Presentation will cover 1. Securing informed and lasting

consent 2. Distinguishing political approval

from economic development 3. Maintaining decision making

consistency 4. Recommended best practices

When Approvals will be sought

Formation of FN Entity

Formation of Project

Partnership

Securing Equity

Financing

Tasks to assist Senior

Financing

Grants

Amendments

Corporate Structures Goals: Minimize Liability Minimize Tax Payable For off-reserve Projects, 2 options: Limited Partnership Principal Business Corporation

Corporate Structures 1. Limited Partnerships

Comprised of a General Partner (corporation) and Limited Partners (First Nations); Most decisions made by board of directors of the GP

First Nation is responsible for electing board; recommend board members not be chief and council (s. 13 Limited Partnership Act)

Limited Partnership Agreement and GP Shareholders Agreement stipulate matters requiring First Nation approval

Chief and Council may identify a proxy to hold authority for providing such approvals

Corporate Structures 1. Limited Partnerships

Partnership Agreement should allocate virtually all profit distributions to First Nation Limited Partners

Income Tax Act exempts from tax income earned by a “public body performing a function of government.” First Nation may qualify as such a public body by: Passing by-laws under ss. 81 & 83 of Indian Act Entering health service transfer agreements with

other levels of government Providing education in band-operated schools

Corporate Structures Limited

Partnership

General Partner Corporation First Nation A First Nation B

First Nation A

First Nation C

First Nation B

First Nation C

Limited Partners Shareholders of General

Partner

Corporate Structures 2. Principal Business Corporations

Corporations whose principal business involves the generation or transmission of electricity in Ontario

Proposed amendment of the income tax act to allow such corporations tax exempt status (proposed since 2002; not yet passed although amendment is uncontroversial)

Corporation governed by its board of directors; simpler structure for First Nations participating in energy and infrastructure projects, but not yet available

Corporate Structures 3. Project Representative

Ensures information flows between: Proponent Advisors (Financial, Legal, Technical) Board of Directors of General Partner Chiefs and Councils / appointed

proxies / Communities Benefits: Provides instructions to advisors Sustains political support for project Keeps community informed

Community Approval Project should be defensible. Consider:

1. Is the Project a good fit for the community?

2. How much does the community stand to gain?

3. How is this gain balanced against the initial outlay of capital needed to get a project off the ground?

4. Responsibility to cover project costs if project doesn’t reach financial close?

Community Approval: Jobs Difficulty: How FN Project revenues are managed are

dependent on Chief and Council; may not hold broad support

Recommendation Secure priority job opportunities for community

members; take steps to realize opportunities Benefit Jobs have a significant, positive, impact at the

community level Support can cross political lines following job

creation

Community Approval: Env’t Difficulty: Skepticism about proponent’s intention in

community and desire to protect environment and culture in traditional territory

Recommendation: Involve members of the First Nation in Project

committees overseeing environmental decisions Benefit: Real steps taken to form true partnerships

increase trust and likelihood that a Project will have a mandate from the community to proceed

Community Approval: Info Difficulty Without clear information, community’s perception of

a proposed project may not be accurate Recommendation Hold frequent meetings in each community, before,

during and after approval process Invite both proponent reps and community advisors to

attend to ensure robust discussion about benefits Benefit Helps maintain community consent; dispel

misinformation A strong community meeting can provide chief and

council confidence that it is operating according to the wishes of its electorate

Council Approvals Time and effort is required to present a proposal

for a Project to a community and obtain direction from chief and council to proceed

Corresponding band council resolutions should have the proper breadth to carry out this direction: Adequacy of consultation undertaken in respect

of the Project Approval of the FN corporate structure and

appointment of directors / proxies Approval of entering partnership documents with

proponent Raising equity financing of First Nation corporate

entity and pledging security held by First Nation Any other related approvals

Council Approvals Shift from political approval to

economic development BCR should vest future decision making

authority of First Nation in a particular individual (e.g. Project Rep.)

Of greater importance with those projects involving many first nations

Unless otherwise revoked by BCR, authority should last until individual’s resignation or commercial operation date of Project

Council Approval Benefits Beyond council approval of Project, future

approvals may still be needed from a First Nation Easier if there is a representative with knowledge

of and support for the Project; chief and council often have many other critical items on their plate

BCR granting authority should be revocable; intention is to avoid situation of being unable to make a decision

Difficulties May not be possible: gov’t / lenders are

conservative in interpreting breadth of a BCR; also need FN comfort with delegation

Conclusion 1. Corporate Structure:

Limited Partnership Principal Business Corporation

2. Community Approvals:

Defensible Project Jobs Environmental Input Community Meetings

3. Council Approvals:

Take the time to secure one approval Grant authority to an individual to make future

approvals

Conclusion During approval stage of Project, a First

Nation is required to appoint: 1. Board of Directors of General Partner 2. Project Representative to Liaise with

Community 3. Proxy of First Nation Shareholders /

Limited Partners 4. Authorized signatory for First Nation (as

First Nation) All individuals should be in place until

resignation or commercial operation, whichever is earlier.