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English Trusts Law in United Kingdom

History of Trust Deeds

When the amount borrowed by a company is large, the company commonly executes a trust deed by way of further security.

The object of such a trust deed is twofold:

  • it conveys specific property to the trustees of the deed by way of legal mortgage (the charge contained in the debentures is only an equitable security), and it further charges all the remaining assets in favour of the debenture-holders, with appropriate provisions for enabling them, in certain events similar to those expressed in the debenture conditions, to enforce the security, and for that purpose to enter into possession and carry on the business, or to sell it and distribute the proceeds;
  • it organizes the debenture-holders and constitutes in the trustees of the deed a body of experienced business men who can watch over the interests of the debenture-holders and take steps for their protection if necessary.

In particular it provides machinery for the calling of meetings of debenture-holders by the trustees, 903 and empowers a majority of (say) two-thirds or three-fourths in number and value at such meeting to bind the rest to any compromise or arrangement with the company which such majorities may deem beneficial. This is found a very useful power, and may save recourse to a scheme or arrangement first sanctioned under the machinery of the Joint Stock Companies Arrangement Act 1870 (Companies Act 1908, § 120).(1)

Resources

Notes and References

  1. Encyclopedia Britannica (1911)

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(2015, 03). English Trusts Law lawi.org.uk Retrieved 06, 2021, from https://lawi.org.uk/english-trusts-law/

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Schema Summary

  • Article Name: English Trusts Law
  • Author: MacCallum
  • Description: History of Trust Deeds When the amount borrowed by a company is large, the company commonly executes a trust deed by way of [...]

This entry was last updated: October 24, 2016

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