Class Unit Trust
Class Unit Trust
STRUCTURE
The following parties are involved in a class unit trust:-
TRUSTEE
This entity, either one or several individuals or a company, is charged with the responsibility of administering the Trust, including investing the Trust Funds and deciding to whom the distribution of trust income is to be made. Any decisions made by the Trustee should be minuted and retained with the records of the Trust. The assets of the Trust are held in the name of the Trustee - in its capacity as Trustee for the Trust. The Trustee may resign from its role by tendering its resignation to the unit holders.
UNIT HOLDERS
The unit holders may consist of one or more entities - which may be individuals or companies. It is common (but not mandatory) for unit holders to be trustees of family trusts or superannuation funds.
CLASSES OF UNITS
In class unit trusts, there are two or more classes of units. Each class is assigned one or more rights which commonly are comprised of:- voting rights right to a fixed proportion of income distributions right to a discretionary distribution of income right to a fixed proportion of capital distributions However, other rights, and refinements of the above rights, may also be attached to different classes. For example, with voting rights, you could provide for A class units to have a voting right of one vote per unit held; whilst B class units may have a voting right of ten votes per unit held.
PARTICULAR CONSIDERATIONS
1. A particular class of unit can be issued for a specified amount per unit (eg $100 or $1,000 [or any amount] per unit). That amount may be different to the issue price for a different class of unit. For example, A class units may be issued for $1.00 per unit; whilst B class units may be issued for $1,000 per unit.
2. It is very easy to redeem units (much easier than undergoing a reduction of capital for a company). We have a detailed checklist of rights which may be attached to units and a listing of other issues which may be relevant to a class unit trust, such as mechanisms for transfer, allotment and redemption and forfeiture of units; refinements of rights to income and capital.
If this is of interest and relevance to you, please ask for that checklist.