Sucker Creek First Nation Group of Companies’ Corporate Structure

1-Trustees of Holdings Trust and Business Trust: Bernard Badger, Cecilia Gaucher, Emily Calliou, (Term expires June 29, 2021) Gwena Cunningham and Debbie Lariviere-Willier (Term expires June 29, 2019)

2-Directors of SCFN Holdings GP Inc.: Gwena Cunningham and Debbie Lariviere-Willier

3-Trustees of Management Trust: Leonard Willier, Emile Willier(Term expires June 29. 2021), Brian Calliou, Wilfred L. Willier (Term expires June 29, 2019)

4-Directors of SCFN Management Corporation, SCFN Services GP Inc. and Sucker Creek North GP Inc.: Mark Calliou, Rose Wong


Table of Contents

  1. Objectives of SCFN Group of Companies
  2. Limited Partnerships
  3. Separation of Ownership and Control
  4. Management of GOC

Objectives of SCFN Group of Companies

Our goal when organizing the SCFN Group of Companies was to provide SCFN with a business structure that:

  • Provides limited liability protection to SCFN
  • Is sensitive to the governance concerns of SCFN
  • Provides for the income generated from the underlying business to be paid into a trust, created to ensure that profits are used for specified purposes that will be of benefit to SCFN’s members
  • Provide for the income generated from the underlying business to be earned in a tax efficient manner. SCFN wishes to maximize profits flowing to SCFN, by operating its businesses on an efficient and cost-effective basis

Limited Partnerships

A limited partnership is a special type of partnership that consists of:

  • at least one general partner; and
  • one or more limited partners

The general partner of a limited partnership is responsible for running the business of the limited partnership, and is legally responsible for all of the debts, obligations and liabilities of the limited partnership.   In other words, the liability of a general partner in a limited partnership is unlimited. For example, if a limited partner contributes $1.00 in exchange for its interest in a limited partnership, then its potential liability will generally be limited to $1.00

  • Often, general partners are newly incorporated corporations with limited or no assets
  • In contrast to the general partner, the limited partner(s) of a limited partnership are passive investors who will retain limited liability protection so long as they do not take part in the control of the business of the limited partnership
  • The liability of any limited partner will generally be limited to the extent of such limited partner’s contribution or investment in the partnership
Why Limited Partnerships?

Limited partnerships offer liability protection which is comparable to that achieved with a corporation; however, unlike corporations, the income earned by a limited partnership is allocated to the partners, and it is the partners that are assessed income tax, not the partnership as a whole.

  • If SCFN is a limited partner (directly or indirectly), income distributed by the limited partnership to SCFN will be exempt from income tax (since SCFN is a tax-exempt entity)
  • In contrast, corporations (even corporations wholly owned by First Nations) are, with some exceptions, subject to income tax

By way of example, SCFN Holdings Limited Partnership distributes monies indirectly to SCFN, through Business Trust and Holdings Trust.  Money paid to SCFN by Holdings Trust can be used for a variety of community-related purposes.

Why Two Levels of Partnership?

SCFN’s current business structure consists of two levels of different limited partnerships: a first level of limited partnerships which includes the business of indirectly or directly providing labour and other services to the resource sector, and a second level of limited partnership which acts as the limited partner of the first limited partnership

  • This “tiered” or two-level partnership structure is recommended because SCFN will be the ultimate owner of both the general partner and the limited partner of the first limited partnership. As a result, there is some risk that the limited partner (because it is ultimately owned by the First Nation) could be found to have participated in the control of the partnership’s business (and therefore lose its limited liability status)
  • Having a second limited partnership assists in distancing SCFN from the control of the business of the first level of limited partnership (i.e. SCFN Ventures LP for example), and any new limited partnerships. In other words, the second level of partnership helps to separate ownership and control of the business of the first level of limited partnerships

Separation of Ownership and Control

As mentioned earlier, if a limited partner takes part in the control of the business of a limited partnership, it risks losing its limited liability protection.  To reduce this risk:

  • The ideal scenario would be to have wholly independent and unrelated persons filling the positions associated with “operating” LPs
  • We recommend that Chief and Council play as limited a role as possible in directing the business of an operating LPTo protect

    SCFN’s limited liability, the safest approach is for the board of directors of the general partner of an operating LP to consist of individuals who are not members of Chief and Council, who do not serve as trustees of either Business Trust or Holdings Trust, and who do not serve as directors of SCFN Holdings GP Inc.  Council, the Trustees of Business Trust and Holdings Trust and the directors of SCFN Holdings GP Inc. should, as much as possible, act as a “passive investor

Management of SCFN Group of Companies

Under the Nation’s corporate structure, the shares of the SCFN’s “operating” entities are held by SCFN Management Corporation. In turn, the shares of SCFN Management Corporation are owned by Management Trust.  For each economic development opportunity undertaken by the nation, SCFN Management Corporation has, and will continue to, establish a separate limited partnership to ensure, to the greatest extent possible, that a successful venture will not be jeopardized by an unsuccessful one.

SCFN’s Chief and Council are responsible for appointing the Trustees of Management Trust.

  • The Trustees of Management Trust owe a duty to SCFN’s Chief and Council and SCFN as a whole to ensure that the SCFN Group of Companies serves SCFN’s best interests
  • The Management Trust agreement does not impose any formal requirements on the Trustees to report to Council; however the Trustees have a common law duty to account and disclose information to SCFN’s Chief and Council (being the representative body of the beneficiary of the Management Trust)
  • The level of reporting and disclosure that is required of a Trustee will vary depending on the circumstances. In this regard, the Trustees, SCFN’s Chief and Council and the directors and officers of the SCFN Group of Companies could benefit from written protocols, policies or terms of reference which clearly specify SCFN’s expectations for transparency and accountability regarding the Group’s activities
  • One of the key functions of Management Trust and the Trustees, as shareholders of SCFN Management Corporation, is to elect the directors of SCFN Management Corporation
  • SCFN Management Corporation, along with SCFN Holdings GP Inc., are obligated to annually present the financial performance of the SCFN Group of Companies to Management Trust
  • If the Trustees of Management Trust, acting in the best interests of SCFN, are not satisfied with the performance of the directors of SCFN Management Corporation, they can remove and replace the directors
  • The directors of SCFN Management Corporation and SCFN Holdings GP Inc. are accountable to Management Trust, but not directly to SCFN’s Chief and Council
  • SCFN Management Corporation, through its directors and officers, will oversee the management, development and overall performance of SCFN’s operating entities
  • SCFN Management Corporation is responsible for organizing each operating entity within the SCFN Group of Companies, including electing the board of directors of these operating entities
  • If the directors of SCFN Management Corporation are not satisfied with the performance of the directors of any operating entity, they can remove and replace the directors
  • The boards of directors of SCFN Management Corporation, SCFN Holdings GP Inc. and each of the operating entities operate independently and autonomously from SCFN’s Chief and Council
  • For instance, the directors of SCFN Management Corporation are solely responsible for managing and administering the company’s personnel and contractors, including hiring, retaining, discipline, and termination of employees and/or contractors. The directors are also responsible for negotiating contracts and ensuring the performance by SCFN Management Corporation of its contractual obligations. The same applies in the case of the board of directors for SCFN Holdings GP Inc. and each operating entity
  • While there may be overlap between the individuals who serve as directors of SCFN Management Corporation and an operating entity from time to time, these individuals will need to discharge their roles and responsibilities for each entity in respect of which they serve as a director
  • In the event that one of SCFN’s operating entities generates a profit, the board of directors of the operating entity will make a determination as to whether the profit shall be distributed to SCFN Holdings LP, or reinvested in the operating entity’s business
  • If profits are distributed by an operating entity to SCFN Holdings LP, SCFN Holdings GP Inc. will similarly make a determination as to whether the profit shall be distributed to Business Trust, or reinvested in one of SCFN’s operating entities
  • When SCFN Holdings LP distributes funds to Business Trust, these funds are automatically paid to Holdings Trust. As discussed below, the Trustees of Holdings Trust then make a decision as to how the funds shall be used in accordance with the terms of the Holdings Trust agreement

Updated July 17, 2018