The Office of the Superintendent of Financial Institutions has issued a decision allowing an insurance company employee to act as a trustee without causing the insurance company to be considered a trustee, too.

The issue was whether a federally regulated insurance company nominating one of its employees for election as trustee of a trust would cause the insurance company to be in contravention of the Insurance Companies Act. The ICA provides that an insurance company shall not act in Canada as a trustee for a trust.

OSFI concluded that, in this case, the fact that the insurance company would nominate one of its employees for election as trustee would not result in the company itself acting as a trustee.

An unnamed insurance company proposed, together with other investors, to create a joint venture to invest in a specified type of assets. The arrangement between the investors provided that the joint venture would be structured through a series of trusts rather than a body corporate or partnership. One of the trusts would be responsible for overseeing the investment of the joint venture. That trust would be headed by a group of individuals to be elected by the investors to act as trustee. Each investor would have the right to nominate an individual for election as trustee. The insurance company wanted to nominate one of its employees for election as one of the trustees.

OSFI says that based on the representations of the insurance company it determined that the role and duties of the individuals to be elected by the investors to act as trustee would be comparable to those of a director or officer of a corporation, and that they would be independent. The insurance company confirmed that the employee to be nominated would be acting independently of the insurance company and that there would be no agreement, commitment or understanding, whether formal or informal, between the insurance company and the employee regarding the role of the employee as trustee.