Restrictions On Non-Resident Ownership

For a number of reasons, income trusts have featured prominently in the business media in the last few months. One issue that has garnered its share of headlines concerns the restrictions on ownership of income trusts by non-residents that often apply under Canadian income tax law. One of the more high-profile stories in this regard was the announcement on June 16, 2003 by Provident Energy Trust, a Canadian income trust listed on both the TSX and AMEX, that non-resident ownership of Provident’s units had increased significantly over the last three months, to the point where Provident was in danger of exceeding the maximum threshold for investment by non-residents provided for in its declaration of trust. As a result, Provident indicated that it might have to restrict transfers to non-residents, halt trading of Provident’s units on AMEX or potentially even force non-residents to redeem units, if necessary, in order to ensure continued compliance with its declaration of trust.