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The Corporation of the Township of North Huron
By-law No. 22-2026
a by-law to adopt an Investment Policy for the Corporation of the Township of North
Huron.
This accessible version of this by-law is printed under the authority of the Council of
the Township of North Huron.
Printing Date: March 20, 2026
Disclaimer:
The following version is an electronic reproduction made available for information only.
It is not an official version of the by-law. The format may be different, and plans,
pictures, other graphics or text may be missing or altered. The Township of North
Huron does not warrant the accuracy of this electronic version. This consolidation
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purposes only if you repeat this disclaimer and the notice of copyright. Official versions
of all by-laws can be obtained from the Clerk's Department by calling 519-357-3550.
The Corporation of the Township of North Huron
By-law No. 22-2026
Being a By-law to adopt an Investment Policy for the Corporation of the Township
of North Huron
WHEREAS Section 5(3) of the Municipal Act, 2001, S.O. 2001, c.25, as amended
provides that municipal power shall be exercised by by-law;
AND WHEREAS Section 224 of the Municipal Act, 2001, S.O. 2001, c.25, as amended,
states "It is the role of Council to (b) develop and evaluate the policies and programs of
the municipality";
AND WHEREAS the Council of the Corporation of the Township of North Huron deems it
desirous to adopt an Investment Policy;
NOW THEREFORE the Council of the Corporation of the Township of North Huron
ENACTS as follows:
1. That the Investment Policy attached hereto as Schedule "A" is hereby adopted and
shall form part of this by-law.
2. That By-law No. 103-2021 be hereby repealed.
3. That this by-law shall come into force and takes effect on the day of the final
passing thereof.
Read a first and second time this 20th day of March, 2026.
Read a third time and passed this 20th day of March, 2026.
__________________________________
Paul Heffer, Reeve
CORPORATE SEAL
__________________________________
Carson Lamb, Clerk
Schedule 'A' to By-law No. 22-2026
Page 1 of 11
Investment Policy
Approval Date: March 20, 2026
The Corporation of the Township of
North Huron
Investment Policy
Schedule 'A' to By-law No. 22-2026
Page 2 of 11
Investment Policy
Approval Date: March 20, 2026
Table of Contents
1.
Purpose ...................................................................................................................... 3
2.
Scope ......................................................................................................................... 3
3.
Review ........................................................................................................................ 3
4.
Definitions ................................................................................................................... 3
5.
Reporting .................................................................................................................... 6
6.
General Objectives ..................................................................................................... 7
7.
Standard of Care ........................................................................................................ 8
8.
Safekeeping and Custody ........................................................................................... 9
9.
Investment Parameters ............................................................................................... 9
10.
Securities For Subdivision And Development Servicing ........................................... 10
Schedule 'A' to By-law No. 22-2026
Page 3 of 11
Investment Policy
Approval Date: March 20, 2026
1. Purpose
1.1. The purpose of this Investment Policy shall be to invest all available funds in
a prudent manner so as to maximize the rate of return while minimizing the
degree of risk to the principal and ensuring an adequate level of liquidity within
the legislated guidelines.
1.2. To outline the investment goals and objectives of the Township of North Huron
and define the parameters within which staff may invest funds not required
immediately.
2. Scope
2.1. This Policy will govern the investment of surplus cash, reserves and reserve
funds and trust funds of the Township of North Huron.
3. Review
3.1. This policy shall be reviewed at least once per term of Council. Amendments
may be made at any time at the recommendation of the Director.
4. Definitions
4.1. "Asset-Backed Commercial Paper (Bank Sponsored Only)" means a
short term promissory note issued by corporations, with maturities ranging
from 2 to 365 days.
4.2. "Basis Point" means a unit of measurement used in the valuation of fixed
income securities equal to 1/100th of 1 percent of yield, e.g. "1/4" of 1 percent
is equal to 25 basis points.
4.3. "Credit Quality" means a measurement of the financial strength of a bond
issuer. This helps an investor to understand an issuer's ability to make timely
interest payments and repay the loan principal upon maturity. Higher credit
quality results in lower interest rates as the risk of default is lower. Credit
quality ratings are provided by nationally recognized agencies such as
Moody's and Dominion Bond Rating Service (DBRS).
4.4. "Credit Risk" means risk to an investor that a security issuer will default in
the payment of interest and/or principal.
4.5. "Designate" means a person authorized by the Director to act on his/her
behalf, for purposes of this policy.
4.6. "Director" means the Director of Finance and for the purposes of this policy, the
Treasurer.
Schedule 'A' to By-law No. 22-2026
Page 4 of 11
Investment Policy
Approval Date: March 20, 2026
4.7. "Discount" means the amount by which the par value of a security exceeds
the price paid for the security.
4.8. "Diversification" means a process of investing assets among a variety of
security types by sector, maturity, and quality.
4.9. "Duration" a measure of the timing of the cash flows, such as the interest
payments and the principal repayment, to be received from a given fixed-
income security. This calculation is based on three variables: term to maturity,
coupon rate, and yield to maturity. The duration of a security is a useful
indicator of its price volatility for given changes in interest rates.
4.10. "Fair value" means the amount at which an investment could be exchanged
in a current transaction between willing parties, other than in a forced liquidation
sale.
4.11. "Interest Rate Risk" the risk associated with declines or rises in interest rates
which cause an investment in fixed-income security to increase or decrease in
value.
4.12. "Investment Policy" means a concise and clear statement of the objectives
and parameters formulated by an investor or investment manager for a portfolio
of investment securities.
4.13. "Liquidity" means the ease with which one can convert securities/assets to
cash
4.14. "Local Government Investment Pool (LGIP)" means an investment by
local government in which their money is pooled as a method for managing
local funds, e.g., the "One Fund".
4.15. "Market Risk" means the risk that the value of a security will rise or fall as
a result of changes in market conditions.
4.16. "Market Value" means the current market price of a security.
4.17. "Maturity" means the date on which payment of a financial obligation is due.
Schedule 'A' to By-law No. 22-2026
Page 5 of 11
Investment Policy
Approval Date: March 20, 2026
4.18. "ONE Fund - The One Investment Program ("ONE Fund")" means A local
government investment pool in which Ontario municipalities may invest. ONE
Fund is operated by Local Authorities Service Limited (a wholly owned
subsidiary of the Association of Municipalities of Ontario), together with CHUMS
Financing Corporation (a wholly owned subsidiary of the Municipal Finance
Officers' Association of Ontario).
4.19. "Par" means the face value or principal value of a bond, typically $1,000 per
bond.
4.20. "Portfolio" means a collection of securities held by an investor.
4.21. "Premium" means the amount by which the price paid for a security exceeds
the security 's par value.
4.22. "Principal" means the face or par value of a debt instrument or the amount
of capital invested in a given security.
4.23. "Prudent Person Rule" means an investment standard outlining the
fiduciary responsibilities relating to the investment practices of public fund
investors.
a) The standard of prudence to be used by investment managers shall be the
"prudent person" standard and shall be applied in the context of managing an
overall portfolio.
b) The "prudent person" must act in all matters regarding investments with the care,
skill, prudence, and diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims.
c) The "prudent person" must diversify the investments of the Funds so as to
minimize the risk of large losses, unless under the circumstances it is clearly not
prudent to do so.
4.24. "Rate of Return" means the yield obtainable on a security based on its
purchase price or its current market price. Yield reflects coupon, term, liquidity
and credit quality.
4.25. "Schedule I Bank" is a chartered bank operating under the Bank Act. The
voting shares must be widely held with no investor holding more than 10%
and foreign ownership limited to 25%.
4.26. "Schedule II Bank" is a chartered bank operating under the Bank Act that
may be wholly owned by non-residents.
4.27. "Securities" include bonds debentures, treasury bills, commercial paper,
Schedule 'A' to By-law No. 22-2026
Page 6 of 11
Investment Policy
Approval Date: March 20, 2026
repurchase agreements, promissory notes and asset -backed securities.
4.28. "Serial Bond" means a bond issue, usually of a municipality, with various
maturity dates scheduled at regular intervals until the entire issue is retired.
4.29. "Township" means The Corporation of the Township of North Huron.
4.30. "Weighted Average Maturity (WAM)" means the average maturity of all the
securities that comprise a portfolio.
4.31. "Yield" means the current rate of return on an investment security generally
expressed as a percentage of the security's current price.
5. Reporting
5.1. The Director shall provide an investment report to Council annually or as
requested by Council. The annual investment report should include the
following:
a. A listing of individual securities held at the end of the reporting period by
maturity date;
b. Investment term in days and interest rate;
c. Realized and unrealized gains or losses resulting from appreciation or
depreciation by listing the cost and market value of securities over one-
year duration that are not intended to be held until maturity;
d. Average weighted yield to maturity of portfolio on investments as compared
to policy benchmark
e. A record of the date of each security transaction, including a statement of
the purchase and sale price of each security;
f. Percentage of the total portfolio which each type of investment represents;
g. A statement about the performance of the investment portfolio during the
period;
h. An estimated ratio of the total long-term and short-term securities
compared to the total investments and a description of the change, if any, in
that estimated proportion since the previous year's report;
i. A statement by the Director as to whether or not, in his or her opinion, all
investments were made in accordance with the investment policy;
Schedule 'A' to By-law No. 22-2026
Page 7 of 11
Investment Policy
Approval Date: March 20, 2026
j. Such other information that Council may require or that, in the opinion of
the Director, should be included.
5.2. The investment portfolio will be managed in accordance with the parameters
specified within this policy. Market yields should be higher than the rate given by
the Town's bank for the various bank accounts. This rate will be used as the
annual benchmark in measuring investment objectives.
5.3. The market value of the portfolio shall be calculated at least annually.
6. General Objectives
6.1. The primary objectives of investment activities shall be adherence to
statutory requirements, safety of principal, liquidity, and maximize rate of
return:
a. Adherence to Statutory Requirements
i.
Legislative authority for the investment guidelines of municipal funds
is provided in Section 418 of the Municipal Act 2001.
b. Ensure Safety of Principal
i.
Selection of highly rated investments conforming to the restrictions of
the Legislative authority, forces the adoption of a defensive policy to
minimize the risk of loss and the preservation of the value of the
principal. The Township will:
- Structure the investment portfolio so that securities mature to meet
cash requirements for ongoing operations, thereby avoiding the
need to sell securities on the open market prior to maturity.
- Invest operating funds primarily in shorter-term securities or
approved investment pools.
- Diversify the investment portfolio so that risk of potential losses on
individual securities will be minimized.
c. Maintain Adequate Liquidity
i.
Liquidity is reliant upon an accurate forecast of the timing of the needs
for funds and to cover the possibility of unplanned needs for funds.
This, along with legislative restrictions, help determine the amounts and
types of investments required to have a high degree of liquidity.
Liquidity will be achieved where possible by structuring the portfolio so
that securities mature concurrent with anticipated cash demands.
Schedule 'A' to By-law No. 22-2026
Page 8 of 11
Investment Policy
Approval Date: March 20, 2026
d. Maximize Rate of Return
i.
While conforming to all of the above objectives, this objective is to
realize a competitive rate of return on invested funds. Investments are
generally limited to relatively low risk securities in anticipation of
earning a fair return relative to the assumed risk.
7. Standard of Care
7.1. Prudence:
a. Investments shall be made with judgment and care, under circumstances
then prevailing, following the prudent person principle of investment
management and considering the probable safety of their capital as well
as the probable income to be derived.
7.2. Ethics and Conflicts of Interest:
a. Officers and employees involved in the investment process shall refrain
from personal business activity that could conflict with the proper
execution and management of the investment program, or that could
impair their ability to make impartial decisions. Material interests in
financial institutions with which they conduct business shall be disclosed.
Further, any personal financial/investment positions that could be related
to the performance of the investment portfolio shall be disclosed.
7.3. Delegation of Authority:
a. All investments for the Township are to be authorized jointly by the Director
of Finance (the Director) and the CAO. The authority to manage and
implement the investment program is granted to the Treasurer, or in their
absence, the Deputy Treasurer, hereinafter referred to as designate, who
shall act in accordance with established procedures and internal controls
consistent with this investment policy. No person may engage in an
investment transaction except as provided under the terms of this policy.
7.4. Investment Placement:
a. Investments are selected after consultation and upon advice from the
investment dealers and banks which have been approved by the
Township.
b. Each investment dealer and bank is requested to provide current rates of
interest on the various types of qualified investments. Upon receipt of the
investment rates, the type of investment and term of investment will be
jointly approved by the Director and CAO.
c. Investment dealers and banks approved by the Township may change
from time to time upon the discretion of the Township, provided they meet
Schedule 'A' to By-law No. 22-2026
Page 9 of 11
Investment Policy
Approval Date: March 20, 2026
legislative requirements.
7.5. Investment Reporting:
a. On a quarterly basis, a year-to-date investment register is to be prepared,
for review by the Director.
7.6. Combining Investments:
a. This policy allows the Township to combine and invest money held in the
general fund, capital fund, reserve fund and trust fund. This policy also
allows the Township to enter into agreements with other municipalities for the
joint investment of money.
8. Safekeeping and Custody
8.1.
All investments shall be held for safekeeping in the name of the Township by
approved institutions (Appendix A). The depository shall issue a safekeeping
receipt to the Township for each investment transaction that lists all pertinent
information. The depository shall also provide monthly reports for each
account, indicating all investment activity, book value of the holdings, market
value as of month-end, and income earned by the investments.
9. Investment Parameters
9.1.
Diversification
a. The investments shall be diversified by:
i. Limiting investments to avoid over-concentration in securities from a
specific issuer or business sector (excluding Government of Canada
securities);
ii. Limiting investment in securities that have higher credit risks;
iii. Investing in securities with varying maturities, and;
iv. Investing in mainly liquid, marketable securities that have an active
secondary market to ensure that appropriate liquidity is maintained in
order to meet ongoing obligations.
b. Note that the "Maximum Portfolio Limit" as included in Appendix A may be
exceeded as a result of the timing of maturities.
9.2.
Maximum Maturities
a. To the extent possible, the Township shall attempt to match investments
with anticipated cash flow requirements. Unless matched to a specific
cash flow, the Township will not directly invest in securities maturing more
than ten (10) years from date of purchase unless the maturities of such
Schedule 'A' to By-law No. 22-2026
Page 10 of 11
Investment Policy
Approval Date: March 20, 2026
investments are made to coincide as nearly as practicable with the expected
use of the funds
10. Securities for Subdivision and Development Servicing
10.1. This policy addresses securities required for subdivision and development
servicing (i.e. "Letters of Credit") and has been designed to provide adequate
protection to the Township of North Huron and to be fair and reasonable to
developers and other interested parties. The objective is to ensure that
monies that guarantee the installation of services will be available to the
Township when required.
Schedule 'A' to By-law No. 22-2026
Page 11 of 11
Investment Policy
Approval Date: March 20, 2026
Appendix A
Authorized Investments and Sector Limitations
Minimum Credit Rating
Issuer
Bond
Market
Money
Market
Sector/Credit Exposure
Limitation
(Maximum
Portfolio Limit)
Sector
Term
Limitation (maximum)
(A)
(B)
(C)
(D)
(E)
Government of Canada or
their Agencies
N/A
N/A
100%
15 years
Provinces or their Agencies
N/A
N/A
75%
15 years
Municipalities within North
Huron
50%
20 Years
Canadian Municipalities and
School Boards
AAA
20%
10 years
AA
15%
10 years
A
10%
5 years
Municipal Investment Pools
(LAS - One Investments)
50%
N/A
Schedule
I
Banks
and
guarantees: CIBC, Bank of
Montreal,
Bank
of
Nova
Scotia,
National
Bank
of
Canada,
Royal
Bank
of
Canada,
Toronto-Dominion
Bank
AA(low)
R1 mid
75%
10 years
A(low)**
R1 low
25%
5 years
Other
Schedule
I
and
guarantees
AA(low)**
R1 mid
15%
5 years
A(low)**
R1 low
5%
5 years
Schedule
II
Banks
and
guarantees
AA(low)
R1 high
5%
5 years
Loan or trust Corporations
AA(low)
R1 mid
5%
5 years
Credit Unions
AA
R1 mid
5%
2 years
Municipal Finance Authority
of British Columbia
A(low)
R1 mid
5%
15 years
Non-Profit or Local Housing
Authority
AA(low)
*Ratings based on DBRS, Fitch, Moody's or Standard & Poor's
**2-year minimum term for bond, debenture, promissory note or other evidence of indebtedness with
a credit rating between A(low) and A(high)