Fishing Lake 1907 Surrender Trust Agreement Trustee Options

1. Fishing Lake 1907 Surrender Trust AgreementTrustee Options Community Meeting Fishing Lake Reserve – August 16, 2014

2. New Structure for Trust – Financing vehicle First Nation Responsibility Trustee Responsibility Band Settlement Account Trust Account Annual Payment Investment • Community decides • what to do with funds • Uses & decision making need to be addressed by the First Nation • Another Trust • S. 83 Expenditure By-law • Financial Policy Amount Can’t be Spent 2

3. Role of Trustee under New Structure • The role of the Trust is limited to • Receiving the monies • Investing the Trust Property • Making an annual payment to the First Nation • Possibly using the Trust Property to secure loans for the First Nation • The Capital is not spent • Capital Invested to generate income which is used to make the annual payment

4. Role of Trustee under New Structure • The Trustee has no role in determining how funds are spent in the community • The decision to determine how to spend the annual payment is left to the Chief and Council and the Members • will be addressed separately – more work to be undertaken

5. Trustee - Options • The First Nation has the following options: • Individual Trustees • Corporate Trustee - a Trust company, duly licensed to act as a Trust company • Combination - some combination of individuals and Corporate Trustee • Individual or Corporate Trustee with a Protector

6. Individual Trustees • Individual Trustees can be: • Members of the First Nation • Person independent of the community - possibly with certain types of expertise (Accountant, Lawyer, Banker, Investment Advisor) • Some combination of members and independent people

7. Corporate Trustees • Corporate Trustees are • Corporate entities that are licenced under Canadian law to provide Trust service, including acting as Trustee • Have professionals that are specifically trained to provide trust services

8. Combination of Individual and Corporate Trustees • Can have a Corporate Trustee along with Individual Trustees

9. Protector • Can have a Corporate Trustee or an Individual act as a protector or “gatekeeper” • Not a Trustee but ensure Trustees are following the terms of the Trust Agreement • This is how the current Fishing Lake 1907 Trust is structured • Seven Members of the First Nation are the Trustees • Peace Hills Trust is acting as the Protector

10. Advantages and Disadvantages of Each Option • There are advantages and disadvantages of each of these options • The First Nation will need to carefully consider these options and the advantages and disadvantages of each • The Chief and council and the Trustees have considered these options and the advantages and disadvantages of each are bringing this matter to the members for their consideration and advice on which option to use

11. Advantages and Disadvantages of Each Option • Asset Custody: • The Trust Property – Trust Account, Investment Instruments, etc. need to be held somewhere • A Corporate Trustee has the legal qualifications to act as custodian of the trust assets • This service is generally included in the Corporate Trustee’s fees • If only individuals are used as the trustees then a separate entity will need to be retained to hold custody of the trust assets • There is an added cost to the Trust for this service

12. Advantages and Disadvantages of Each Option • Knowledge and Experience: • Corporate Trustees have wide ranging managerial experience with trusts • The Professionals working for a Corporate Trustee have specialized training • They understand the laws applicable to Trusts and have a working knowledge of such laws • Are able to effectively communicate these principles the community • Individuals often have limited experience in the operation of a Trust, Trust laws, the handling of investments and trust accounting • Band members may have difficulty communicating trust concepts to the members of the First Nation • Other individuals may not have this same difficulty depending on their expertise

13. Advantages and Disadvantages of Each Option • Administration and Reporting: • Corporate Trustees have computerized systems in place to handle timely collection of all investment income and authorized disbursements as well as full financial reporting on all activities of the trust • These services are included in the Corporate Trustee’s fees • In the case of individual trustees, such systems will need to be put in place or a third party retained to provide these services • There will be an added cost to the Trust for such systems or for the services

14. Advantages and Disadvantages of Each Option • Objectivity: • Corporate Trustees do not have any political or family connection to the First Nation • Able to remain neutral concerning all decisions • Members of the First Nation who are trustees can face pressure within the community and are often criticized • It is often easier for a Corporate Trustee to say “no” then it is for a trustee who is a member of the community • Such problems do not necessarily arise when a person independent of the First Nation is a trustee • A potential area of conflict of interest may arise if a Corporate Trustee is also the investment manager for the trust.

15. Advantages and Disadvantages of Each Option • Language/Communication: • It can be important to have community members as trustees - to ensure that information and reporting can be provided to the members of the community in their first language, if needed • Member trustees can also better understand the needs of the community and the impact specific decisions would have on the community • They are also available to their members to hear their concerns and questions • Corporate Trustees and Individuals, who are not members, are not always as available to the community members

16. Advantages and Disadvantages of Each Option • Decision Making: • Conflicts and pressures within the community can sometimes make member trustees’ decisions difficult • Conflict of interest problems can also arise with member trustees, because of family relations • These same types of conflicts do not exist with a Corporate Trustee • This is also so for an individual who are independent of the community

17. Advantages and Disadvantages of Each Option • Capacity Building: • Including Members in the role of trustee can provide an important opportunity for on-going capacity building for the First Nation • The members who act as trustees learn new things, become more knowledgeable, which can also be past on to other members making the community generally more knowledgeable

18. Advantages and Disadvantages of Each Option • Training: • Corporate Trustees do not require initial and on-going training, education, and hiring of administrative staff • Corporate Trustees can provide training workshops to help new trustees or members of council and/or other members of the First Nation learn more about their trust and how it works • Members who are trustees generally need to have on-going training and have administrative staff • There is an added cost to the Trust for this • Depending on the experience level of individuals who is independent of the community, they may be able to provide some of this type of training

19. Advantages and Disadvantages of Each Option • Costs: • For the type of Trust being considered a Corporate Trustee’s costs can be far less expensive when all of the costs are considered • By the time all the costs of operating a board of trustees are considered, such as honorariums, travel costs, administrative costs, professional fees, training costs, costs for staff and other related costs, the flat fee charged by a Corporate Trustee is considerably less • Historically the Fishing Lake 1907 Trustees have been spending on average 1.5% of the value of the Trust Property each year to operate the Trust • With using only a Corporate Trustee the costs to operate the Trust will be around 0.5%

20. Sole Corporate Trustee Member Trustees Independent Trustee Advantages and Disadvantages - Summary

21. Decision on Trustee Option • Normally with the type of Trust being considered by the First Nation a Corporate Trustee is generally used • Every few decisions need to be made • Keep the costs for operating the Trust to a minimum so that there is more benefits going to the community • Can also consider some combination of a Corporate Trustee and individuals, with the Corporate Trustee acting as a Trustee or as a Protector • With either of these options there will be added expenses to operate the Trust

22. Decision on Trustee Option Questions And Discussions