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TRUSTEE (AMENDMENT) BILL 1993
NEW SOUTH WALES
EXPLANATORY NOTE
(This Explanatory Note relates to this Bill as introduced into Parliament)
A trustee may invest trust funds in securities authorised by the trust deed creating the
trust or as authorised by section 14A of the Trustee Act 1925, which lists securities in
which a trustee is authorised to invest unless expressly forbidden by the trust deed.
The object of this Bill is to mend the Act to enable a trustee to make use of the
Reserve Bank Information and Transfer System (RITS) to hold or invest in securities
which the trustee is authorised to hold or invest in.
The RITS system provides a means of transferring and settling transactions in
securities. Currently the system applies only to Commonwealth Government securities.
A trustee wishing to invest in securities using the RITS system may be prevented from
doing so because the actual securities are vested in the Reserve Bank while they are held
in the system and the trustee obtains only a right (a legal chose in action) to securities of
the same description.
The Bill inserts a new section into the Act which will equate a chose in action under
the RITS system with a security of the description to which the trustee is entitled under
the chose in action. A trustee who holds or acquires such a chose in action will be
regarded as having invested in the underlying security.
The amendment will not increase the range of securities in which trustees are
authorised to invest. It merely permits a different means of investing in securities that
are authorised investments.
The new provision will apply to existing trusts as well as new trusts. It will not apply
to
trust to the extent that the trust instrument expressly forbids it.
Clause 1 specifies the short title of the proposed Act.
Clause 2 provides for the commencement of the proposed Act on a day to be
appointed by proclamation.
Clause 3 contains the amendment to the Trustee Act 1925.