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Limited Liability Legislation for Ontario Income Trusts

March-31-2003

Lawyer Allan Goodman, Stephen Pincus, Michelle Roth
Area Commercial Real Estate, Corporate Finance and Securities, Tax, REITs and Income Securities

Summary

On March 27, 2003, the Ontario Government declared its support for legislation to remove uncertainty concerning the limited liability of business trust investors.

Partners of Goodmans LLP worked closely with the Canadian Institute of Public and Private Real Estate Companies over recent months in spearheading this initiative and assisting in drafting the proposed legislation to confirm that unitholders of real estate investment trusts and other income trusts are not personally liable for the activities or obligations of such trusts or their trustees.

A principal reason for the initiative was to address the concern, albeit a remote risk, that income trust units would not carry the same protection for unitholders of a trust as shares provide for shareholders of a corporation.  Adoption of this legislation will ensure that the exposure of unitholders to claims against such a trust will be limited to the amount of their investment in the trust.

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