. Who are the trustees? Trustees are the people who are responsible for the general control and management of the administration of the guarantee company. Trustees cannot benefit from their position as trustees and one of the key principles of trusteeship is that it is voluntary. Their position and role in the company should not conflict with their role as a trustee and their personal interests.
Company's trustees should be selected for what they can contribute to the guarantee company. They should not be appointed for their status or position in the community alone; this is the function of patrons. When trustees are recruiting new trustees, we would recommend that they take the opportunity to look at the skills, which are needed to run the company effectively and identify whether there are any gaps in these skills which could be filled by a new trustee. The new Trustee Act came into force on 1 February 2001 and brings radical changes to the way in which trustees can invest the funds held by the company. According to the new changes trustees are now able to make any investment which is expected to yield income or capital return.
If you are seeking company formation services you may wish to enquire whether your proposed company formation agent or company formation system will be transferring an existing registered company (ready-made company) to you or forming a brand new company for you. All company formations are completed by qualified professionals and our research and analysis is verified by in house accountants and researchers. We are the company formation firm of choice for individuals starting their own business, and for Accountants and Solicitors. Within 6-8 hours using our special software approved by the UK Companies House, we will incorporate your new business with the name of your choice. Allow us to help you register your private company limited by guarantee and get it running. Coddan CPM offers same day guarantee companies formation for £42.00. If you have an idea for a business, we can also assist you in start-up your new business directly in the United Kingdom from the ground up. In the UK, you must register your business, which we can do for you. Let us know how we can help.
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Further information
There are many good reasons to have a trust. And there are many different types of trusts. The assets you put into a trust are protected in a wide range of situations because you no longer own them yourself. That doesn't mean that you can't have a say. In fact, a trust can help you ensure that your wishes are carried out, even after you die. If you are the person setting up the trust (settlor), you hand over assets to another person (a trustee) to look after for a third person (the beneficiary). The trustee is responsible for looking after the assets of the trust in the best interests of the beneficiaries. In some cases you might be a trustee - or a beneficiary - yourself.
There is usually a trust deed setting out the 'rules' of the trust. There are also laws covering trusts and trustees' responsibilities. The main reason to set up a trust is to protect assets for the future. Assets held in trust may not be affected by matrimonial property disputes. A trust can provide protection from creditors. For some, a trust may offer tax savings because of the different ways income can be distributed. A trust may provide protection if capital gains or death taxes are introduced. Trust assets may be exempt from asset testing for the residential care subsidy and other welfare benefits. You can set up a trust for a specific purpose - such as education -and the money can't be used for any other purpose.
A trust can give you a degree of control over what happens to your assets, even after you die.
Estate planning involves many considerations and various legal devices to make sure your heirs (beneficiaries) receive your property according to your wishes. This pamphlet is intended to provide you with general information about trusts, a popular - but sometimes complex - estate planning tool. A trust is an agreement under which money or other assets are held and managed by one person for the benefit of another. Different types of trusts may be created to accomplish specific goals. Each kind may vary in the degree of flexibility and control it offers. Certain elements are necessary to create a legal trust, including a trustor, trustee, beneficiary, trust property and trust agreement.
The person who provides property and creates a trust is called a trustor. This person may also be referred to as the grantor, donor or settlor. The trustee is the individual, institution or organization that holds legal title to the trust property and is responsible for managing and administering those assets. If not designated by name, a trustee will be appointed by the court. In some cases, a trustor can serve as the trustee. It is also possible for two or more trustees to serve together, or for both an individual and an organization to act as co-trustees. Separate trustees may also be named to manage different parts of a trust estate. The beneficiary is the person who is to receive the benefits or advantages (such as income) of a trust.
In general, any person or entity may be a beneficiary, including individuals, corporations, associations or units of government. The general duties and obligations of the beneficiary, the trustee and the trustor are summarized elsewhere in this pamphlet.
To be valid, a trust must hold some property to be administered. The trust property may be any asset, such as stocks, real estate, cash, a business or insurance. In other words, either real or personal property may constitute trust property (which may also be called the trust corpus, trustees, trust estate or trust principal). Trust property may also include some future interest or right to future ownership, such as the right to receive proceeds under a life-insurance policy when the insured dies (discussed under Insurance Trusts).
Property is made subject to the trust by transfer to the trustee, commonly called a gift in trust. The trust agreement is a contract that formally expresses the understanding between the trustor and trustee. It generally contains a set of instructions to describe the manner in which the trust property is to be held and invested, the purposes for which its benefits (such as income or principal) are to be used, and the duration of the agreement. Trust agreements may be expressed in writing, by oral agreement or may be implied, and the trustor usually has considerable latitude in setting the terms of the trust. To be enforceable, a trust involving an interest in land must be in writing.
Depending on a number of circumstances, trusts may be established orally, in writing or by conduct. Most trusts involve a number of technical legal concepts relating to ownership, taxes and control. A lawyer can assist in explaining options, considering contingencies and preparing documents. In creating a trust, you should consider several factors and obligations. A trustee - whether an individual or institution - holds legal title to the trust property and is given broad powers over maintenance and investment. To ensure that these duties are properly carried out, the law requires that the trustee act in a certain manner. The trustee must administer the trust property only for the designated beneficiaries and may not use trust principal or income for his or her own benefit.
In other words, a trustee is usually prohibited from borrowing or buying from the trust, from selling his or her own property to it, and from using the trust assets as collateral for a personal debt. In selecting a trustee you should consider the potential trustee's competence and experience in managing business or financial matters and the potential trustee's availability and willingness to serve. Individuals and certain corporations (or a combination of both) may serve as trustee. Each selection offers distinct advantages and drawbacks that should be considered. For example, an institution, such as a bank, usually offers specially trained managers to provide administrative, counseling and tax services.
Other typical advantages include the institution's continuity and reliability of service, and its ready availability. Most banks charge a fee for trust services, and some may not want to manage small trusts, so you may want to compare options.
This is our most popular package with UK residents, and includes: Submission of applications that details company's executive officers Guarantee company formation is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees The appointment of your own candidates as directors and secretary (a minimum of two people are required) The following documents will be e-mailed to you (Note: these documents are to be printed and signed): Electronic Certificate of Incorporation (PDF) Electronic Special Memorandum & Articles of Association (MS Word) Minutes of the First Meeting of Directors (MS Word) Membership Certificates and company Register
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This is our most popular package with EU residents, and includes: Submission of applications that details company's executive officers Company limited by guarantee formation is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees The appointment of your own candidates as directors and secretary (a minimum of two people are required) A registered office address for 12 months, provided by Coddan An application form for the following year's renewal of the Registered Office Address service (£50.00) Annual Return and Annual Account reminder The following documents will be e-mailed to you (Note: these documents are to be printed and signed): Electronic Certificate of Incorporation (PDF) Electronic Special Memorandum & Articles of Association (MS Word) Minutes of the First Meeting of Directors (MS Word) Membership Certificates and company Register
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This is our most popular package with small business, and includes: Submission of applications that details company's executive director Non-profit company registration is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees Applicant appointment of director for company (appointed electronically) A registered office address for 12 months, provided by Coddan An application form for the following year's renewal of the Registered Office Address service (£50.00) Nominee company secretarial service for 12 months (next year - £49.95) The following documents will be posted to you (these documents will be sent via Royal Mail): The original laminated Certificate of Incorporation A bound copy of the Memorandum and Articles of Association The Minutes of the First Directors' Meeting One (minimum) printed Membership Certificates and Company Register
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This is our most popular package with overseas residents, and includes: Non-profit company incorporation is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees A registered office address for 12 months, provided by Coddan An application form for the following year's renewal of the Registered Office Address service (£50.00) Nominee company secretary service for 12 months (next year - £49.95) Coddan provides a company nominee director service for 1 year (next year - £125.00) The name of the nominee director & secretary will appear as a public record Annual Return and Annual Account reminder The following two hard bound copies of corporate documents will be posted to you (Note: these documents are sent to you through Royal Mail Service, and are to be completed upon arrival): The original laminated Certificate of Incorporation A bound copy of the Memorandum and Articles of Association The Minutes of the First Directors' Meeting One (minimum) printed Membership Certificates and Company Register A pre-signed, undated letter of resignation from the nominee director A General Power of Attorney signed by nominee director An indemnity Letter for General Power of Attorney A nominee service agreement which provides for the indemnification of the nominees
Business Start-Up: Legal Requirements
A guarantee company does not have a share capital. A guarantee company has Members. Members are guarantors instead of Shareholders. A guarantee company can hold property. A guarantee company can borrow money in its own name. Guarantee companies are required to have a secretary. Secretary usually described as the senior administrator. This person may also be a member or director, but need not be. A company must have a minimum of one Member. Members can be corporate bodies or private individuals. Members can be of any nationality. The company is required to have a registered office in the UK.
COMPANY INCORPORATION UNITED KINGDOM, FORMING COMPANY UK
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Our fee for registering a company limited by guarantee is ONLY £42.00. This type of company is normally incorporated for non-profit making functions. The company has no share capital. Common uses of guarantee companies include clubs, membership organisations, sports associations and charities.
Suggested Reading
Trustee Act 2000. The new Trustee Act came into force on 1 February 2001 and brings radical changes to the way in which trustees can invest the funds held by the charity. It replaces the Trustee Investments Act 1961 (except for Scotland and Northern Ireland). It is intended to remove some of the restrictions facing trustees in their choice of investments. However, it also provides protection for the charity or trust by ensuring that trustees apply specific criteria to investment decisions and carry out regular reviews of the investments and advice received.
What investments can be made under the Act? Basically, trustees are now able to make any investment which is expected to yield income or capital return. However, charities with more restrictive investment powers in their governing documents must still follow the specific rules in that document. The Act contains a specific power to purchase land as an investment or for the use of a beneficiary. Once purchased the charity has all the powers of an absolute owner.
Trustees' responsibilities under the Act. The Act introduces general provisions spelling out the responsibilities of trustees: The type of investment and the particular investment involved must be reviewed to ensure it is suitable (see below for an explanation of what is a suitable investment). The overall portfolio should be diversified. The level of diversification should be “appropriate” to the circumstances of the charity. The investments should be reviewed from time to time by the trustees who should consider whether the investments and level of diversification are still suitable and relevant for the needs of the charity. "Proper advice" should be sought before making an investment or when undertaking a review of the current investment portfolio. This is the advice of a person whom the trustees reasonably believe to be qualified to provide the advice. Trustees will also need to consider whether additional advice such as tax advice is also required. Proper advice need not be taken where the trustees consider that in the circumstances it is not necessary or would not be appropriate. Examples include situations where the cost of such advice would be disproportionate to the benefit obtained, or where the trustees already have sufficient skills and knowledge.
What is a suitable investment? The trustees should consider the following: The size of the investments, the level of risk involved, the need for balance between income and capital growth, the requirements of the charity, i.e. the needs of the beneficiaries, any ethical considerations that are relevant. Any further considerations relevant to the particular charity.
New Duty of Care. The Act imposes a "duty of care" on the trustees, which requires the trustees to "exercise such care and skill as is reasonable". This depends on the level of knowledge and experience a trustee has or claims to have and any specialist knowledge that they ought to have. The duty of care applies when exercising the general power of investment, reviewing the investment portfolio, appointing someone to provide advice, appointing an agent, nominee or custodian and acquiring land.
Agents. Under the Act, trustees are able to delegate functions to an agent acting on their behalf. Thus, charities may appoint an investment manager without the need to revert to the Charity Commission where the governing document does not contain a specific power of delegation. Proper advice regarding the investments is still required by the agent unless they are the type of person from whom such advice could normally be sought. The agreement between the agent and the trustees should be in writing and requires the agent to comply with an investment policy statement prepared by the trustees. This policy statement must be prepared when the trustees allow investment managers discretionary powers. The statement is not required when the trustees merely obtain advice but take all investment decisions themselves. There is no prescriptive form for the statement but it should provide guidance as to how the investments should be managed. SORP 2000 also requires trustees to state their investment policy and report on the performance against this policy within their annual report. The Act also allows trustees to appoint a nominee or custodian in relation to the assets. Again any appointment must be made in writing. Any agreement with an agent, nominee or custodian must be reviewed from time to time and consider whether they are still suitable. The trustees may need to decide whether they should provide further directions to the agent or revoke the authorisation. Should the trustees fail in their duty to review the arrangement, they may become liable for any act or default of the appointed person.
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TRUSTEE ACT 2000. THE DUTY OF CARE
Whenever the duty under this subsection applies to a trustee, he must exercise such care and skill as is reasonable in the circumstances, having regard in particular: to any special knowledge or experience that he has or holds himself out as having, and if he acts as trustee in the course of a business or profession, to any special knowledge or experience that it is reasonable to expect of a person acting in the course of that kind of business or profession. In this Act the duty under subsection (1) is called "the duty of care". Schedule 1 makes provision about when the duty of care applies to a trustee.
INVESTMENT
Subject to the provisions of this Part, a trustee may make any kind of investment that he could make if he were absolutely entitled to the assets of the trust. In this Act the power under subsection (1) is called "the general power of investment". The general power of investment does not permit a trustee to make investments in land other than in loans secured on land. A person invests in a loan secured on land if he has rights under any contract under which: one person provides another with credit, and the obligation of the borrower to repay is secured on land. "Credit" includes any cash loan or other financial accommodation. "Cash" includes money in any form.
In exercising any power of investment, whether arising under this Part or otherwise, a trustee must have regard to the standard investment criteria. A trustee must from time to time review the investments of the trust and consider whether, having regard to the standard investment criteria, they should be varied. The standard investment criteria, in relation to a trust, are: (a) the suitability to the trust of investments of the same kind as any particular investment proposed to be made or retained and of that particular investment as an investment of that kind, and (b) the need for diversification of investments of the trust, in so far as is appropriate to the circumstances of the trust.
Before exercising any power of investment, whether arising under this Part or otherwise, a trustee must (unless the exception applies) obtain and consider proper advice about the way in which, having regard to the standard investment criteria, the power should be exercised. When reviewing the investments of the trust, a trustee must (unless the exception applies) obtain and consider proper advice about whether, having regard to the standard investment criteria, the investments should be varied. The exception is that a trustee need not obtain such advice if he reasonably concludes that in all the circumstances it is unnecessary or inappropriate to do so.
Proper advice is the advice of a person who is reasonably believed by the trustee to be qualified to give it by his ability in and practical experience of financial and other matters relating to the proposed investment. The general power of investment is: (a) in addition to powers conferred on trustees otherwise than by this Act, but (b) subject to any restriction or exclusion imposed by the trust instrument or by any enactment or any provision of subordinate legislation. For the purposes of this Act, an enactment or a provision of subordinate legislation is not to be regarded as being, or as being part of, a trust instrument.
In this Act "subordinate legislation" has the same meaning as in the Interpretation Act 1978. This Part applies in relation to trusts whether created before or after its commencement. No provision relating to the powers of a trustee contained in a trust instrument made before 3rd August 1961 is to be treated (for the purposes of section 6(1)(b)) as restricting or excluding the general power of investment. A provision contained in a trust instrument made before the commencement of this Part which: (a) has effect under section 3(2) of the Trustee Investments Act 1961 as a power to invest under that Act, or (b) confers power to invest under that Act, is to be treated as conferring the general power of investment on a trustee.
ACQUISITION OF LAND
A trustee may acquire freehold or leasehold land in the United Kingdom: (a) as an investment, (b) for occupation by a beneficiary, or (c) for any other reason. "Freehold or leasehold land" means: (a) in relation to England and Wales, a legal estate in land, (b) in relation to Scotland- the estate or interest of the proprietor of the dominium utile or, in the case of land not held on feudal tenure, the estate or interest of the owner, or a tenancy, and (c) in relation to Northern Ireland, a legal estate in land, including land held under a fee farm grant.
For the purpose of exercising his functions as a trustee, a trustee who acquires land under this section has all the powers of an absolute owner in relation to the land. The powers conferred by this Part are: (a) in addition to powers conferred on trustees otherwise than by this Part, but (b) subject to any restriction or exclusion imposed by the trust instrument or by any enactment or any provision of subordinate legislation.
This Part does not apply in relation to: (a) a trust of property which consists of or includes land which (despite Section 2 of the Trusts of Land and Appointment of Trustees Act 1996) is settled land, or (b) a trust to which the Universities and College Estates Act 1925 applies. Subject to subsection (1), this Part applies in relation to trusts whether created before or after its commencement.
AGENTS, NOMINEES AND CUSTODIANS
Subject to the provisions of this Part, the trustees of a trust may authorise any person to exercise any or all of their delegable functions as their agent. In the case of a trust other than a charitable trust, the trustees' delegable functions consist of any function other than: (a) any function relating to whether or in what way any assets of the trust should be distributed, (b) any power to decide whether any fees or other payment due to be made out of the trust funds should be made out of income or capital, (c) any power to appoint a person to be a trustee of the trust, or (d) any power conferred by any other enactment or the trust instrument which permits the trustees to delegate any of their functions or to appoint a person to act as a nominee or custodian.
In the case of a charitable trust, the trustees' delegable functions are: (a) any function consisting of carrying out a decision that the trustees have taken; (b) any function relating to the investment of assets subject to the trust (including, in the case of land held as an investment, managing the land and creating or disposing of an interest in the land); (c) any function relating to the raising of funds for the trust otherwise than by means of profits of a trade which is an integral part of carrying out the trust's charitable purpose; (d) any other function prescribed by an order made by the Secretary of State.
For the purposes of subsection (3)(c) a trade is an integral part of carrying out a trust's charitable purpose if, whether carried on in the United Kingdom or elsewhere, the profits are applied solely to the purposes of the trust and either: (a) the trade is exercised in the course of the actual carrying out of a primary purpose of the trust, or (b) the work in connection with the trade is mainly carried out by beneficiaries of the trust.
The power to make an order under subsection (3)(d) is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament. Subject to subsection (2), the persons whom the trustees may under section 11 authorise to exercise functions as their agent include one or more of their number.
The trustees may not authorise two (or more) persons to exercise the same function unless they are to exercise the function jointly. The trustees may not under section 11 authorise a beneficiary to exercise any function as their agent (even if the beneficiary is also a trustee).
The trustees may under section 11 authorise a person to exercise functions as their agent even though he is also appointed to act as their nominee or custodian (whether under section 16, 17 or 18 or any other power). Subject to subsections (2) and (5), a person who is authorised under section 11 to exercise a function is (whatever the terms of the agency) subject to any specific duties or restrictions attached to the function.
Linked functions etc. For example, a person who is authorised under section 11 to exercise the general power of investment is subject to the duties under section 4 in relation to that power. A person who is authorised under section 11 to exercise a power which is subject to a requirement to obtain advice is not subject to the requirement if he is the kind of person from whom it would have been proper for the trustees, in compliance with the requirement, to obtain advice. Subsections (4) and (5) apply to a trust to which section 11(1) of the Trusts of Land and Appointment of Trustees Act 1996 (duties to consult beneficiaries and give effect to their wishes) applies. The trustees may not under section 11 authorise a person to exercise any of their functions on terms that prevent them from complying with section 11(1) of the 1996 Act.
A person who is authorised under section 11 to exercise any function relating to land subject to the trust is not subject to section 11(1) of the 1996 Act. Subject to subsection (2) and sections 15(2) and 29 to 32, the trustees may authorise a person to exercise functions as their agent on such terms as to remuneration and other matters as they may determine. The trustees may not authorise a person to exercise functions as their agent on any of the terms mentioned in subsection (3) unless it is reasonably necessary for them to do so.
The terms are:(a) a term permitting the agent to appoint a substitute; (b) a term restricting the liability of the agent or his substitute to the trustees or any beneficiary; (c) a term permitting the agent to act in circumstances capable of giving rise to a conflict of interest.
The trustees may not authorise a person to exercise any of their asset management functions as their agent except by an agreement which is in or evidenced in writing. The trustees may not authorise a person to exercise any of their asset management functions as their agent unless: (a) they have prepared a statement that gives guidance as to how the functions should be exercised ("a policy statement"), and (b) the agreement under which the agent is to act includes a term to the effect that he will secure compliance with: (i) the policy statement, or (ii) if the policy statement is revised or replaced under section 22, the revised or replacement policy statement.
The trustees must formulate any guidance given in the policy statement with a view to ensuring that the functions will be exercised in
Companies Law
UK Trustee Act 2000
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This is our most popular package with UK residents, and includes:
Submission of applications that details company's executive officers
