WOLVES AND LAMBS

Te Awamutu Courier, Volume 53, Issue 3830, 6 November 1936, Page 10

WOLVES AND LAMBS

"There are certain dangers which cannot be eliminated in legislation, just as there are dangers in dealing in stocks and shares, notwithstanding the drastic provisions of company law,” states the report, recently published, of the British Board of Trade Committee on investment trusts. “The Unit Trust seems to us, if properly conducted, to offer to the small investor facilities which he did not previously enjoy for acquiring a particular type of investment. We have accordingly come to the conclusion that tlie Unit Trust movement is one which should be controlled, but not. prohibited. ‘‘lf the Industrial and Provident Societies Acts are to be used as a means of registering what are, in effect, investment trust companies, or property holding companies, steps should be taken to bring the prospectus provisions of-these Acts into line with those of I lie Companies Act, 1929." Tlie chief recommendations of the committee are: Every unit trust to be registered. Management to be undertaken only by bodies incorporated in the United Kingdom. Deposit of £20,000 to be made with the Paymaster-General by the managers in respect of each trust managed by them, witli conditional exentption for existing trusts. Certificate of registrar necessary before units or sub-units are offered for sale. Trustees to be of a specified financial status. Managers not to assume any indemnity which frees them from liability for negligence, default, breach of duty, or breach of trust. The court to have power to wind up a unit trust as if it were an unregistered company. Any community of interest or connection between managers and trustees to be disclosed. Machinery to be provided for investigation by an inspector appointed by the Board of Trade into the conduct of a trust. Directors of Management company and anyone authorising tlie advertisement to be liable for loss sustained by purchaser arising from a false

statement in an advertisement, cir cular, booklet, etc. Meeting of unit (and sub-unit) holders to have powers to remove or appoint trustees, managers and' auditors; to give directions as to voting on underlying security; and to initnate investigation into conduct of trust. “Hawking of units (or sub-units) should be made a criminal offence. Substantial penalties in case of false statements made in any documents relating to unit trusts which are required to be filed.