Tougher teeth for trustees
The Securities Commission has called for law changes to strengthen the powers of finance company trustees, and to help them protect investors' interests.
Friday, September 7th 2007, 6:37AM
The commission said in advice to Minister of Commerce Lianne Dalziel that trustees should have greater powers to obtain up to date and accurate information about a finance company's financial position.
"The changes we are proposing will ensure that all trust deeds provide trustees with robust powers to get the information they need to carry out their duties in the interests of investors," said commission acting chairman Colin Beyer.
Some existing trust deeds contain the proposals, which are also in the Trustee Corporations Association guidelines. However, the changes will be automatically included in all finance company trust deeds.
Under the proposed changes a finance company must:
- give to its trustee annual and half-yearly audited financial statements, monthly management accounts, and quarterly attestations by the directors on compliance with prospectus and trust deed requirements;
- advise any change in controlling shareholders, directors and senior management, and give advance notice of any major transactions;
- consult its trustee before appointing an auditor, and tell its trustee if an auditor has refused appointment or resigned.
A trustee may also appoint an additional auditor at the finance company's expense.
The commission expected to provide its formal recommendations by the end of September. Changes to the law would be made under the Securities Act 1978.
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