Subsection 69(2) of the SCA states that a person cannot be appointed or act as a trustee without the approval of the Commission if the person is a shareholder who beneficially holds shares in the borrower, is beneficially entitled to moneys owed by the borrower, has entered into a guarantee related to the amount secured or payable, or is a related corporation of the borrower or any of the categories of persons mentioned above.

The guidelines are meant to provide checks and balances to ensure that the interests of debenture holders are protected in the event that the trustee who seeks to act for debenture holders is related to the categories of persons set out in subsection 69(2) of the SCA.

The checks and balances mandated by the guidelines include the requirement that at least one third of the board of the trustee seeking approval under the guidelines are independent directors. Structural separation between the trustee and the connected persons as set out in subsection 69(2) is a further requirement of these guidelines. A trustee is also required to ensure that its non-financial resources are sufficiently independent of the connected persons mentioned above.

Under these guidelines, the SC shall grant a blanket approval to any trustee seeking to be appointed or to act as trustee under subsection 69(2) provided that the requirements of these guidelines are met. A condition of approval by the Commission will be that the trustee must continue to meet these requirements while it acts as a trustee in respect of a particular debenture issue.