COMPANY LAW 2.10 REGISTERED AND INCORPORATED TRUSTEES (INTRODUCTION)
REGISTERED/INCORPORATED TRUSTEE`
Section 590 (1) Where one or more trustees are appointed by any community of persons bound together by custom, religion, kinship or nationality or by any body or association of persons established for any religious, educational, literary, scientific, social, development, cultural, sporting or charitable purpose, he or they may, if so authorised 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. (2) 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.
Section 591 provides for the procedure for registration. Which should be accompanied by the constitution of the trust, the name of the secretary of the trust/association.
Section 591 also mandates that the name of the entity should start with “Incorporated Trustees of”…
What is a registered Trust? Set up to further a purpose which is usually of a public character. Like educational, scientific, ecclesiastical or other charitable purposes. Trustees are appointed to further the purpose.
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-Section 18.
Legal Status: Section 596: provides that 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. See NBA V Gani Fawehinmi.
Qualification to act as trustee: Section 592 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-Nestle V National Westminster Bank.
- Exercise reasonable care and prudence in administering the trust: 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[1].
- 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[2]. 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[3] In Bray V Ford[4] 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 just remuneration for the delegate-Section 603 CAMA.
- He should be reimbursed for out of pocket expenses (where he uses his own personal money)-Section 603(2b)
- A reasonable[5] fee should be paid for services rendered-Section 603(2b).
- 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 authorised 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[6]–Section 12 TA. Except the breach or wrongdoing occurred as a result of his neglect or default.
Dissolution of Trust is provided in Section 608 CAMA. The trustee can apply that the registered trust be dissolved. Not less than 50 percent of memmbers can sign that they want to dissolve. Also the CAC. Grounds for dissolution: Section 608(2). By performance, expiration of period, illegality of trust, or trust is contrary to public policy on just and equitable grounds.
[1] The duty and care which a specialist would employ.
[2] (1886) 34 Ch.D 77 at 81.
[3] 1873 24 ER 1049
[4] 1896 A.C. 44 at 51.
[5] In determining reasonableness for remuneration, the court would look what the trustee did, the skill and time required to do it, the level of compensation paid to others rendering the same services in similar foundation/organizations of similar size.
[6] This means that the trustee is accountable only for his own default and not the default of his fellow trustee or administrator.
