This Overview was prepared as a means of explaining the task of the Financial Trustees and the individual duty, role and responsibilities of a Financial Trustee.
Unlike a corporation, a "trust" is not a legal entity itself, rather a trust describes a legal relationship that is created between a beneficiary (the Rainy River First Nations in this case) and a person called a "trustee", in this case a "Financial Trustee" as defined in the Trust Agreement. The Financial Trustees hold legal title to the Trust Property and are totally responsible for the investment management of the Trust funds as well as their due administration and disbursement under the terms of the Trust Agreement. They each accept the obligation to perform certain significant duties and assume broad responsibilities in relation to the administration of the Trust Property to preserve and protect it for the benefit of the RRFNs and future generations of Members.
Responsibility of Financial Trustees
The Financial Trustees have responsibility for:
- Administration of the Trust Property
- Engaging professional financial management services to assist them in the investment and administration of the Trust funds
- Receipt and payment out of Trust funds in accordance with the Trust Agreement based on Council requests for implementation funding and land purchases, "funding directions" received from the Community Fund Trustees and Trust administration fees and expenses
- Obtaining an annual audit; and
- Maintaining records of Trustee meetings, all decisions and accounts
- Reporting to Council and the Members on:
- The audit
- The use of the Trust Property for Implementation and Community Purposes as provided in the Trust Agreement
- The investment of the Trust Property, including compliance with the objectives of the Trust and results for each year.
The above responsibilities can only be fully understood through a careful and detailed reading of the Trust Agreement. Each Trustee must have a thorough understanding of the Trust Agreement.
Expenditures of Benefit to the Community
General guidelines are provided to the Financial Trustees for the use of the Trust Property at Article 8. The Financial Trustees agree to hold the funds on the terms set out in the Trust Agreement for the benefit of Rainy River and to assist in implementation of the settlement agreement by:
- acquiring land to be registered in the name of Rainy River or any agent, trustee or legal representative of the Beneficiary
- discharging expenses associated with the purchase of land and other implementation of the Settlement Agreement
- the advancement of the interests of and quality of life of Rainy River and its Members through the preservation, enhancement and application of Trust Property.
Specific guidelines for each of the Implementation Purposes and Community Purposes are set out in Section 8.1 and implementation costs at Section 8.4.
Implementation Purposes include the capital cost of land purchases approved by the Land Purchase Committee and costs incidental to purchases (appraisal, legal, inspections, transfer, etc.) as well as internal staff administration. Community Purposes are expenditures based on the definition of "expenditures beneficial to the beneficiary for community purposes" at page 14 of the Trust Agreement, specifically Paragraph 8.2(b) which include health care, education support, elder needs, community development, language preservation, cultural learning, community activities, financial services, housing incentives, economic development, protection and advancement of Treaty and aboriginal rights, Trust costs including professional services and any other activities deemed to be of community benefit of a similar nature, except for the payment of First Nations debt or any cash distributions to individual Members.
The Financial Trustees are independent of the Community Fund Trustees, each group performing a distinct and separate function. Upon receiving a request for disbursement of funds the Financial Trustees must only confirm that the request approvals and documentation are in order. The Financial Trustees do not supervise the Community Fund Trustees, except for compliance with the Trust Agreement requirements. The Members of RRFNs must ensure that the Trustees act properly in accordance with their undertakings and the expectations of the community membership.
Duties and Standards of Conduct of Trustees
All Trustees are legally obliged to act in utmost good faith with a view to the best interest of the Trust and to avoid conflicts of interest at all times. The standard or duty of care for a Trustee is the highest standard known in law. They must also act in strict accordance with the Trust Agreement in terms of the guidelines for expenditures, limits of authority, funding directions, reporting and applicable trust law requirements.
Failure to act in accordance with the Trust Agreement and applicable law will attract serious personal legal liability. Trustees are protected from liability for their actions under the Trust Agreement, but not for any individual fraud or negligence.
Consent and Acknowledgement
Each Trustee must sign a consent to act and acknowledgement containing the following statements:
"I, ___________________, of the _____________ of ___________________, in the Province of ________________, Canada, hereby accept and consent to my appointment as a Trustee of the Rainy River First Nations Trust by the resolution of the Council of the Rainy River First Nations dated _________________, a copy of which is attached as Appendix A.
I pledge that I will act as a Trustee to the best of my knowledge, ability and skill, in utmost good faith, with due care and diligence at all times in accordance with the terms of the Trust Agreement, a copy of which is attached as Appendix B.
I have read the Trust Agreement understand that will be liable for breach of the duty of care I am bound to exercise as a Trustee at law, and in particular for my individual fraudulent or negligent act or omission, but that I am otherwise indemnified and saved harmless from claims and costs arising from the performance of my duties as Trustee from the Trust Property in accordance with the terms of the Trust Agreement. I also understand that the Trust Agreement provides for strict and detailed guidelines in relation to the disclosure of conflicts of interest, the breach of which could result in the withdrawal of my appointment, accounting for profit or returns received and other civil or criminal penalties.
I acknowledge and agree that I may be obliged to participate in financial management and investment or Trust management orientation and training workshops or programs to assist me and the other Trustees in the better management and administration of the Rainy River First Nations Trust."
Trustees must be at least 18 years of age upon appointment and are expected to be persons of good character and exceptional experience. Although not absolutely required post-secondary education would be preferred for the Financial Trustees as well as suitable administrative or business experience to appreciate the duties of a Trustee and effectively perform the duties of a Trustee. Trustees must be bondable and have no criminal record involving financial matters, interpersonal violence or other matters affecting personal reputation or credibility as a Trustee.
A Trustee is a volunteer, however, a Trustee may receive compensation for meeting attendance and income loss and reimbursement of pre-approved incidental expenses for meeting attendance. Compensation and expense allowances are not set by the Trustees, they are set by the general membership from time to time. Meetings are to take place at least once every 2 months, but frequency will vary with the amount of planning activity. Trustees living off Reserve will typically participate by conference calls, but be expected to attend the annual general meeting at which reports are given to the Members.