An interest in possession trust’s sole asset is a minority shareholding in a private limited company. The settlor is the majority shareholder of the company. The beneficiaries are the settlor’s son and remoter descendants. The settlor and his wife are the Trustees.
The company is going to be sold to a third party purchaser.
The trust follows a standard format from a drafting perspective (income to son during his lifetime and subject to that as the Trustees think fit; standard overriding powers) and the administrative provisions are in line with the STEP 1st edition standard provisions.
There is no express power to sell the shares (and also no express obligation to retain them) - but the trust deed does contain the general administrative power to manage trust assets: “The Trustees may effect any transaction relating to the management or disposition of Trust Property (NB: that definition includes the shares) as if they were beneficial owners. In particular: The Trustees may repair and maintain Trust Property; The Trustees may develop or improve Trust Property.”
The Buyer’s solicitor has stated that, because there is no clear/express provision confirming that the shares can be sold, the Trustees do not have the power to sell the shares.
The Trustees claim they do have the right, pursuant to the powers outlined above.
We act for the Company and are currently in agreement with the Trustees.
Any thoughts/opinions on this view and whether the Buyer has any real cause for concern here would be appreciated.
With regards the sale, it is likely the Trustees will give ‘title and capacity’ warranties only.