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Clueless about Trustee roles and responsibilities

Discussion in 'Accounting, Tax & Legal' started by greenie, 24th Apr, 2010.

  1. greenie

    greenie New Member

    Joined:
    24th Apr, 2010
    Posts:
    2
    Location:
    Brisbane, QLD
    Hi,

    AA and BB are Trustees for a property development trusts but AA and BB have since turned against each other. AA has access to all details about Trustee as AA has law degree and was the one who setup the Trusts while BB does not. AA and BB have since turned against each other.

    Q1. Could anyone please advise BB where to find roles and responsibilities of a Trustee are defined.

    Q2. Can Trustees stop someone from becoming an investor in the company Trust? Is it against the law if they did?

    Any advice would be much appreciated.

    Thanks in advance.
     
  2. MattR

    MattR Well-Known Member

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    23rd May, 2007
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    Location:
    Sydney
    What about B1 and B2? What are they up to?

    Get your hands on a copy of the Trust Deed, it spells out the rules of the Trust and the powers of the Trustee(s).
     
  3. greenie

    greenie New Member

    Joined:
    24th Apr, 2010
    Posts:
    2
    Location:
    Brisbane, QLD
    There isn't any B1 or B2. I should have asked what if AA tried to stop BB's wife from becoming an investor to have a say at future investors meeting. Recent investors meeting, BB's spouse attended but the spouse's objections to the minutes were negated as BB's spouse is not an investor though BB's spouse has signed documents to buy unit and the money used as a deposit was of another investor who did not want to buy the unit. The purpose of the meeting was to intended by AA to remove BB. How BB get to this Trust Deed if all were held by AA? There are samples of Trust Deed on the net but are there any core roles and responsibilities that is maintained even if the Deed is customised? Unfortunately because BB threatened investors during the meeting in rebuke to abusive investors and BB was not ware of BB's role and now AA says BB must resign because of threatening investors. Any advice is much appreciated. Thanks.
     
  4. Nigel Ward

    Nigel Ward Team InvestEd

    Joined:
    10th Jun, 2005
    Posts:
    1,172
    I'm confused. Are the natural persons AA & BB the trustees or are they directors of the corporate trustee. I'm assuming the later.

    The trustee of a trust is a fiduciary. That is they owe a special duty of trust and confidence and must act in the best interests of the beneficiaries of the trust (here it sounds like a unit trust so the beneficiaries are the unitholders).

    There aren't all that many good books about trusts that are non-technical. Dale Gatherum-Goss' book Trust Magic is good but focusses, understandably, mostly on tax issues.

    Regarding your 2nd question - is there a shareholders and/or a unitholders agreement? That is is there any agreement between the unitholders in the trust which has "pre-emptive rights" or "buy-sell" provisions? What is prudent in joint investment structures like this is for existing shareholders/unitholders to have a right to buy shares/units from any existing holder who is selling so that the kind of situation you describe is less likely to arise. Of course that right may not be exercised or you may not have the funds to do so. A slightly different concept is so called "tag along" and "drag along" rights. What they means is that if one holder is selling, you have a right to tag along with them and sell your shares to the same buyer too. Alternatively if you don't want to sell then in some cases such a clause can force you to sell your units/shares ie a drag along.

    Having said all that, remember that regardless of whom is the trustee or controls the trustee they remain bound by the overriding obligation to act in the best interests of the unitholders. You can take action in court to restrain a breach of that duty.

    I hope that helps a little. Let us know how you get on.

    Cheers
    N