Monitoring Non-Resident Ownership

Widespread use of the depository system in Canada and the U.S. imposes practical limits on income trusts’ ability to monitor and control non-resident ownership of their units. Many income trusts are subject to restrictions on the ownership of their units by non-residents of Canada (see the article by Doug Richardson Restrictions On Non-Resident Ownership). However, an income trust faces obstacles when it attempts to determine the exact extent of beneficial ownership of its units by non-residents or to impose restrictions on transfers of units to non-residents, in each case arising from the widespread use of the depository systems in the Canadian and U.S. securities markets. While many income trusts will allow unitholders to hold their units through certificates registered and issued in their name, most unitholders hold their securities through the depository systems in Canada, or in Canada and the United States if the income trust is listed in both jurisdictions. These depository