Marginal note:Conflict of interest

• 105. (1) No person shall accept an appointment as trustee if there is a material conflict of interest between their role as trustee and their role in any other capacity.

• Marginal note:Eliminating conflict of interest

  (2) A trustee shall, within the prescribed period after becoming aware that a material conflict of interest exists, eliminate the conflict of interest or resign.

• Marginal note:Validity

  (3) A trust indenture, any debt obligations issued under it and a security interest effected by it are valid despite a material conflict of interest of the trustee.

• Marginal note:Removal of trustee

  (4) The court may, on the application of an interested person, order, on any terms that it thinks fit, that a trustee who has contravened subsection (1) or (2) be replaced.

Marginal note:Qualification of trustee

106. A trustee, or at least one of the trustees if more than one is appointed, shall be a body corporate incorporated under the laws of Canada or a province and authorized to carry on the business of a trust company.

Marginal note:List of debt obligation holders

• 107. (1) A holder of debt obligations issued under a trust indenture may, on payment to the trustee of any reasonable fee and on sending to the trustee the statutory declaration referred to in subsection (4), require the trustee to furnish, within the prescribed period, a list of debt obligation holders setting out the prescribed information and updated in accordance with the regulations.

• Marginal note:Duty of issuer

  (2) On the demand of a trustee, the issuer of debt obligations shall furnish the trustee with the information required to enable the trustee to comply with subsection (1).

• Marginal note:Corporate applicant

  (3) If the applicant is a body corporate, the statutory declaration shall be made by a director or officer of the body corporate.

• Marginal note:Contents of statutory declaration

  (4) The statutory declaration shall

  • (a) state the name and address of the applicant and, if the applicant is a body corporate, its address for service; and

  • (b) state that the list will not be used except as permitted under subsection (5).

• Marginal note:Use of list

  (5) A list obtained under this section shall not be used by any person except in connection with

  • (a) an effort to influence the voting of the holders of debt obligations;

  • (b) an offer to acquire debt obligations; or

  • (c) any other matter relating to the debt obligations or the affairs of the issuer, the guarantor or, in Quebec, the surety of the debt obligations.

Marginal note:Evidence of compliance

• 108. (1) An issuer, a guarantor or, in Quebec, a surety of debt obligations issued or to be issued under a trust indenture shall, before taking any of the following actions, provide the trustee with evidence of compliance with the conditions, if any, in the trust indenture for taking that action:

  • (a) the issue, certification or delivery of debt obligations under the trust indenture;

  • (b) the release or release and substitution of property subject to a security interest effected by the trust indenture; or

  • (c) the satisfaction and discharge of the trust indenture.

• Marginal note:Duty of issuer, guarantor or surety

  (2) On the demand of a trustee, the issuer, the guarantor or, in Quebec, the surety of debt obligations issued or to be issued under a trust indenture shall provide the trustee with evidence of compliance with the trust indenture by the issuer, guarantor or surety in respect of any act to be done by the trustee at their request.

Marginal note:Contents of declaration, etc.

109. Evidence of compliance as required by section 108 shall consist of a statutory declaration or certificate made by a director or an officer of the issuer, the guarantor or, in Quebec, the surety stating that the conditions referred to in that section have been complied with. If compliance with any of those conditions is subject to review by legal counsel, evidence of compliance also includes an opinion of legal counsel that those conditions have been complied with. If compliance with any of those conditions is subject to review by an auditor or accountant, evidence of compliance also includes an opinion or report of the public accountant of the issuer, guarantor or surety, or any other accountant that the trustee selects, that those conditions have been complied with.

Marginal note:Further evidence of compliance

110. The evidence of compliance referred to in section 109 shall include a statement by the person giving the evidence

• (a) declaring that they have read and understand the conditions of the trust indenture referred to in section 108;

• (b) describing the nature and scope of the examination or investigation on which the statutory declaration, certificate, opinion or report is based; and

• (c) declaring that they have made the examination or investigation that they believe necessary to enable them to make their statutory declaration, certificate, opinion or report.

Marginal note:Trustee may require evidence of compliance

• 111. (1) On the demand of a trustee, the issuer, the guarantor or, in Quebec, the surety of debt obligations issued under a trust indenture shall provide the trustee with evidence in any form that the trustee may require for compliance with any condition relating to any action required or permitted to be taken by the issuer, guarantor or surety under the trust indenture.

• Marginal note:Certificate of compliance

  (2) At least once in each prescribed period beginning on the date of the trust indenture and at any other time on the demand of a trustee, the issuer, the guarantor or, in Quebec, the surety of debt obligations issued under a trust indenture shall provide the trustee with

  • (a) a certificate that the issuer, the guarantor or, in Quebec, the surety has complied with all requirements contained in the trust indenture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an event of default; or

  • (b) a certificate of the particulars of any failure to comply with the requirements.

Marginal note:Notice of default

112. The trustee shall give notice to the holders of debt obligations issued under a trust indenture of every event of default arising under the trust indenture and continuing at the time the notice is given, unless the trustee reasonably believes that it is in the best interests of the holders of the debt obligations to withhold the notice and so informs in writing the issuer, the guarantor or, in Quebec, the surety. The notice shall be given within the prescribed period.

Marginal note:Duties of trustee

113. A trustee in exercising their powers and discharging their duties shall

• (a) act honestly and in good faith with a view to the best interests of the holders of the debt obligations issued under the trust indenture; and

• (b) exercise the care, diligence and skill of a reasonably prudent trustee.

Marginal note:Reliance on statements

114. Despite section 113, a trustee is not liable if they rely in good faith on statements contained in a statutory declaration, certificate, opinion or report that complies with this Act or the trust indenture.

Marginal note:No exculpation

115. No term of a trust indenture or of any agreement between a trustee and the holders of debt obligations issued under the trust indenture or between the trustee and the issuer, the guarantor or, in Quebec, the surety shall operate so as to relieve a trustee from the duties imposed on the trustee by section 113.

PART 8RECEIVERS, RECEIVER-MANAGERS AND SEQUESTRATORS

Marginal note:Functions of receiver or sequestrator

116. A receiver or sequestrator of any property of a corporation may, subject to the rights of secured creditors, receive the income from the property, pay the liabilities connected with the property and realize the security interest of those on behalf of whom the receiver or sequestrator is appointed, but, except to the extent permitted by a court, the receiver or sequestrator may not carry on the activities of the corporation.

Marginal note:Functions of receiver-manager

117. A receiver-manager of the corporation may carry on any activities of the corporation to protect the security interest of those on behalf of whom the receiver-manager is appointed.

Marginal note:Directors’ powers cease

118. If a receiver-manager or sequestrator is appointed by a court or under an instrument or act, the powers of the directors of the corporation that a receiver-manager or sequestrator is authorized to exercise may not be exercised by the directors until the receiver-manager or sequestrator is discharged.

Marginal note:Duty to act

119. A receiver, receiver-manager or sequestrator appointed by a court shall act in accordance with the orders of the court.

Marginal note:Duty under instrument or act

120. A receiver, receiver-manager or sequestrator appointed under an instrument or act shall act in accordance with that instrument or act and any order of a court made under section 122.

Marginal note:Duty of care

121. A receiver, receiver-manager or sequestrator of a corporation appointed under an instrument or act shall

• (a) act honestly and in good faith; and

• (b) deal with any property of the corporation in their possession or control in a commercially reasonable manner.

Marginal note:Orders given by court

122. On the application of a receiver, receiver-manager or sequestrator, whether appointed by a court or under an instrument or act, or of any interested person, a court may make

• (a) an order appointing, replacing or discharging a receiver, receiver-manager or sequestrator and approving their accounts;

• (b) an order determining the notice to be given to any interested person or dispensing with notice to any person;

• (c) an order fixing the remuneration of the receiver, receiver-manager or sequestrator;

• (d) an order requiring the receiver, receiver-manager or sequestrator, or a person by or on behalf of whom the receiver, receiver-manager or sequestrator is appointed, to make good any default in connection with the receiver’s, receiver-manager’s or sequestrator’s custody or management of the property and activities of the corporation, or relieving the receiver, receiver-manager or sequestrator, or a person by or on behalf of whom the receiver, receiver-manager or sequestrator was appointed, from any default on any terms that the court thinks fit;

• (e) an order confirming any act of the receiver, receiver-manager or sequestrator;

• (f) an order giving directions on any matter relating to the duties of the receiver, receiver-manager or sequestrator; and

• (g) any other order that it thinks fit.