States that have adopted an amended version of article 808. A number of UTC states have not only adopted Article 808, but have also provided other legal advice to trustees. For example, Ariz. Rev. Stat. § 14-10818 states in part that a trust may provide for the appointment of a protector. It is important to note that Arizona law creates a standard treatment of protecting legitimate expectations as unfaithful. In comparison, N.H. Rev. Stat. § 564-B:12-1201 ff. (Trust Protectors and Trust Advisors) offers a unique definition of Trust Protector and Trust Advisor.
With respect to treatment as a trustee, New Hampshire adopts a general rule that a trustee is a trustee, but provides for non-fiduciary treatment for any power granted or reserved exclusively to another trustee, trustee or trust protection. For further comparison, N.C. Gen. Stat. § 36C-8A-3 the third holder of power is simply sufficient a “holder of power”. The term “protection of legitimate expectations” is not used. It is important that the presumption as a trustee exists, with the exception of three listed powers. Even among some of the States that have additional legal provisions on fiduciaries, questions remain due to a lack of cross-references or clarity as to which provisions apply. The Income Tax Act defines a “person” as( among other things, (c) any trust However, it is strange to describe an obligation to the shareholders and the trust as being “greater” than an obligation to the trust alone. It may be a question of who is allowed to take legal action to enforce the duty, but the broadening of this category does not indicate, of course, that the duty is heavier in terms of content – only that the chances of enforcement are greater.
Consider an analogy with negligence. A stricter obligation would require the potential offender to exercise greater caution, but it is not clear whether the obligation to more people would mean a “greater” duty. If negligence leading to an accident could cause a total of $100 in damages, it would be stricter to require the potential offender to take precautions that cost $60 than to take precautions that cost $50, but the fact that two people could file a $100 class action lawsuit for negligence; No, in our view, you are implying a higher duty than if a single person could sue for $100. Similarly, a rule stating that a trustee can never manage a trust is stricter than a rule that allows a disinterested vote of trustees to approve an agreement between a trust and its trustee, but to allow trustees and beneficiaries to sue for violation of such a rule, does not entail a greater duty than if only trustees were allowed to sue. Belobaba J.A.`s understanding of the role of the DOT`s application that tariffs should not go beyond those mentioned in the CBCA ignores this point and is therefore counterintuitive to us. With respect to remedies, TIOs generally do not mimic the shareholder remedies contained in the company`s articles of association. [44] In our 2005 and 2014 studies, we found significant differences between the shareholder remedies set out in the DOT and the remedies granted to shareholders under the CCA. In particular, none of the issues discussed offered shareholders the right to bring a derivative action or a possible means of repression. The only notable change between 2005 and 2014 was that two-thirds of trusts in the last period provided shareholders with valuation material similar to that provided for in the company`s articles of association, a significant increase from our 2005 study, in which less than ten percent of THE DOT included such a fund for shareholders. [45] The absence of recourse in the points increases the importance of the remedies available at common law, which is why Foss v. Harbottle is as relevant in this case as what is discussed in Part II below.
The Companies Act defines a “corporation” as (b) a trust [58] Belobaba J. stated that trustees cannot have obligations to an unknown class of persons, a legal principle discussed in McPhail v Doulton, [1970] UKHL 1, [1971] AC 424 to 456. However, this statement is not really true in this context, as it only applies to fixed trusts. In the case of discretionary trusts, it is sufficient to say with certainty whether a particular person is a member of the group or not” (ibid.). It should be noted that a “discretionary trust” is a trust where trustees have the power (rather than an obligation) to distribute funds to beneficiaries. This discretion has been used in the past to allow trustees to distribute either the income or capital of the trust, or both (see Waters, Gillen & Smith, note 27 above, pp. 571-72). Justice Belobaba`s attention has thus shifted superficially from the trustees` non-duty to shareholders to their explicit duty to act in the best interests of the trust and trust solely in accordance with the DOT.
However, the two concepts are closely related due to the way the DOT was designed. In this commentary, we begin with the basic observation that an income trust does not have its own legal personality and that it is fundamentally a different corporate organization than a corporation. The application of company law to the interpretation of fiduciary duties does not recognize the absence of an independent legal entity in the fiduciary context and the historically fundamental fiduciary relationship between trustees and beneficiaries (i.e. shareholders in this context). One of the main texts on trust law states: “The characteristic of a trust is the fiduciary relationship that the trust creates between the trustee and the beneficiary. [27] Although Belobaba J. maintained the distinction between trusts and corporations when considering the breach of trust application, his analysis of the fiduciary duty application sometimes obscures the water, perhaps because of the explicit wording of the DOT. The issue can therefore be summed up in the drafting of the TIOs themselves and the importance of maintaining clarity in the duties of trustees as trustees. At the heart of trust law is the fundamental point that three parties are necessary to create a trust: the settlor, trustee or trustee, and beneficiary(ies). [28] In the context of income trusts, the only beneficiaries are the shareholders,[29] and the trustees must make decisions and act exclusively in the best interests of the shareholders. Original income trusts are designed to drain all or substantially all of their distributable cash to maximize investor returns while minimizing or even eliminating corporate income tax.
[30] As the number of registered income trusts began to increase in the mid-1990s,[31] resulting in the perception of personal liability for public investors,[32] many provinces passed legislation to ensure limited liability for shareholders of public income trusts. [33] In addition to the legal requirements for trusts, trustees are free to determine the governance structure of the trust, which they do in the privately written DOT. The DOT establishes the trust, describes the relationship between trustees and shareholders, and regulates the structure and activities of the trust. The idea that parties can enter into contracts (including their fiduciary duties) under fiduciary law has prevailed in common law jurisdictions, including Canada (although “subcontracting” was not challenged in the foreclosure). Corporate legislation, such as the Canada Business Corporations Act[34] (CRA) or its counterparts in provincial jurisdictions, does not apply. [35] Document templates that contain a dual obligation can lead to confusing legal interpretations and outcomes. In particular, when the terms of a DOT are negotiated, the approach of the court having jurisdiction over the parties is uncertain. Indeed, as the above analysis suggests, we are not able to determine some of the key principles that lockout defends and the foundations on which it would be used as a precedent, as there is a lack of conceptual clarity in this case. We also question the usefulness of DOT models and “manuals” that, unlike corporations, do not fully reflect a complete understanding of the legal principles underlying trusts. To the extent that those preparing DOT rely on these documents, they can also contribute to ambiguities regarding the appropriate legal principles that play a role in DOT. As a starting point for reviewing the lawsuit against the CEO, it should be noted that the DOT did not specify the nature of the executive`s fiduciary duties. Justice Belobaba reviewed the definition of a DOT officer and quickly concluded that the officer`s duties in this context were equivalent to those of a senior executive.
As Peoples and BCE make clear, these executives have an obligation to the company alone – not to a single group of stakeholders, including shareholders. Belobaba J.A. therefore held that in this case the public servant had a fiduciary duty to the shareholders, but only to the trust. [47] This trend is reversed in the case of a hybrid structured in trust. The articles of association place the management and control of the Company in the hands of its directors and member shareholders, but shareholders are excluded from distribution. Guaranteeing members with weak insolvency obligations are entitled to receive dividends and interest-free or interest-bearing loans, and members have very limited voting rights. In summary, guarantor members are the passive “beneficiaries” of a hybrid corporation that resembles a trust.