Directive No. 13R6

Trustee Licensing

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Directive No. 13R6

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Date:

To: Trustees and Registrars

Subject: Directive No. 13R6, Trustee Licensing

The Office of the Superintendent of Bankruptcy (OSB) has amended subsection 31(1) of Directive No. 13R5, Trustee Licensing to authorize, in addition to the existing requirements, the use in the name of a corporate trustee of the first letter of the surname of one or more of the trustees or accountants that are practising or have actively practised either as trustees or accountants.

This amendment maintains all existing requirements while providing an additional way of representing some or all of the names of individuals involved based on the first letter of their surname. This change is considered to be consistent with the intent and objectives of existing corporate name requirements in the Licensing Directive.

Coming into Force

Directive No. 13R6, Trustee Licensing, comes into force on the date it is signed.

Enquiries

For any questions pertaining to this Directive, please contact the Office of the Superintendent of Bankruptcy at ic.osblicencebsf-bkhq.ic@canada.ca.

William R. James
Superintendent of Bankruptcy


Issued:

(Supersedes Directive No. 13R5, issued on , on the same topic.)

Interpretation

  1. In this Directive,
    • "Act" means the Bankruptcy and Insolvency Act;
    • "applicant" means a person who applies for a licence under the Act;
    • "CAIRP" means the Canadian Association of Insolvency and Restructuring Professionals;
    • "CIRP" means the Chartered Insolvency and Restructuring Professional;
    • "incompatible activity" means an activity that would or may be perceived to create a conflict of duties, compromise a trustee's ability to perform any professional engagement, or jeopardize a trustee's integrity, independence or competence, including, but not limited to, the activities of a collection agent, a bailiff, an employee of the Office of the Superintendent of Bankruptcy (except when acting pursuant to sections 14.03 or 29 of the Act), a lawyer and a notary in the Province of Quebec;
    • "licence" means a licence to act as a trustee issued by the Superintendent pursuant to the Act;
    • "MOU" means the Memorandum of Understanding between CAIRP and the Office of the Superintendent of Bankruptcy signed on , or any further MOU as may be entered into between the parties thereafter. The MOU sets out the roles, responsibilities and interests of the parties with respect to the delivery of a professional qualification program for insolvency and restructuring professionals seeking a licence to act as a trustee;
    • "professional engagement" means any bankruptcy or insolvency matter in respect of which a trustee is appointed or designated to act in that capacity pursuant to the Act or to the Companies' Creditors Arrangement Act (CCAA);
    • "resident office" means the principal place of business from which the trustee normally practises;
    • "Rules" means the Bankruptcy and Insolvency General Rules; and
    • "Superintendent" means the Superintendent of Bankruptcy or such persons as he may delegate or direct.
Authority and Purpose
  1. This Directive is issued pursuant to paragraph 5(4)(d) of the Act for the purpose of specifying the requirements to obtain and maintain a trustee licence and governing the activities of trustees.


Obtaining a Licence

Part I: Application for Licence

Application for Individual Licence
  1. A person who wishes to obtain an individual licence may complete and file with the Superintendent Form 2, Application for Trustee Licence (Individual).
Application for Corporate Licence
  1. A person who wishes to obtain a corporate licence may complete and file with the Superintendent Form 3, Application for Trustee Licence (Corporation).

Part II: Prerequisite Requirements for Issuance of Licence

Prerequisite Requirements for Individual Licence
  1. The following are the prerequisite requirements for issuance of an individual licence under the Act:
    • (a) the applicant shall have successfully completed the following, which are administered by CAIRP in accordance with the MOU:
      • (i) the CIRP Qualification Program (CQP) unless otherwise exempted;
      • (ii)the CIRP National Insolvency Exam; and
      • (iii) the Insolvency Counsellor's Qualification Course;
    • (b) the applicant shall pay the prescribed fee under Rule 134(1);
    • (c) the applicant shall be solvent;
    • (d) the applicant shall be of good character and reputation; and
    • (e) the applicant shall pass the Oral Board of Examination.
  2. Without limiting paragraph 5(a) of this Directive, an applicant shall satisfy the Superintendent that he or she has adequate knowledge, experience and skills to carry out the duties of a trustee.
Good Character and Reputation Requirement
  1. An applicant shall satisfy the Superintendent that he or she is of good character and reputation and that issuance of a licence will not impair public confidence in the bankruptcy and insolvency system.
  2. An applicant who has been found guilty of an indictable offence for which a pardon has not been granted shall satisfy the Superintendent that such finding is not of a nature that would impair the trustee's capacity to perform his or her fiduciary duties nor impair public confidence in the bankruptcy and insolvency system.
  3. An applicant shall be in good standing with, and not be subject to, any current disciplinary action by any professional organization of which the applicant is or was a member.
  4. An applicant who has been found guilty of professional misconduct by any professional organization of which the applicant is or was a member shall satisfy the Superintendent that such finding is not of a nature that would impair the trustee's capacity to perform his or her fiduciary duties or impair public confidence in the bankruptcy and insolvency system.
Oral Board of Examination – Assessment of Competencies
  1. An applicant who has filed Form 2, Application for Trustee Licence (Individual), and meets the prerequisite requirements under paragraphs 5(a) to 5(d) of this Directive shall receive an invitation from the Superintendent to appear before an Oral Board of Examination to demonstrate that he or she possesses the necessary skills and competencies to carry out the duties of a trustee.
  2. An Oral Board of Examination is conducted in accordance with the established process.
Prerequisite Requirements for Corporate Licence
  1. The following are the prerequisite requirements for issuance of a corporate licence under the Act:
    • (a) The applicant shall be a corporation incorporated under an Act of Parliament or the legislature of a province;
    • (b) The applicant shall be solvent;
    • (c) The applicant shall obtain prior approval of the proposed corporate name from the Superintendent and the appropriate federal or provincial regulatory body regarding the proposed corporate name; and
    • (d) The applicant shall satisfy the corporate requirements under paragraphs 31 to 41 of this Directive.
Validation of Prerequisite Requirements
  1. The Superintendent may conduct any investigation concerning an applicant as the Superintendent considers necessary to be satisfied that he or she meets the prerequisite requirements under this Directive, including, but not limited to, a bankruptcy and insolvency search and a criminal background check.
  2. The applicant shall provide any information and/or documentation and shall sign any authorization for information and/or documentation as the Superintendent considers necessary for the purpose of an investigation under paragraph 14 of this Directive.

Part III: Issuance of Licence

Issuance of Individual Licence
  1. The Superintendent considers the contents of an applicant's Form 2, Application for Trustee Licence (Individual), and the results of any investigation and the Oral Board of Examination when making a decision on the issuance of an individual licence.
  2. The Superintendent may issue a full licence, issue a licence subject to such conditions and limitations as the Superintendent considers appropriate, or refuse to issue a licence.
Issuance of Corporate Licence
  1. An applicant who satisfies the corporate requirements under paragraphs 31 to 41 of this Directive may be issued a corporate licence.
Review of Decision
  1. An applicant may request a review of the Superintendent's decision in accordance with the process established for such a review.

Requirements to Practise

Part IV: Probation Period

  1. (1) For a minimum of twenty-four (24) months following issuance of an individual licence (the "probation period"), the trustee shall actively practise with, and in the same physical location as, an active established trustee.

    (2) Where the trustee does not satisfy the requirement under paragraph 20(1) of this Directive, the trustee may only act in the following cases, subject to any condition(s) and limitations imposed upon his or her licence:

    • (i)   consumer proposals;
    • (ii)  summary administration estates;
    • (iii) ordinary administration estates for which unsecured liabilities do not exceed $500,000 and for which the realizable assets, after deducting the value of all security interests, do not exceed $15,000; and
    • (iv) all other cases (notices of intention, Division I Proposals, receiverships, CCAA filings and any other cases not covered by paragraph 20(2)(iii) above), with the approval of the Superintendent and on any terms that he considers appropriate based on the performance of the trustee.
  2. In granting the trustee approval to act in the cases described in paragraph 20(2)(iv) of this Directive, the Superintendent may require that the trustee have a sponsor to supervise his or her administration of those cases.
  3. Subject to a determination to the contrary, the restrictions imposed under paragraph 20 of this Directive shall be automatically lifted following the probation period.

Part V: Administrative Status of Trustee

  1. The administrative status of an individual trustee is "active," "semi-active" or "inactive" depending on the practice of the trustee. Trustees are advised of their status and may contact the OSB to verify or request changes to their status.
  2. The administrative status of a newly licensed trustee is generally "active."
  3. Regardless of the trustee's administrative status, the trustee shall pay the prescribed annual fee to maintain a valid licence.
Active
  1. An active trustee may file professional engagements in the trustee's personal name or on behalf of a corporate trustee if he or she is associated with a corporate trustee. The filing trustee is responsible for the professional engagement.
Semi-Active
  1. A semi-active trustee may administer and carry out the duties related to professional engagements, but shall not file professional engagements in his or her personal name.
Inactive
  1. An inactive trustee shall not file or administer professional engagements or perform any of the functions that are exclusively reserved for a trustee, including, but not limited to, supervision, receivership or liquidation work, look-see or consultation in insolvency matters (e.g., a trustee who has gone back to school or has temporarily left the profession).

Part VI: General Requirements for Individual Trustees Not Associated with a Corporate Trustee (Sole Practitioners) and for Corporate Trustees

  1. The following are the requirements that shall be met prior to the trustee accepting  professional engagements:
    • (a) The trustee shall have a valid licence;
    • (b) The trustee shall be solvent;
    • (c) The trustee shall not practise an incompatible activity;
    • (d) The trustee shall have sufficient financial resources to properly administer professional engagements;
    • (e) The trustee shall have adequate facilities and personnel to administer professional engagements in the district(s) in which he or she is entitled to act;
    • (f)  The trustee shall have adequate professional liability insurance and adequate employee dishonesty (also known as fidelity) insurance; and
    • (g) Where applicable, the corporation shall be in good standing with the applicable federal or provincial regulatory body that registers corporations.

Part VII: General Requirements for Individual Trustees Associated with a Corporate Trustee

  1. The following are the requirements that shall be met prior to an individual trustee administering professional engagements on behalf of a corporate trustee:
    • (a) The trustee shall have a valid licence;
    • (b) The trustee shall be solvent; and
    • (c) The trustee shall not practise an incompatible activity.

Part VIII: Corporate Requirements

Corporate Name
  1. (1) Subject to paragraphs 31(2), 32 and 33 of this Directive, the name of a corporate trustee shall only be composed of the names of one or more trustees or accountants that are practising or have actively practised either as trustees or accountants. In addition to the aforementioned requirements, the corporate name may include the first letter of the surname of one or more of the trustees or accountants that are practising or have actively practised either as trustees or accountants.

    (2) The name of a corporate trustee may consist of the name of a monitor appointed in CCAA proceedings commenced after , and before the day on which subsection 1(1) of Chapter 36 of the Statutes of Canada, 2007, came into force.

  2. A corporate trustee may continue to use a name approved by the Superintendent prior to the date of coming into force of this Directive.
  3. The requirements of paragraph 31(1) of this Directive may be waived or varied in circumstances where the Superintendent is satisfied it is appropriate.
  4. A corporate trustee shall operate and do business only under the name under which it is licensed and shall not use trade names.
Corporate Structure
  1. A corporate trustee shall restrict its business to the duties and responsibilities of a trustee licensed pursuant to the Act and to other related functions, such as those of a liquidator, a receiver, an interim receiver, a receiver/manager, an agent for a secured creditor or a consultant in insolvency matters.
  2. A majority of the directors and a majority of the officers of a corporate trustee shall be licensed trustees.
  3. A corporate trustee shall not have a class of shares of the corporation listed on a stock exchange or be the primary subsidiary (i.e., more than 50 percent of the business interest of a parent company) of a corporation whose shares are listed on a stock exchange.
  4. Subject to paragraph 39 of this Directive, a corporate trustee shall, at all times and in the district(s) in which it is entitled to act, operate through an individual trustee.
  5. In extraordinary circumstances, where a corporate trustee is left with no individual trustee in a given district due to an unforeseen event, such as death, sickness or resignation of an individual trustee, the corporate trustee shall submit a written request to the Superintendent for authorization to maintain the corporate trustee's operation in the given district for a specified period of time.
Shareholder Restriction
  1. A trustee may, with the approval of the Superintendent, be a shareholder or a financial backer of more than one corporate trustee provided that:
    • (a) The trustee satisfies the Superintendent that there is no conflict of interest; and
    • (b) The trustee respects any other condition or limitation that the Superintendent considers appropriate.
  2. Notwithstanding paragraph 40 of this Directive, a trustee may, with the approval of the Superintendent, be a shareholder or a financial backer of more than one corporate trustee in the same district, for a limited period of time, to wind up the trustee's practice.
Designated Trustee
  1. A corporate trustee shall, for each professional engagement it has accepted, or for which it has been appointed, designate an individual trustee in the applicable district who shall administer the professional engagement. 
  2. The designation of an individual trustee by the corporate trustee shall not relieve the corporate trustee of its accountability for any professional engagement it has accepted, or for which it has been appointed.
  3. An individual trustee designated pursuant to paragraph 42 of this Directive shall not accept professional engagements under the individual trustee's personal name.
  4. Where an individual trustee designated by the corporate trustee is to be replaced, the corporate trustee shall forthwith notify the Superintendent of the reason for such replacement and of the name of the newly designated trustee.

Modifications to Licence or Practice

Part IX: Changes Requiring Prior Approval

  1. The trustee shall submit a written request to the Superintendent and receive prior approval before any of the following changes can be effected:
    • (a) A change to the trustee's resident office or business address (within the same district);
    • (b) A change to the trustee's district (transfer or extension);
    • (c) A change to the individual trustee's licence or practice, including a change or departure from the firm with which the trustee is associated, a change to the trustee's administrative status, retirement or cancellation of the individual trustee's licence; and
    • (d) A change to the corporate trustee's licence or practice, including a change to the corporate name, a change to the corporate structure, a merger or purchase agreement between two or more corporate trustees, or cancellation of the corporate trustee's licence.
Change or Departure from Firm, Retirement or Cancellation of Licence
  1. Without limiting paragraphs 46(c) or (d) of this Directive, before a trustee changes or departs firms, retires, or has his or her licence cancelled, the trustee shall ensure that all professional engagements under his or her name are completed or transferred to another trustee by court order or otherwise, as applicable.
Change to Corporate Name
  1. Any change to the corporate trustee name requires approval of the Superintendent and of the appropriate federal or provincial regulatory body.

Part X: Other Changes Requiring Notification

  1. The trustee shall notify the Superintendent of any other change to the trustee’s licence or practice within fifteen (15) days of the change.

General Provisions

Part XI: Coming into Force

  1. This Directive comes into force on the date it is signed.

Part XII: Enquiries

  1. For any questions pertaining to this Directive, please contact the Office of the Superintendent of Bankruptcy at ic.osblicencebsf-bkhq.ic@canada.ca

William R. James
Superintendent of Bankruptcy

Important notice:

The HTML version of this Directive is not the official version. In the event of an inconsistency between the HTML and PDF versions of this Directive, the PDF version prevails. Users are required to exercise due diligence with respect to the HTML version.

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