A tax court decision, recently
affirmed by the Federal Court of
Appeal, highlights the importance
of properly transferring shares.
In Antle v. Canada, [2010]
F.C.J. No. 1317 (affirmed by the
FCA in October), the court found
that a “major stumbling block”
for Paul Antle in constituting a
Barbados spousal trust was that
the shares earmarked to settle
the trust were never properly
transferred to the trust. As every
law student knows, to properly
constitute a trust the three cer-tainties (intention, subject matter and objects) must be met,
and the trust property must be
transferred to, and vest in, the
trustee.
If there is a statutory form of
transfer, that form must be followed—and there is a statutory
form of transfer for shares. In
Antle, share transfers were governed by the Newfoundland Corporations Act (1990). Section 124
provided that an endorsement of
a security transfer did not constitute a transfer until delivery of the
security. As Stratos (a third-party
creditor) held the share certificates at the time the trust was
purportedly settled, the court
CATHERINE
BROWN
“Certificates or
documents of title
representing
ownership are being
eliminated, and
securities simply exist
as computer records.
concluded that the shares could
not be delivered to the trustees.
Consequently, the trust was not
properly constituted.
Antle, although still technically
good law on this issue, is not the
final word on how to transfer
shares. In 11 jurisdictions across the
country, share transfers are no
longer governed by provincial cor-
porations legislation, but instead by
a Securities Transfer Act (STA).
Between 2007 and 2010, all of the
provinces except PEI enacted vir-
tually identical securities transfer
legislation. There is no equivalent
federal act.
Air India report recommends charity consultations
Dubbed a Canadian tragedy,
the bombing of Air India Flight
182 in 1985 is deeply emblazoned in the memories of Canadians. The bombing, which
claimed all 329 people on board,
remains the largest mass murder
in Canadian history. The Report
of the Commission of Inquiry
into the Investigation of the
Bombing of Air India Flight 182,
authored by former Supreme
Court of Canada Justice John
Major, is both a good and bad
news story for charities and not-for-profit organizations (NPOs)
in Canada.
While the report falls short,
in some ways, in reforming Can-
ada’s anti-terrorism regime for
charities and NPOs, it does make
the crucial recommendation for
government agencies to consult
with the charitable sector prior
to implementing changes to the
regime, as well as taking into
consideration the “legitimate
charitable sector.”
The commission’s five-volume
final report, released in June
2010, made findings and recom-
mendations on whether Can-
ada’s existing legal framework
provides adequate constraints
on terrorist financing in, from or
through Canada, including con-
straints on the use or misuse of
funds from charitable organiza-
tions. Volume 5 deals specifically
with terrorist financing, and
NANCY
CLARIDGE
&TERRANCE
CARTER
offers a thorough examination of
the impact of terrorist financing
and Canada’s role in combating
such terrorist activity.
Charities and NPOs, whether
rightly or wrongly, have long
been identified by governments
and international organizations
as the “weak link” in the fight
against terrorism, suggesting
that they are vulnerable to
abuse by terrorist organizations
as a means of fundraising for
illicit activities.
The report suggests that there is
a lack of institutionalized co-ordin-
ation and direction in intelligence
sharing in national security mat-
ters, and Canadian agencies have
developed a culture of managing
information in a manner designed
to protect their individual institu-
tional interests. Referring to the
practice of limiting information
disclosure between the Canadian
Security Intelligence Service, Royal
Canadian Mounted Police and
Canada Revenue Agency (CRA) as
“an impoverished response to ter-
rorist threats,” the report suggests
that the processes and procedures
by which decisions are made con-
cerning what information should
be passed or exchanged between
intelligence and law enforcement
communities requires substantial
revision.
Nancy Claridge is an associate
at Carters Professional Corpora-
tion and practises in the areas of
charity law and anti-terrorism
law in the Orangeville office. Ter-
rance Carter is the managing
partner with Carters Professional
Corporation. He is counsel to
Fasken Martineau DuMoulin
LLP on charitable matters and
editor of charitylaw.ca.
