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ARTICLE · 22 JULY 2009

Income Trust Governance Considerations - June, 2009

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By now trustees will have considered or be considering at least on a preliminary basis whether or not to convert now to a corporation or to postpone a conversion decision until closer to the end of 2010.

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The Business Judgment Rule in Canada

"Directors and officers will not be held to be in breach of the duty of care ... if they act prudently and on a reasonably informed basis. The standard of care is an objective one. The decisions of directors and officers must be reasonable business decisions in light of all the circumstances, including the prevailing socio-economic conditions, about which they knew or ought to have known. While courts are ill-suited and should be reluctant to second-guess the application of business expertise to the considerations that are often involved in corporate decision-making, they are capable, on the facts of any case, of determining whether an appropriate degree of prudence and diligence was brought to bear in reaching what is claimed to be a reasonable business decision."

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