Funds Investing

By now, the law must have developed a distinct body of company law. The fact that two institutions have the same origin should not per se lead to the conclusion that the same body of principles applies. Brothers, despite their common parents, are not twins automatically. Directors’ duties, despite their origin in the trust, are not trustees’ duties. Latham CJ stated that ‘the power [to alter articles] must be exercised bona fide for the benefit of the company as a whole‘. Malcom CJ said: ‘It cannot be said that the alteration was made otherwise than bona fide for the benefit of the unitholders as a whole.’ The apparent similarity of these two formulations is deceptive. If the unitholders are not associating, as Smith v. Anderson has suggested, is it right to look at all unitholders as a whole? Read the rest of this entry »

Under section 83 of the Financial Services Act 1986, a manager of an authorized unit trust is not permitted to engage in activities other than acting as a manager of a unit trust, an open-ended investment company, a `body corporate whose business consists of investing its funds with the aim of spreading investment risk and giving its members the benefit of the results of the management of its funds‘,” or a collective investment scheme. The Act does not restrict the activities of the trustee of a unit trust and its position is governed by equitable principles above discussed.

As noted earlier, dealing in units is the contractual right of the manager. Any gain by the manager from issuing and redeeming units is not a secret profit and therefore is not accountable to anyone. This is the position of the manager of an authorized unit trust if it discloses prominently in the scheme particulars a statement to this effect. Read the rest of this entry »