CAN AN INCORPORATED TRUSTEE BE PERMITTED TO MANAGE A BUSINESS

Know everything about an incorporated trustee.

CHAMAN LAW FIRM

2/10/20220 min read

CAN AN INCORPORATED TRUSTEE BE PERMITTED TO MANAGE A BUSINESS

What Is an Incorporated Trustee?

An incorporated trustee (also referred to as a "corporate trustee") is a corporation, usually a trust company, which is named as the trustee of an account such as a private trust or another fiduciary account.

Incorporated trustees stand in contrast to an individual person or "natural trustee," which may also be selected as the trustee of such an account. In both cases, the trustee's role is to execute the instructions of the trust's grantor as well as manage the assets of the trust.

Where one or more trustees are appointed by any community of persons bound together by custom, religion, kinship or nationality or by anybody or association of persons established for any religious, educational, literary, scientific, social, development, cultural, sporting or charitable purpose, he or they may, if so authorized by the community, body or association (in this Act referred to as "the association") apply to the Commission in the manner hereafter provided for registration under this Act as a corporate body. Upon being so registered by the Commission, the trustee or trustees shall become a corporate body in accordance with the provisions of Section 679 of this part of this Act.

The procedure for registration.. Which should be accompanied by the constitution of the trust, the name of the secretary of the trust/association. The name of the entity should start with "Incorporated Trustees of".

Registered Trusts/trustees are regulated by the CAMA (Part C, Section 26), Trustees Act. Trustee Investment Act 1962, Internal rules and Bye Laws, Common Law and the Doctrines of Equity. There should be at least 6 trustees to effect the purpose of the Registered Trust.

It is a body corporate with perpetual succession and common seal having power to sue and be sued. It can hold and transfer property. In essence, it is a legal entity. But the legal entity is vested in the trustees who are to sue and be sued on behalf of the trust.

Qualification to act as trustee: must not be:

-an infant,

-of unsound mind,

-an undischarged bankrupt,

- convicted of an offence involving fraud or dishonesty within 5 years of his proposed appointment.

 

DUTIES AND RESPONSIBILITIES OF THE REGISTERED TRUSTEE

The duties and responsibilities are quite onerous. He is expected to:

 

• Gather the trust property and confirm the veracity of the trust instructions.

• Carry out the objectives of the trust in accordance with the terms of the trust. He can obtain legal advice where ambivalent.

• Exercise reasonable care and prudence in administering the trus^ In Re Waterman's Will In Re Waterman's Will Trust, the court noted that trustee's diligence should be that which a prudent businessman would employ in managing his own affair. Where he is a paid trustee, a higher standard would be expected.

• Duty to protect the trust property and keep it safe in the interest of the association.

He also has a host of other Fiduciary Duties which include:

Loyalty and accountability: he should keep and render proper accounts to the Association and CAC. He should not make secret profits, nor let his interest conflict with that of the trust-Okesuji V Lawal where the trustee renewed trust property's lease in his own name. See also-Re Barber. In Re Gee the court held that where trust shares gives the trustee higher voting rights to be appointed as director, he would have to surrender his salary (gotten from that position) to the trust.

• He is to treat trust information as private and confidential.

• He should also be impartial in administering trust affairs.

• Duty to act gratuitously as a volunteer-Robinson V Pette In Bray V Ford the court noted that he is under a duty not to make profit. Exceptions:

·         Where the terms of the trust provide otherwise.

·         Where he delegates his duty to a third party, he may prescribe reasonable and jus remuneration for the delegate.

·         He should be reimbursed for out of pocket expenses (where he uses his own personal money).

·         A reasonable fee should be paid for services rendered.

·         Duty to invest: So as to make it productive-Re Power. In Trustees of the British Museum V AG, the court held that such investments must be authorized by the Trustee Investment Act or the Trust instrument.

·         Duty not to delegate his duty: except it is a matter requiring expertise. He must exercise due care and skill in selecting his delegatee and constantly supervise the delegate to ensure conformity with the terms of the trust.

 

The liability of the trustees is several rather than joint. Except the breach or wrongdoing occurred as a result of his neglect or default.

Dissolution of Trust: The trustee can apply that the registered trust be dissolved. Not less than 50 percent of members can sign that they want to dissolve. Also the CAC. Grounds for dissolution: By performance, expiration of period, illegality of trust, or trust is contrary to public policy on just and equitable grounds.

REFERENCE:

1. Section 590 (1) CAMA 2020.

2. Section 591 CAMA 2020.

3. Section 591 CAMA 2020(Supra).

4. Section 18 CAMA 2020.

5. Section 596 CAMA 2020.

6. NBA V Gani Fawehinmi (1989) 2 NWLR (Pt.105) 558.

7. Section 592 CAMA 2020.

8. (1886) 34 Ch.D 77 at 81.

9. (1873) 24 ER 1049.

10. (1896) A.C. 44 at 51.

11. Section 603 CAMA, 2020.

12. Section 603 (2b) CAMA, 2020.

13. Section 603(2b) CAMA 2020.

14. [2005] 3 WLR 396.

15. Section 12 TA.

16. Section 608 CAMA 2020.

17. Section 608(2) CAMA 2020.

 

WRITTEN BY: CHAMAN LAW FIRM TEAM

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