Crown Forest Utilization in Ontario – Shareholder Agreements used with Sustainable Forest Licences – Part 2
- By Pilot Law LLP
The Crown Forest Sustainability Act, 1994 (Ontario), as amended to date (the “Act”), is the primary statute governing the utilization of Crown Forests in Ontario.
The Act, Regulations passed under the Act and Manuals prepared under the authority of the Act, create a code for dealing with the wide range of issues involved in managing Crown Forests, with a view to “meet social, economic and environmental needs of present and future generations” (Section 1 of the Act). Professional Foresters, cognizant of all the issues involved in optimizing the management of forests, were instrumental in creating this code, under which they have significant responsibilities for preparing plans for individual forests governed by the Act and for monitoring the performance of those plans.
Various types of agreements between the Province and industry participants, and between participants with one another, create the legal structure within which Provincial Crown Forest policies are implemented. Examples of such agreements include Sustainable Forest Licences, Forest Resource Processing Facility (mill) Licenses and Shareholder Agreements.
There are many features of these agreements that are unique to the forest products industry. There are many other features, however, that are not unique to forestry; features that are commonplace in other industries; features with respect to which a commercial lawyer, who is familiar with Crown Forest legislation, will have useful, practical advice for industry participants, to address a variety of problems that arise from time to time.
This article, and the next article in this series, will focus on the Shareholder Agreement used in conjunction with a Sustainable Forest Licence issued under the Act held by multiple stakeholders.
A Sustainable Forest Licence is a licence granted by the Ontario government to a licensee that entitles the licensee to harvest forest resources on a Crown Forest. The licence may be for a term of up to 20 years and may be renewed subject to the provisions of the Act. The Licensee has a variety of obligations under the licence, including obligations to maintain and renew the forest and to pay the Province for rights granted under the licence.
In cases where the Province decides to allow harvesting of forest resources on a given Crown Forest by a group of industry participants, the group is in certain cases required to establish a new corporation, in which the participants become shareholders, and to have that new corporation become the licensee under the Sustainable Forest Licence. The issues that may arise in the administration of such agreements are not always within the expertise generally expected of a Professional Forester, but are nevertheless important in the day-to-day functioning of the shareholder agreement.
The next article in this series will describe the components of the Shareholder Agreement, and the kinds of issues that may arise where outside legal advice may be useful.
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