BILL 30 – 2002
TRUSTEE INVESTMENT STATUTES AMENDMENT ACT, 2002

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province of British Columbia, enacts as follows:

Architects Act

1 Section 82 (2) of the Architects Act, R.S.B.C. 1996, c. 17, is amended by adding "property or" before "securities".

Cemetery and Funeral Services Act

2 Section 45 (4) of the Cemetery and Funeral Services Act, R.S.B.C. 1996, c. 45, is repealed and the following substituted:

(4) The provisions of the Trustee Act respecting the investment of trust property by a trustee apply to care funds.

College and Institute Act

3 Section 30 of the College and Institute Act, R.S.B.C. 1996, c. 52, is repealed and the following substituted:

Investments

30 The board may invest for the benefit of the institution money belonging to it and available for investment only as permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee.

Company Act

4 Section 288 (4) of the Company Act, R.S.B.C. 1996, c. 62, is repealed and the following substituted:

(4) Until required for distribution to creditors and members, cash balances held by the liquidator may be invested as follows and any dividends or interest received from the investments form part of the assets of the company:

(a) in an interest bearing account with any savings institution;

(b) as permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee.

Farmers and Womens Institutes Act

5 Section 7 (2) of the Farmers and Womens Institutes Act, R.S.B.C. 1996, c. 133, is amended by adding "property or" before "securities".

Financial Administration Act

6 Section 40 of the Financial Administration Act, R.S.B.C. 1996, c. 138, is amended

(a) by repealing subsection (1) and substituting the following:

(1) The Minister of Finance may invest money of the consolidated revenue fund not immediately required for payments. ,

(b) by repealing subsection (4) and substituting the following:

(4) Subject to any terms and conditions the Minister of Finance considers advisable and subject to the regulations of the Lieutenant Governor in Council, if money of a trust fund is not immediately required for payments, it may be invested by the person having authority to invest the money as permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee. , and

(c) by repealing subsections (6) to (8) and substituting the following:

(6) When investing any money other than under subsection (4), the Minister of Finance must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments.

7 Section 60 (1) (b) is amended by striking out "section 40 (1)" and substituting "section 40 (6)".

Financial Institutions Act

8 Section 272 (1) (a) of the Financial Institutions Act, R.S.B.C. 1996, c. 141, is repealed.

Institute of Technology Act

9 Section 31 of the Institute of Technology Act, R.S.B.C. 1996, c. 225, is repealed and the following substituted:

Investments

31 The board may invest for the benefit of the institute money belonging to it and available for investment only as permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee.

Islands Trust Act

10 Section 43 (3) of the Islands Trust Act, R.S.B.C. 1996, c. 239, is repealed and the following substituted:

(3) Subject to the approval of the minister, the property of the trust fund may be invested as permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee.

Medical Practitioners Act

11 Section 98 (2) of the Medical Practitioners Act, R.S.B.C. 1996, c. 285, is amended adding "property or" after "invested in".

Municipal Finance Authority Act

12 Section 16 (3) (e) of the Municipal Finance Authority Act, R.S.B.C. 1996, c. 325, is repealed and the following substituted:

(e) investments permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee; .

Public Guardian and Trustee Act

13 Section 8 of the Public Guardian and Trustee Act, R.S.B.C. 1996, c. 383, is amended by adding "the regulations," after "this Act,".

14 Section 14 (a) is amended by striking out "registered, despite section 20 of the Trustee Act," and substituting "registered".

15 Section 28 is amended

(a) by repealing subsection (2) (b) and substituting the following:

(b) authorizing the Public Guardian and Trustee to invest in specified types of investments in addition to investments permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee; , and

(b) by repealing the second subsection (3).

Real Estate Act

16 Section 21 (8) of the Real Estate Act, R.S.B.C. 1996, c. 397, is amended by striking out everything after "trust funds".

17 Section 27 (1) is repealed and the following substituted:

(1) The corporation may invest any part of the insurance fund not presently required for disposition, as permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee.

18 Section 29.4 (1) as enacted by section 20 of the Finance and Corporate Relations Statutes Amendment Act, 1998, S.B.C. 1998, c. 7, is repealed and the following substituted:

(1) The special compensation corporation may invest any part of the compensation fund, not presently required for disposition, as permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee.

Science Council Act

19 Section 10 (6) of the Science Council Act, R.S.B.C. 1996, c. 415, is repealed and the following substituted:

(6) The council may invest money in its hands as permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee.

Society Act

20 Section 32 (2) and (3) of the Society Act, R.S.B.C. 1996, c. 433, is repealed and the following substituted:

(2) A society that has and exercises powers within the scope of section 14 must adhere to prudent standards as defined in section 136 (1) of the Financial Institutions Act in investing its funds.

(3) A society to which subsection (2) does not apply may invest its funds in investments authorized by its constitution or bylaws, but if that investment is not authorized, the society must invest its funds only as permitted under the provisions of the Trustee Act respecting the investment of trust property by a trustee.

Strata Property Act

21 Section 95 (2) (a) of the Strata Property Act, S.B.C. 1998, c. 43, is repealed and the following substituted:

(a) those investments permitted by the regulations; .

22 Section 292 (2) is amended by adding the following paragraph:

(l.1) specifying permitted investments for the purposes of section 95 (2) (a); .

Trustee Act

23 Section 15 of the Trustee Act, R.S.B.C. 1996, c. 464, is repealed and the following sections are added:

Investment of trust property

15.1 (1) A trustee may invest property in any form of property or security in which a prudent investor might invest, including a security issued by a mutual fund as defined in the Securities Act.

(2) Subsection (1) does not authorize a trustee to invest in a manner that is inconsistent with the trust.

(3) Without limiting subsection (1), a trustee may invest trust property in a common trust fund managed by a trust company, whether or not the trust company is a co-trustee.

Standard of care

15.2 In investing trust property, a trustee must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments.

Trustee not liable if overall investment strategy is prudent

15.3 A trustee is not liable for a loss to the trust arising from the investment of trust property if the conduct of the trustee that led to the loss conformed to a plan or strategy for the investment of the trust property, comprising reasonable assessments of risk and return, that a prudent investor would adopt under comparable circumstances.

Abrogation of common law rules: anti-netting rules

15.4 (1) The rule of general trust law that requires the assessment of the decisions of a trustee on an investment by investment basis if the decisions are called into question is abrogated.

(2) The rule for the assessment of damages for breach of trust that prohibits losses from being off set by gains is abrogated except in respect of circumstances in which the breach is associated with dishonesty on the part of the trustee.

Delegation of authority with respect to investment

15.5 (1) In this section, "agent" means any person to whom a trustee delegates investment responsibility.

(2) A trustee may delegate to an agent the degree of authority with respect to the investment of trust property that a prudent investor might delegate in accordance with ordinary business practice.

(3) A trustee who delegates authority under subsection (2) must determine the investment objectives for the trust and exercise prudence in

(a) selecting an agent,

(b) establishing the terms and limits of the authority delegated,

(c) acquainting the agent with the investment objectives, and

(d) monitoring the performance of the agent to ensure compliance with the terms of the delegation.

(4) In performing a delegated function, an agent owes a duty to the trust to exercise reasonable care to comply with the terms of the delegation.

(5) A trustee who complies with the requirements of subsection (3) is not liable to the beneficiaries or to the trust for the decisions or actions of the agents to whom the function was delegated.

(6) This section does not authorize a trustee to delegate authority under circumstances in which the trust requires the trustee to act personally.

(7) Investment in a mutual fund referred to in section 15.1 (1) or a common trust fund referred to in section 15.1 (3) is not a delegation of authority with respect to the investment of trust property.

Interpretation of trust instrument in relation to sections 15.1 to 15.5

15.6 For the purposes of sections 15.1 to 15.5 and any investment made after the coming into force of this section, if the terms of the instrument that created a trust express the powers of the trustee as powers to invest property of the trust in the investments permitted under section 15 as that section read at any time before its repeal, the instrument is to be interpreted as authorizing the investments permitted under sections 15.1 to 15.5, unless a particular investment would be expressly authorized or expressly prohibited by the terms of the instrument.

24 Sections 16, 17, 18 and 20 are repealed and the following substituted:

Corporate trustee not to invest trust money in own securities

17.1 Except as provided in section 15.1 (3), a corporation that is a trustee must not invest trust money in its own securities.

Workers Compensation Act

25 Section 67 (2) of the Workers Compensation Act, R.S.B.C. 1996, c. 492, is amended by striking out everything after "reinvested" and substituting "and in doing so must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments."

Commencement

26 This Act comes into force by regulation of the Lieutenant Governor in Council.