Policy 8.19 - Woodlot Licence Program - Transfer of Woodlot Licences

Effective Date: 02-Oct-01
Responsible Branch: Resource Tenures and Engineering Branch

Resource Management Volume Table of Contents | Amendment Log

Scope

Under section 54 of the Forest Act, prior written consent is required before a woodlot licence may be transferred from one holder to another or before there is a change in the control of a corporation that holds a woodlot licence.

This policy applies throughout the Ministry and is intended to offer information and guidance with the objective of providing consistency in the manner in which woodlot licence transfers are administered throughout the province. While this policy provides valuable guidance, every transfer will be considered on its own merits. Accordingly, a departure from this policy may occur if unique circumstances make it appropriate to do so.

Policy

It is the policy of this Ministry that woodlot licences may be transferred from one holder to another, or the control of a corporation that holds a woodlot licence may be changed, provided that the proposed transfer will maintain or enhance the achievement of the Woodlot Licence Program objectives.

The five objectives of the Woodlot Licence Program are:

• to increase the amount of private forest land under sustained yield management, and to improve the productivity of that land
• to improve the productivity of small parcels of Crown forest land
• to increase the opportunities for private citizens to participate directly in small-scale forest management operations
• to promote local employment opportunities, and
• to promote excellence in forest resource management.

This policy distinguishes between two basic categories of transfers and suggests different criteria that should be met before written consent is provided:

1. Transfers of woodlot licences to immediate family members and corporations that are controlled by the individuals who previously held the licence should maintain the Schedule A land contribution and the level of achievement of the program objectives.
   
   
2. Where a proposed transfer would result in a person who is not an immediate family member becoming a holder of the woodlot licence or controlling a corporation that holds the woodlot licence, the transfer should enhance the achievement of program objectives above and beyond what would occur if the woodlot licence was re-advertised. To demonstrate that this is the case, the proposed transfer should provide a private land contribution, a suitably qualified transferee, and legally enforceable commitments that will enhance the achievement of program objectives. Favourable consideration should be provided if the existing licensee has demonstrated excellence in forest management in accordance with the criteria outlined in Appendix I.

Under section 54 (2) of the Forest Act, the authority to provide consent with respect to the first category of woodlot licence transfers has been delegated to the Regional Managers.

Relevant Considerations Associated With
All Woodlot Licence Transfers

To determine if the objectives of the Woodlot Licence Program will be maintained or enhanced, the statutory decision maker should consider the following circumstances associated with each request to transfer a woodlot licence:

• Proposed transfers that maintain or increase the quantity or quality of Schedule A land should generally receive favourable consideration, while proposed transfers that reduce the quantity or quality of Schedule A land should not normally be approved.
• Proposed transfers of woodlot licences that are in a serious state of non-compliance (i.e., where silviculture obligations have not been completed in accordance with originally approved timelines or management plan commitments have not been achieved), should not be approved unless conditions are attached to the transfer to provide a security deposit and rectify the deficiency within a stated period of time.
• Favourable consideration should be given to proposed transfers that contribute additional private land or add legally enforceable commitments that will enhance the achievement of program objectives (e.g., intensive silviculture treatments that will be carried out at the licensee's expense).
• The transfer of woodlot licences should not allow an individual that holds or has an interest in a woodlot licence to obtain additional woodlot licences for immediate family members or partnerships or corporations that the individual (or an immediate family member) has an interest in. Where more than one woodlot licence was competitively awarded to a group of immediate family members, transfers of these woodlot licences between the immediate family members should be allowed.
• Woodlot licences should not be transferred to an individual, partnership, or corporation that will result in the licence being controlled by the holder of a major licence.
• The transferee must be eligible to enter into a woodlot licence, in accordance with the Forest Act.
• The financial accounts of the transferor and the transferee with the government must be in good standing.

Unless the District Manager feels it is unnecessary, each request for a woodlot licence transfer should include documentation of the existing licensee's performance of licence obligations, completion of management plan commitments, and achievement of the objectives of the Woodlot Licence Program.

Where the proposed transfer would result in a new individual becoming a holder of the woodlot licence or acquiring control of a corporation that holds a woodlot licence, the statutory decision maker should consider:

• the history of successful management and investment in the timber and non-timber resources of the private lands owned by the proposed transferee
• the proposed transferee's qualification, abilities, and demonstrated participation in the Woodlot Licence Program or small-scale forestry. Conditions may be attached to the transfer to ensure that the new licensee hires experienced help to manage the woodlot licence or participates in available training courses.

Transfer to an Immediate Family Member

For the purposes of this policy, an "immediate family member" is defined as a spouse, child, child of a spouse, sibling, spouse of a child, spouse of a sibling, niece, nephew or grandchild, of the licensee. Proposed woodlot licence transfers to an immediate family member will generally receive consent if they satisfy the considerations outlined in "Relevant Considerations Associated With All Woodlot Licence Transfers" and are otherwise consistent with this policy.

Transfers of a woodlot licence to an immediate family member would include:

• the transfer of a woodlot licence from one immediate family member to another
• changes in control of a corporation that holds a woodlot licence between immediate family members
• the addition of an immediate family member as a holder of the woodlot licence (as joint licensees)
• a divorce settlement where only one spouse will hold a woodlot licence that was previously held jointly by both spouses, or
• where two immediate family members hold or control a woodlot licence jointly and one of them dies, leaving the woodlot licence to the other.

A woodlot licence held by a sole licensee who dies could continue to operate in the name of "the estate of the deceased licensee." The licensee's executor/executrix, as nominated in a valid will, would have signing authority.

A woodlot licensee who transfers a woodlot licence to an immediate family member should not be allowed to obtain another woodlot licence through competition or transfer.

Where a proposed transfer of a woodlot licence would result in a reduction in the quantity or quality of Schedule A land or the replacement of Schedule A land with an alternative parcel of private land, policy 8.8, entitled "Private Land Exchanges and Deletions," should be considered. In most cases where the proposed transfer will result in a reduction in the quantity or quality of Schedule A land, consent for the transfer should not be provided.

In certain intergenerational transfers, the Schedule A land may represent a major family asset that is to be divided among several children and the woodlot licence is proposed to be transferred to only one of these children. In such situations¹, or in the case of a divorce, where the proposed transfer would result in a reduction in the quantity or quality of Schedule A land, the transferee should propose a suitable partner with land or some other means to contribute an equal or better parcel of Schedule A land to the woodlot licence. If the transferee is unwilling or unable to maintain the quantity or quality of Schedule A land, the Crown area of the woodlot licence should be reduced.

Transfer to or Within a Partnership

Consent should generally be provided for the following types of woodlot licence transfers that involve partnerships, provided the considerations outlined in "Relevant Considerations Associated With All Woodlot Licence Transfers" are met and the proposed transfer is otherwise consistent with this policy:

• where a partner ceases to be involved in the management of the woodlot licence²
• where the transfer is to a corporation controlled by the current partners (licensees) and their immediate family members
• where the transfer involves adding a partner³ who will contribute additional Schedule A land or adds significant commitments that will enhance the achievement of the objectives of the Woodlot Licence Program.

1. Prior written consent under section 54 of the Forest Act is still required for the transfer of a woodlot licence or the disposition of Schedule A land, despite any provisions in a will or court ordered divorce settlement.

2. In cases where a partner leaves and the partner's experience was a factor in the initial award of the woodlot licence, the experienced partner will not be able to use their experience to obtain another woodlot licence for at least 3 years. The statutory decision maker may place conditions on the transfer to ensure that the remaining partner hires experienced help to manage the woodlot licence.

3. Where the additional partner is not an immediate family member, the consent of the minister must be obtained.

Transfer to or Within a Corporation

Consent should generally be provided for the following types of woodlot licence transfers that involve corporations, provided the considerations outlined in "Relevant Considerations Associated With All Woodlot Licence Transfers" are met and the proposed transfer is otherwise consistent with this policy:

• where one or more individuals who hold a woodlot licence requests that the licence be transferred so that it is held by a corporation that is controlled by these same individual(s)
• where one or more individuals who control a corporation that holds a woodlot licence transfers the control of the corporation to an immediate family member
• where one of two or more individuals who control a corporation that holds a woodlot licence ceases to be involved in the management of the woodlot licence.⁴

Proposed transfers of woodlot licences that will result in a corporation holding a woodlot licence that is controlled by a person who is not an immediate family member of a person that previously controlled the woodlot licence, will be considered as a "Transfer to a Third Party Who is Not an Immediate Family Member" (see the section below).

Where one or more individuals who hold a woodlot licence request a transfer so that the licence will be held by a corporation that is controlled by these same individual(s), the transferee must state who will control the corporation and how that control is exerted (see section 53 of the Forest Act for the definition of "control of a corporation"). Similarly, if the control of a corporation that holds a woodlot licence will change as a result of a proposed transfer, then the transferee must state who will control the corporation and how that control is exerted. These statements should be recorded as conditions of the transfer so that it will be easy to determine if a subsequent change in control of the corporation occurs.

4. In cases where a shareholder leaves a corporation and the shareholder's experience was a factor in the initial award of the woodlot licence, the experienced shareholder will not be able to use their experience to obtain another woodlot licence for at least 3 years. The statutory decision maker may place conditions on the transfer to ensure that the remaining shareholder(s) hires experienced help to manage the woodlot licence.

Transfer to a Third Party Who is Not an Immediate Family Member

With prior written consent⁵, a woodlot licence may be transferred to a third party who is not an immediate family member where:

• the licensee has a valid offer to purchase the Schedule A land (or the proposed transferee is offering to contribute an alternate (better) parcel of private land)
• the proposed transferee has qualifications that are similar to or better than what would be obtained by re-advertising the woodlot licence, and
• the proposed transfer should result in greater achievement of program objectives than would occur if the woodlot licence were re-advertised.

The "Relevant Considerations Associated With all Woodlot Licence Transfers" section of this policy should also be reviewed and considered by the statutory decision maker.

Before providing consent to a transfer of a woodlot licence to a third party who is not an immediate family member, the following points should be considered:

• the level of interest shown locally by potential applicants for woodlot licences
• the ability of other potential applicants to better achieve the program objectives, and
• the ability to satisfy this demand by advertising additional licences.

If there are a number of well-qualified individuals with potential private land contributions who would be interested in the woodlot licence being proposed for transfer, consent for the proposed transfer may be withheld.

If a woodlot licence has an associated Schedule A land contribution that is significantly better than what would be obtained through re-advertising the licence, then consenting to a transfer that would retain the Schedule A land and result in the woodlot licence being held by a qualified person may be consistent with the program objectives.

Where Schedule A land is not part of the woodlot licence, consent should not normally be provided to transfer the licence to a third party who is not an immediate family member unless there is a private land contribution at least equal to the contribution that would be expected to be obtained if the woodlot licence was competitively awarded. Appendix II provides a listing of the average number of hectares of private land that were contributed in each forest district for woodlot licences that were entered into after the Forest Practices Code came into force.

In estimating the Schedule A land contribution that might be obtained if the woodlot licence was re-advertised, the statutory decision maker should first consider the quality of the woodlot licence (Crown AAC, potential profitability, etc.). Then the statutory decision maker should consider the amount of private land that would probably be contributed if this specific woodlot licence was re-advertised, based on comparable woodlot licences that were recently advertised. If well-qualified applicants from previous woodlot licence competitions, or other individuals who have recently expressed interest to the District Manager, are willing to make a Schedule A land contribution, then providing consent to a woodlot licence transfer without an associated private land contribution would fail to satisfy the program objective of achieving sustained yield management on private forest land.

To provide incentive for licensees to exceed the minimum management requirements under the licence, favourable consideration should be provided if the licensee proposing the transfer has achieved excellent forest management in accordance with the criteria outlined in Appendix I. If the licensee believes that these criteria have been satisfied, written documentation and/or a field trip to the woodlot licence should normally be provided. Favourable consideration should also be provided for additional commitments that will result in superior achievement of program objectives over and above what would be expected to occur through a re-advertisement of the woodlot licence.

Consent should not be provided to individuals who obtain a woodlot licence and then quickly try to transfer it to someone else for profit or other considerations.

5. Failure to obtain prior written consent prior to selling or disposing of the Schedule A land may result in cancellation of the woodlot licence by the minister.

Continuing Obligations

Conditions should be placed on all proposed woodlot licence transfers so that:

• subject to the Forest Act, Forest Practices Code of BC Act, and associated regulations, the transferee must carry out all outstanding obligations including, without limitation, silviculture obligations, road obligations, cut control requirements, any commitments or measures specified in an operational plan, and any conditions or requirements specified in a written authorization or exemption
• the existing management plan commitments made by the transferor, and any additional commitments made by the transferee, must be carried out

References

• Forest Act, ss. 53 and 54
• Ministry Policy Manual, Resource Management, 8.7, Woodlot Licence Program - General Administration
• Ministry Policy Manual, Resource Management, 8.8, Woodlot Licence Program - Private Land Exchanges and Deletions
• Consent to Transfer Procedures

APPENDIX I: EXCELLENCE IN FOREST MANAGEMENT

1. Operational and Management Planning:

2. Operations Compliance:

3. Enhanced Silviculture:

4. Forest Health Management:

5. Management of Non-Timber Resource Values:

6. Timber Utilization Standards:

7. Private Land Management:

8. Community Involvement:

9. Positive Participation in a Local Woodlot Association, the Federation of BC Woodlot Associations, or the Woodlot Product Development Council.

10. Public Recognition of Outstanding Performance:

APPENDIX II: HECTARES OF PRIVATE LAND CONTRIBUTED TO NEW WOODLOT LICENCES