Question for Lawyers/Accountants?

[centrefold]

In Oct 2003 shares were (kindly donated) transferred from Judy's name into the name of a charity called XYZ Trust.

Judy had previously given Tarzan written power of attorney to act on her behalf.

Tarzan (happens to be the principal trustee of the charity) having sort consent from Judy signs (witnessed too) the share transfer form on behalf of both Judy & the Charity.

On Oct 23 2003 he sends off the transfer form to the appopriate share transfer office called Timbuctoo Investor Services Ltd (TISL) in Jungleland.

Last Dec Tarzan received correspondence & a dividend cheque (made out to him & not the charity) from TISL.

Tarzan returns the cheque to TISL requesting that it be;

- cancelled

- reissued in the charity's name

- void of tax

- & that they amend all documentation dating back to 23 Oct 2003, showing the charity's name as the registered shareholder & not his!

In reply TISL says that they;

- banked the returned cheque as is into the charity's bank a/c.

- never received the original transfer form. Even tho their correspondence shows both Tarzan's name & the charity's

- were unaware that XYZ Trust was a charity as they had not until recently sighted it's certificate of incorpoartion

- because of s92 of the Companies Act 1993 the shares were registered in Tarzan's name with a reference to XYZ Trust

- they are now requesting that Tarzan sign a new transfer form, thus tranferring the shares from his name (which shouldn't of even been in his name in the first place) into the name of XYZ Trust.


Question:

1. is TISL request legal?




2. if it is or isn't what should he do to remedy the matter?




Thanks in advance for your feedback.



Jane

[fudosan]

Hi Jane, welcome to the forum.

I hope our accountant friends on this forum can offer you help soon. We have seveal members on this forum familiar with trusts.

Hey guys, any comments?

[centrefold]

Thanks Fudosan!

A little disappointing that no one in here is able to help!


Jane

[Julian]

Even accountants and lawyers are entitled to a little time off at Easter to spend with their families. I'm sure an answer will be forthcoming.
Julian

[masteraccountants]

Hi Tarzan and Jane,

I'm on holidays...but I'm checking my business mail so that my staff don't get too frazzled by too many queries.

The share registry is incorrect in requesting a new transfer. They have not understood that the entries to record a Trust owning shares is to record the Trustee's Name or Trustees' Names, if more than one.

This catches out a lot of people who would like to see the Trust's name on the share scrip. A Trust owes its legal existence to the Trustees. This is why the Trustees names are on the share scrip and the dividend cheque.

What to do with the cheque? Bank it in the Trust's bank account. At year end, record the dividend in the Trust's tax return. You do not include it in Tarzan's tax return.

The poor fellow has enough to do navigating the jungle on vines, watching out for poachers and the old angry lion terrorizing Jane.

[fudosan]

Hi Christopher,

Apologize this is off the topic... As discussed in another thread, would you mind confirming you are a member of the Institute of Chartered Accountants in NZ? I could not find your name on the www.icanz.co.nz website. Thanks.

[masteraccountants]

Hi Fudosan,

I have not as yet requested to change my Australian CPA registration to become a Chartered Accountant with ICANZ.

I did contact ICANZ back in 2000 and they informed me that I would have to sit for two papers. I've done one of them. I'll get around to the other paper and change my membership across - CPA is Certified Practising Accountant.

I've been slow in changing as in Australia, we were not allowed to set up Trusts as that was deemed to be legal work, and we were professional accountants.

I see that ICANZ seems to be looser about this than the ASCPA, so I need to check that I am allowed to advise on trusts and asset protection when I become a Chartered Accountant.

My staff are asking the same questions, so that they can have me as their Mentor and receive credit with ICANZ for their time with me. So I guess I am going to have to bite the bullet.

[centrefold]

Hi Chris,

Firstly sorry for the late reply!

The share registry is incorrect in requesting a new transfer.

We think so too!

They have not understood that the entries to record a Trust owning shares is to record the Trustee's Name or Trustees' Names, if more than one.

When you say they do you mean the trustees for the Trust?

This catches out a lot of people who would like to see the Trust's name on the share scrip. A Trust owes its legal existence to the Trustees. This is why the Trustees names are on the share scrip and the dividend cheque.

Um Chris XYZ Trust is a CHARITY! which means the above applies to Family or Trading Trusts only right?

What to do with the cheque? Bank it in the Trust's bank account.

I think you missed this:

In reply TISL says that they;

- banked the returned cheque as is into the charity's bank a/c.

ICANZ seems to be looser about this than the ASCPA

We think so too. Your feedback & professional opinion as an individual is much appreciated

The poor fellow has enough to do navigating the jungle on vines, watching out for poachers and the old angry lion terrorizing Jane.

Lol Chief Mabulu gave him a gold medal for honorary community service.


Jane

[masteraccountants]

Hi Jane,

They have not understood refers to the share registry people.

The Charity has been constituted as a Charitable Trust, so the same rules for Trusts apply.

Just ask the TISL share registry to reissue the cheque to you, then bank it in the Trust's bank account.

It's great to see community service recognized and rewarded.