July 05, 2010
As Canadian income trusts prepare to change their corporate structures before January 1, 2011, when they lose their preferential tax treatment, there is likely a lot of work ahead for lawyers involved in the conversion process.
So far in 2010, approximately 40 income trusts have announced their conversion plans or completed a transaction, and more are likely to follow before year-end, according to a report by Torys LLP.
From in-house counsel, it is important to have proper communication with internal and external stakeholders to ensure that there are no surprises in the conversion process, says Glen Johnson. "They need to ensure that the market doesn't have any surprises. There needs to be a full disclosure and understanding behind the reasons to convert or not. It's also important to understand the distribution policy that is going to be selected going forward."