2004 Ontario Budget: Limited Liability Legislation for Income Funds

The 2004 Ontario budget, announced today, confirms that the Ontario government will propose technical legislation to clarify that investors in publicly traded trusts will not be liable for the activities of the trust. This is consistent with the announcement included as part of the 2003 Ontario Economic Outlook and Fiscal Review released on December 17, 2003 by Finance Minister Greg Sorbara.

The proposed legislation is expected to be introduced shortly. Similar to the Trust Beneficiaries’ Liability Act, 2003 that was first introduced in May, 2003 but not passed, it is expected that the proposed legislation will clarify that the exposure of unitholders to claims against publicly traded trusts is limited to the amount of their investment in the trust, removing any remaining uncertainty for trust investors.