Delegation and Powers of Attorney

This may be an obvious one. Where trustees have a power of delegation - for example the following:

"The Trustees may engage any person as investment adviser to advise them on the investment of all or any part of the Trust Fund and they may delegate, to such adviser, discretion to manage investments on such terms as the Trustees think fit. " or

"Any trustee may…by deed,…delegate to any person …the exercise of all or any trusts, powers, duties and discretions conferred or imposed on such trustee (other than the power of delegation conferred by this clause), notwithstanding the fiduciary nature of such trusts, powers, duties and discretions. "

Would this enable the trustees to grant a power of attorney to the investment manager to sign documents relating to investments on their behalf?

It sounds obvious - in that the obstacle to trustees granting a PoA is the rule against delegation - but I have not been able to find a positive statement that power to delegate includes power to grant a PoA. Incidentally, we are trying to avoid the use of s.25 TA 1925 as it contains the 12 month limit and is more suited to the grant of powers by one trustee rather than the body as a whole.

Andrew Goodman
Osborne Clarke LLP

I suggest the answer will depend upon the documents it is proposed the investment managers might sign.

The Trustee Act 2000 provides for trustees to delegate administrative functions to agents, which includes the investment discretion, and a prescribed level of sub-delegation.

The second of the examples quoted appears to circumvent the limitation prescribed by s.25 Trustee Act 1925, although appears limited to delegation by a single trustee, rather than the trustees as a body.

Generally, where investment management is delegated, the assets are transferred into the name of the manager or its nominee. The only documents requiring the trustees’ signatures would be the investment management agreement and the transfer of assets to the manager/nominee. I do not consider it appropriate to give the manager a power of attorney to sign any of these in place of the trustees and doubt this is the aspect in mind.

If, however, the investment manager is performing an advisory role only, I can see a wish to enable them to give effect to the trustees’ instructions without the need for the necessary paperwork to be committed to the postal system, especially as, on occasion, a matter needs to be progressed promptly. I can see no reason why, technically, trustees might not grant a power of attorney to the investment advisers so they can deal with the administrative aspect of the trustees’ decisions (a bit like delegating the signing authority for a bank account to, say, 2 of 4 trustees). However, I suggest there would be benefit in using the investment manager’s nominee service in such situations, with one trustee as the “lead” contact and responsible for warranting to the manager that any instructions passed on are appropriately authorised by the trustees. If the trustees are not comfortable with the investment manager holding the assets in their own name though …

Paul Saunders

I would expect that the situation regarding delegation to an investment advisor is the same in the UK as it is in New Zealand, in that trustees must continue to exercise their duties in line with what a prudent business person would do. It should be borne in mind that even when a mandate is given to an investment advisor, the trustees still remain responsible to benchmark the performance of the investments to ensure that they are performing well.

Lee Harris

Turner Hopkins, New Zealand