O. Reg. 4/01: APPROVED ACTS OF EXECUTORS AND TRUSTEES

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Charities Accounting Act

ONTARIO REGULATION 4/01

approved acts of executors and trustees

Consolidation Period: From April 1, 2018 to the e-Laws currency date.

Last amendment: 112/18.

Legislative History: 112/18.

This is the English version of a bilingual regulation.

Approval of Specified Acts

1. (1) The acts authorized by this Regulation that would otherwise require the approval of the Superior Court of Justice in the exercise of its inherent jurisdiction in charitable matters shall be treated, for all purposes, as though they had been so approved.  O. Reg. 4/01, s. 1 (1).

(2) Subsection (1) does not constitute authorization of an act that conflicts with one of the following in a particular case:

1. The will or the instrument in writing relating to the property.

2. A court order relating to the will or instrument or relating to the property.  O. Reg. 4/01, s. 1 (2).

(3) An executor or trustee must maintain records demonstrating that he, she or it has complied with the requirements of this Regulation when engaging in an act that is authorized under subsection (1).  O. Reg. 4/01, s. 1 (3).

(4) An executor or trustee is not required by virtue of this Regulation to give any indemnity or to make any payment.  O. Reg. 4/01, s. 1 (4).

Authorization to Indemnify

2. (1) In the circumstances and subject to the restrictions set out in this section, an executor or trustee and, if the executor or trustee is a corporation, each director or officer of the corporation may be indemnified for personal liability arising from their acts or omissions in performing their duties as executor, trustee, director or officer.  O. Reg. 4/01, s. 2 (1).

(2) An executor, trustee, director or officer cannot be indemnified for liability that relates to their failure to act honestly and in good faith in performing their duties.  O. Reg. 4/01, s. 2 (2).

(3) In the circumstances and subject to the restrictions set out in this section, insurance may be purchased to indemnify the executor, trustee, director or officer for the personal liability described in subsection (1).  O. Reg. 4/01, s. 2 (3).

(4) The terms of the indemnity or insurance policy must not impair a person’s right to bring an action against the executor, trustee, director or officer.  O. Reg. 4/01, s. 2 (4).

(5) The executor or trustee or, if the executor or trustee is a corporation, the board of directors of the corporation shall consider the following factors before giving an indemnity or purchasing insurance:

1. The degree of risk to which the executor, trustee, director or officer is or may be exposed.

2. Whether, in practice, the risk cannot be eliminated or significantly reduced by means other than the indemnity or insurance.

3. Whether the amount or cost of the insurance is reasonable in relation to the risk.

4. Whether the cost of the insurance is reasonable in relation to the revenue available to the executor or trustee.

5. Whether it advances the administration and management of the property to give the indemnity or purchase the insurance.  O. Reg. 4/01, s. 2 (5).

(6) The purchase of insurance must not, at the time of the purchase, unduly impair the carrying out of the religious, educational, charitable or public purpose for which the executor or trustee holds the property.  O. Reg. 4/01, s. 2 (6).

(7) No indemnity shall be paid or insurance purchased if doing so would result in the amount of the debts and liabilities exceeding the value of the property or, if the executor or trustee is a corporation, render the corporation insolvent.  O. Reg. 4/01, s. 2 (7).

(8) The indemnity may be paid or the insurance purchased from the property to which the personal liability relates and not from any other charitable property.  O. Reg. 4/01, s. 2 (8).

(9) If the executor, trustee, director or officer is deceased, the indemnity or the proceeds of the insurance may be paid to his or her estate.  O. Reg. 4/01, s. 2 (9).

Authorization to Pay

2.1 (1) In this section,

“corporate trustee” means a corporation deemed by subsection 1 (2) of the Act to be a trustee within the meaning of the Act; (“fiduciaire constitué en société”)

“person connected to a director” means a person determined in accordance with subsection (3). (“personne liée à un administrateur”) O. Reg. 112/18, s. 1.

(2) A corporate trustee may, in the circumstances and subject to the restrictions set out in this section, make payments from the charitable property acquired by it to any of the following persons, for goods, services or facilities provided to it by the person:

1. A director of the corporate trustee.

2. A person connected to a director of the corporate trustee. O. Reg. 112/18, s. 1.

(3) The following are persons connected to a director of the corporate trustee for the purposes of this section, but do not include the corporate trustee itself:

1. A spouse, child, parent, grandparent or sibling of the director.

2. The employer of the director or of a person described in paragraph 1.

3. A corporation with share capital, if, singly or jointly, the director or a person described in paragraph 1 beneficially owns, controls or has direction over more than 5 per cent of the corporation’s shares.

4. A corporation without share capital, if, singly or jointly, the director or a person described in paragraph 1 beneficially owns, controls or has direction over more than 20 per cent of the outstanding voting membership interests of the corporation.

5. A corporation with or without share capital for which the director or a person described in paragraph 1 acts as director or officer.

6. A partnership in which the director or a person described in paragraph 1 is a partner, or in which a corporation described in paragraph 3, 4 or 5 is a partner.

7. A partner in a partnership described in paragraph 6. O. Reg. 112/18, s. 1.

(4) This section does not authorize any of the following:

1. Remuneration or other direct or indirect payment for services provided by a director as a director or employee of the corporate trustee, as the case may be, in that capacity.

2. Direct or indirect payment for providing fundraising services or for selling goods or services for fundraising purposes.

3. Direct or indirect payment made in connection to the purchase or sale of real property. O. Reg. 112/18, s. 1.

(5) Payments made under this section,

(a) must be made with a view to the corporate trustee’s best interests;

(b) must be in an amount that is reasonable for the corporate trustee to pay for the goods, services or facilities that are provided;

(c) must not result in the amount of the corporate trustee’s debts and liabilities exceeding the charitable property’s value, or render the corporate trustee insolvent; and

(d) must not exceed the amount set out in the agreement referred to in clause (a) of subsection (6) for the goods, services or facilities to be provided. O. Reg. 112/18, s. 1.

(6) Before a corporate trustee’s board of directors may authorize payment for goods, services or facilities under this section,

(a) every director of the corporate trustee must agree in writing to a maximum amount that can be paid by the corporate trustee for the goods, services or facilities and, if the goods, services or facilities are to be provided by a person connected to a director, that person must also agree in writing to the maximum amount;

(b) every director of the corporate trustee, other than the director providing the goods, services or facilities or the director to whom the person providing the goods, services or facilities is connected, as the case may be, must agree in writing that he or she is satisfied that the payment is being made in accordance with the requirements, and within the restrictions, of this section; and

(c) the board of directors must consider any guidance respecting payments made under this section that is issued by the Public Guardian and Trustee and published on a Government of Ontario website. O. Reg. 112/18, s. 1.

(7) In order for a corporate trustee’s board of directors to authorize payment under this section, there must be at least four voting directors on the board, not including the director providing the goods, services or facilities or the director to whom the person providing the goods, services or facilities is connected, as the case may be. O. Reg. 112/18, s. 1.

(8) Regardless of whether goods, services or facilities are provided by a director of the corporate trustee or by a person connected to a director of the corporate trustee, neither the director nor any person connected to him or her shall attend any part of a board meeting during which the decision to authorize the payment is discussed, nor vote on the matter. O. Reg. 112/18, s. 1.

(9) The total number of persons receiving payment under this section must not exceed 20 per cent of the number of voting directors on the board. O. Reg. 112/18, s. 1.

(10) The directors of the corporate trustee shall ensure that information respecting payments made under this section in a given year is noted in the corporate trustee’s financial statements for that year, and placed before its members at an annual meeting of the members. O. Reg. 112/18, s. 1.

(11) Clauses (5) (c) and (d) and subsections (6) to (10) do not apply with respect to a payment made under this section to a corporation described in paragraph 5 of subsection (3), if neither the director nor a person connected to the director, other than the corporation itself, would receive any benefit from the payment and,

(a) the corporation is a corporation without share capital; or

(b) all of the corporation’s shares are owned by the corporate trustee. O. Reg. 112/18, s. 1.

Combining Property Held for Restricted or Special Purposes

3. (1) In this section,

“contributed property” means, in respect of an individual property, additional property that is added to, and forms part of, a pre-existing individual property.  O. Reg. 4/01, s. 3 (1).

(2) In the circumstances and subject to the restrictions described in this section, an executor or trustee may combine property received by the executor or trustee for a restricted or special purpose with other property received by the executor or trustee for another restricted or special purpose and may hold the combined property in one account in a financial institution or invest it as if it were a single property.  O. Reg. 4/01, s. 3 (2).

(3) The property may be combined only if it advances the administration and management of each of the individual properties to do so.  O. Reg. 4/01, s. 3 (3).

(4) All gains, losses, income and expenses must be allocated rateably, on a fair and reasonable basis, to the individual properties in accordance with generally accepted accounting principles.  O. Reg. 4/01, s. 3 (4).

(5) The executor or trustee must maintain the following records for each of the individual properties, in addition to such other records as may be required by law:

1. The value of the individual property immediately before it becomes part of the combined property, and the date on which it becomes part of the combined property.

2. The value of any portion of the individual property that does not become part of the combined property.

3. The source and the value of contributed property relating to an individual property, and the date on which the contributed property is received.

4. The value of the contributed property immediately before it becomes part of the combined property, and the date on which it becomes part of the combined property.

5. The amount of the revenue received by the combined property that is allocated to the individual property, and the date of each allocation.

6. The amount of the expenses paid from the combined property that are allocated to the individual property, and the date of each allocation.

7. The value of all distributions from the combined property made for the purposes of the individual property, and the purpose and date of each distribution.  O. Reg. 4/01, s. 3 (5).

(6) The executor or trustee must maintain the following records for the combined property, in addition to such other records as may be required by law:

1. The value of each individual property that becomes part of the combined property, and the date on which it becomes part of the combined property.

2. The value of contributed property that becomes part of the combined property, the date on which it becomes part of the combined property, and details of the individual property to which the contributed property relates.

3. The amount of the revenue received by the combined property, the amount allocated to each individual property and the date of each allocation.

4. The amount of the expenses paid from the combined property, the amount allocated to each individual property and the date of each allocation.

5. The value of all distributions from the combined property made for the purposes of an individual property and the purpose and date of each distribution.  O. Reg. 4/01, s. 3 (6).

 

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