Directive No. 13R4 - Version outlining the modifications
December 8, 2011
(Supersedes Directive No.
13R2 issued on August 14, 2009 , on the same topic)
For the purposes of this Directive, all terms defined or described in the Bankruptcy and Insolvency Act and Bankruptcy and Insolvency General Rules apply. 2. Subject to paragraph 1, the following definitions apply:
“Act” means the Bankruptcy and Insolvency Act;
“applicant” means a person who applies for a trustee licence under the Act;
“licence” means a licence issued by the Superintendent of Bankruptcy pursuant to the Act;
“OSB” means the Office of the Superintendent of Bankruptcy;
“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;
“resident office” means the principal place of business from which the trustee normally practises;
“state of insolvency” means being bankrupt, having filed a notice of intention or a proposal under the Act or being subject to any similar proceedings under federal, provincial or foreign legislation.
Authority and Purpose
3. This Directive is issued pursuant to paragraph 5(4)(d) of the Act and specifies the criteria and qualifications required to obtain and maintain a trustee licence. 4. Paragraph 5(4)(d) of the Act authorizes the Superintendent to issue directives governing the criteria to be applied, in determining whether a trustee licence is to be issued to a person, and governing the qualifications and activities of trustees.
Criteria to Obtain a Trustee Licence
A. Trustee Licence — Individual
5. Application by an individual for a trustee licence shall be made using Form 2, Application for Trustee Licence (Individual).
6. An individual who wishes to apply for a licence must meet the following prerequisites:
be an insolvent person and not have been in a state of insolvency within five (5) years preceding the date of the application;
possess a Canadian university degree or its equivalent, or hold a relevant professional designation recognized in Canada or have a minimum of five (5) years relevant work experience; (c) have successfully completed
National Insolvency Qualification Program ; and
(ii) the National Insolvency Examination
as described in the licensing process set out in Appendix A; (d) have successfully completed
the Insolvency Counsellor’s Qualification Course
, as established by the Superintendent of Bankruptcy; and (e) be
in good standing with
, and not subject to any current disciplinary action by , any professional organization of which the applicant is a member.
7. An applicant who meets the prerequisite qualifications must satisfy the reputation and suitability requirements described below.
8. The applicant shall
(a) be of good character and reputation; and
(b) satisfy the Superintendent that the issuance of a licence will not impair public confidence in the insolvency
process . 9. Without limiting paragraph 8, an
applicant who has been
convicted of an indictable offence must satisfy the Superintendent that a pardon has been granted and that the conviction was not related to an offence of a commercial or an economic nature. 10. Without limiting paragraph 8, an applicant who has been found guilty of professional misconduct must satisfy the Superintendent that such misconduct was not of a commercial or an economic nature. Where the misconduct is not of a commercial or an economic nature, the applicant must show that the misconduct is not likely to impair public confidence in the applicant or in the bankruptcy and insolvency system in general.
11. The suitability of a candidate to become a trustee is evaluated by a Board of Examination that will consider the skills of the applicant. 12. The applicant shall demonstrate before the Board :
(a) the ability to administer professional engagements;
(b) the ability to apply related legislation and jurisprudence;
(c) appropriate experience and a good understanding of business and consumer matters;
(d) good judgment in the administration of professional engagements; and
(e) a high standard of business ethics and professionalism.
Limit 13. An applicant is limited to three (3) appearances before the Board of Examination, over a period of ten (10) years from the date of enrolment in the National Insolvency Qualification Program, as described in the licensing process set out in Appendix A.
14. licence is issued (a) subject to the condition that
continue to meet the requirements and qualifications of this Directive at all times; and (b) subject to
conditions that the Superintendent considers appropriate.
15. A licence may be limited to
(a) corporate bankruptcies and corporate proposals;
(b) consumer bankruptcies and consumer proposals;
or be subject to any other limitation
s that the Superintendent considers appropriate taking into account the Board of Examination’s evaluation and the professional environment in which the applicant will operate. 16. For the purposes of this Directive only, where a trustee licence is limited to consumer bankruptcies pursuant to paragraph 15 (b) of this Directive, a “consumer bankruptcy” means a bankruptcy in which an individual has, directly or indirectly, no business liabilities. 17. Where a bankruptcy does not constitute a “consumer bankruptcy” as defined in paragraph 16 of this Directive and is not a corporate bankruptcy, such an estate may only be administered by a trustee holding a licence without limitations.
B. Trustee Licence — Corporate
18. Application for a corporate trustee licence shall be made using Form 3, Application for Trustee Licence (Corporation).
Pre-approval of Name
19. A person who wishes to apply for a corporate trustee licence must
(a) obtain pre-approval from the Superintendent for the proposed corporate trustee name; and
(b) obtain the approval of the appropriate federal or provincial regulatory body regarding the proposed corporate name.
(1) Subject to paragraph
20 (2) 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.
(2) The name of a corporate trustee may consist of the name of a monitor appointed in Companies’ Creditors Arrangement Act (CCAA) proceedings commenced after September 30, 1997, and before the day on which subsection 1(1) of Chapter 36 of the Statutes of Canada, 2007,
comes into force.
(3) The corporate trustee must be a corporation incorporated under an Act of Parliament or of the legislature of a province.
21. The 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. 22. A majority of the directors and a majority of the officers of a corporate trustee shall be licensed trustees. 23. A corporate trustee shall be a private or closed company as defined in the applicable legislation. 24. A trustee may, with pre-approval from the Superintendent, be a shareholder or a financial backer of more than one corporate trustee provided that
(a) the corporate trustees do not operate in the same district;
(b) the trustee satisfies the Superintendent that there is no conflict of interest; and
(c) the trustee respects any other conditions and limitations that the Superintendent considers appropriate.
25. Notwithstanding paragraph 24 , a trustee may, with pre-approval from 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, in order to retire from practise as a trustee.
Issuance of Licence
26. A licence is issued (a) subject to the condition that :
the corporate trustee continues to meet the requirements
and qualifications of this Directive at all times; and (b) subject to
conditions and limitations that the Superintendent considers appropriate.
Conditions to Practise
27. In order to perform professional engagements, the trustee must
(a) be solvent at all times;
(b) have financial resources sufficient to warrant confidence in the ability to properly administer professional engagements;
(c) have adequate facilities to perform his or her professional engagements; and
(d) have adequate professional liability insurance and adequate employee dishonesty (also known as fidelity) insurance, a bond or other suitable financial arrangements.
28. Except in extraordinary circumstances26 , a corporate trustee must, at all times and in each district for which it holds a licence, operate through an individual trustee. 29. Extraordinary circumstances include the situation where the corporate trustee is left with no individual trustee in a given district due , notably, to death, sickness or resignation of an individual trustee . Under these circumstances, the corporate trustee must obtain authorization from the Superintendent to maintain its operation in the given district .
30. A corporate trustee shall, for each professional engagement, designate an individual trustee who shall be responsible for the administration of that engagement. 31.
The designation of an individual trustee shall not relieve the corporate trustee of its ethical responsibility under any professional engagement it has accepted.
32. An individual trustee designated pursuant to paragraph 30 of this Directive shall not accept professional engagements under the individual trustee’s personal name.
33. An individual trustee shall not act as a trustee if that trustee practises an incompatible occupation.
34. “Incompatible occupation” includes
, notably a collection agent, a bailiff, a trade association representative, an employee of the Office of the Superintendent of Bankruptcy ( ) or a lawyer, or a notary in the Province of Quebec, as well as any other occupation, business or profession that may be in conflict with the duties and responsibilities of a trustee.
35. Notwithstanding paragraph 34, an employee of the OSB acting pursuant to sections 14.03 or 29 of the Act may act as a trustee.
36. The trustee who is a member of a professional body regulating an incompatible occupation must satisfy the Superintendent that he or she does not practise that occupation or profession.
37. A licence is issued for the bankruptcy district or part thereof in which the trustee maintains a resident office.
38. The Superintendent may, upon written request, transfer the licence of an individual trustee to another district, or part thereof, provided the trustee satisfies the Superintendent that he or she has sufficient knowledge of the relevant legislation that applies in that district.
39. The Superintendent may, upon written request, extend the licence of an individual trustee to another district, or part thereof, provided the trustee satisfies the Superintendent that
(a) he or she has sufficient knowledge of the relevant legislation that applies in that district; and
(b) this extension will not adversely affect the performance of professional engagements.
40. Where an individual trustee has made a request to the Superintendent to transfer or extend his or her licence to one or more districts, the Superintendent may require that the trustee appear before a Board of Examination.
41. Notwithstanding paragraph 40,
the individual trustee who requests that his or her licence be transferred from a common law province to a civil law province, or vice versa, will be required to appear before a Board of Examination.
Maintenance of a Trustee Licence
Notification of Changes
42. Subject to paragraph 45, the following changes require the approval of the Superintendent and shall be contained in a written request for such approval prior to the effective date of the proposed change:
(a) a change of district or of the resident office of the trustee;
(b) a change of firm for which the individual trustee practises;
(c) a change in the corporate structure or trustee name
(d) reactivation or reinstatement of a trustee licence
(e) a merger of two or more corporate trustees.
43. Any other change in the information supplied by the trustee under this Directive shall be communicated to the Superintendent, in writing, at the latest within five (5) days of such a change.
44. A corporate trustee shall operate and do business only under the name under which it is licensed. 45. Any change to the corporate name shall be pre-approved by the Superintendent before the approval of the appropriate federal or provincial regulatory body is requested.
46. An individual trustee may be active or inactive.
47. The following factors are taken into consideration in determining whether a trustee is active, semi-active or inactive:
(a) activity in the day-to-day administration of professional engagements;
(b) a supervisory role or control in an insolvency practice;
(c) the length of time of inactivity;
(d) the inventory of open estates in the trustee’s personal name or in the trustee’s name on behalf of a corporate trustee
48. An active trustee is a trustee who may accept professional engagements either in the trustee’s personal name or for a corporate trustee; the trustee is responsible for the administration of these professional engagements. 49. The trustee must obtain pre-approval from the Superintendent before that trustee can begin accepting professional engagements.
50. An inactive trustee is a trustee who does not carry out the functions of a trustee and who does not perform any duties in relation to supervision, receivership or liquidation work, look-see, consultation or research in insolvency matters , for example, a trustee who has gone back to school for a period of time or left the profession. 51. Upon being formally notified by the Superintendent that he or she is inactive, the trustee shall not accept any professional engagements, nor shall that trustee carry out any functions that are exclusively reserved for a trustee appointed under a professional engagement. 52. An inactive trustee must pay the prescribed annual fees. 53. In order to reactivate a licence, an inactive trustee must satisfy the Superintendent that the technical knowledge and skills required to act as a trustee have been maintained. 54. Where the trustee has been inactive for more than five (5) years and wishes to reactivate his or her licence, he or she will be required to appear before a Board of Examiners .
55. The Superintendent may issue an honorary trustee licence to an individual trustee, acknowledging past service, where the trustee meets the following criteria:
(a) the trustee has been active for a minimum of thirty (30) years;
(b) the trustee has
attained the age of fifty-five (55) years; (c) the trustee has retired from active insolvency practise;
d) the trustee is not responsible for any professional engagements;
and, at the discretion of the Superintendent,
e) the trustee is generally recognized by peers as having made a significant contribution to the insolvency community. 56. An honorary trustee shall not accept any professional engagements and will not be subject to any fees.
Reinstating a Trustee Licence
57. In order to reinstate a licence that has ceased to be valid, in accordance with subsection 13.2(3) of the Act, the trustee must satisfy the Superintendent that reinstatement of the licence will not impair public confidence in the bankruptcy and insolvency system.
58. In the event of a temporary absence (i.e. . illness, maternity leave, vacation) during which the trustee is unable to perform normal trustee duties, arrangements may be made with the Designated Senior Bankruptcy Analyst to allow another trustee to carry out the required duties.
59. Paragraph 6(b) and sub-paragraph 6(c)(i) do not apply to applicants who have successfully completed the National Insolvency Examination held in 1998 or in a previous year. 60. Paragraph 6(b) and sub-paragraph 6(c)(i) do not apply to applicants who failed the National Insolvency Examination held in 1997 or in a previous year, but successfully completed it in 1998, 1999 or 2000.
Paragraph 6(d) does not apply to licences issued in 1998 or in a previous year. 62. A corporate trustee may continue to use a name approved by the Superintendent prior to the date of coming into force of this Directive. 63. The requirements of paragraph 20(1) of this Directive may be waived or varied in circumstances where the Superintendent is satisfied it is appropriate.
Compliance and Enforcement
64. Failure to comply with any provision of this Directive consitutes an offence under the Act and, in accordance with subsection 13.2(5) of the Act, may, among other things, result in cancellation or suspension of a licence as well as application of a disciplinary process and conservatory measures, including a direction to the official receiver not to appoint the trustee to any new estates.
Coming into Force
65. This Directive comes into force on December 8, 2011 __________, 2012.
66. For any questions pertaining to this Directive, please contact your local office.
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