenant Governor in Council, and will be effective as of the effective date of that regulation.

To view Bill 30 in its entirety, please see http://www.legis.gov.bc.ca/37th3rd/1st_read/gov30-1.htm