Subject: General Synod’s Investment Powers

Moved By: Ronald Stevenson (Chancellor)

Seconded By:

Note: The mover and the seconder must be members of the General Synod and be present in the House when the resolution is before the synod for debate.

BE IT RESOLVED:

That the General Synod authorize the presentation of a petition to the Parliament of Canada requesting enactment of a Bill to repeal section 6A of An Act to incorporate the General Synod of the Church of England in Canada, chapter 82 of the statutes of 1921, as enacted by chapter 35 of the statutes of 1951 (second session).

EXPLANATORY NOTE/BACKGROUND INFORMATION: At the request of the Financial Management and Development Committee and the Council of the General Synod the Chancellor reviewed the legislation incorporating the General Synod to determine if changes in the legislation are necessary with respect to investments.

Section 6A of the Act incorporating the General Synod, as enacted in 1951 simultaneously with an Act respecting the Church’s Consolidated Trust Fund (the CTF), is as follows:

6A. The Synod may also invest and reinvest any of its funds, including any funds held in trust —

(a) in any bonds or debentures of any municipality or public school corporation or district in Canada, or in securities of or guaranteed by the Government of Canada or of any province thereof;

(b) in first mortgages on freehold property in Canada and for the purposes of the same may take mortgages or assignments thereof whether such mortgages or assignments be made directly to the Synod in its own corporate name or to some company or person in trust for it, and may sell and assign the same; and

(c) in any securities in which life insurance companies are authorized from time to time by the Parliament of Canada to invest funds, subject to the limitation on investments in stocks, bonds and debentures set out in the Canadian and British Insurance Companies Act, 1932.

When that section was enacted in 1951 section 60 of the Canadian and British Insurance Companies Act, 1932 contained an extensive list restricting the types of stocks, bonds and debentures in which insurance companies were allowed to invest. The Canadian and British Insurance Companies Act was repealed in 1991 when Parliament enacted a new Insurance Companies Act as part of a revision of the laws governing financial institutions. That new legislation does not contain any limitation on investments comparable to what was in the Canadian and British Insurance Companies Act.

It is the Chancellor’s advice that the limitations on investments set out in the General Synod legislation and in the Canadian and British Insurance Companies Act as of 1951 still apply to the General Synod and therefore to the CTF.

Section 6A of the Act incorporating the General Synod, and section 60 of the Canadian and British Insurance Companies Act, contained what were commonly called “legal lists” of authorized investments. During the last 35 years the “legal list” approach to trustee investments has been almost universally abandoned in Canada in favour of what is usually referred to as the “prudent investor rule.” That rule, variously expressed, allows trustees to invest in any kind of property in which a prudent investor might invest.

CTF investments are held in pooled funds managed by UBS Global Asset Management (Canada) Co. Investment of trust funds in mutual funds has been held to be an abdication by the trustee of control over property so invested. Some provinces now have legislation that expressly allows such investments.

The legal list in section 6A of the Act incorporating the General Synod is outdated. Changes in the legislation are necessary to allow investment in accordance with modern rules respecting trust investments.

The General Synod being federally incorporated, absent any investment provisions in our legislation, the investment rules applicable to the Synod would be those of the province where we do our investing, i.e. Ontario. The Ontario Trustee Act now incorporates most of the provisions of the Uniform Trustee Investment Act recommended by the Uniform Law Conference of Canada. It includes the prudent investor rule and permission for investment of trust funds in mutual and pooled funds.

The simplest way to accomplish the desired change in the legislation is to ask Parliament to repeal section 6A.

Resolution Carried