The Ontario Government has passed the Trust Beneficiaries Liability Act, putting trust unit holders on an equal footing with equity shareholders.

The act is contained in Bill 106, which was passed yesterday and will come into effect once it has received Royal Assent in the New year. The date of implementation will be January 1.

The legislation makes it legally clear that investors in publicly traded income trusts can’t be held liable for the activities of the income trusts.

Ontario investors can now buy trust units without worrying about getting sued if that trust gets into any legal difficulty.

The Liberal government said in its May budget that it would introduce technical legislation to clarify the rules.

Ontario is the third province to create such legislation, following Quebec and Alberta.

“This is a very important moment for the development of income funds in Canada. Ontario is home to a large and divers group of business trusts and they welcome the legislation as do trusts in other sectors,” said CAIF Chairman Stephen Probyn, chairman of the Canadian Association of Income Funds (CAIF), in a release.

George Kesteven, investor relations manager for PrimeWest Energy said the legislation provides a level of comfort for nstitutional investors by taking away any uncertainty around liability. “Essentially, it now puts trust unit holders on an equal footing with shareholders of corporations, which is great news,” he said.

Margaret Lefebvre, executive director at CIAF, said the legislation removes one more obstacle to the inclusion of income funds in the S&P/TSX composite index.