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SLC Consultation Paper on Public and Charitable Trusts: Amalgamation of Functions and Common Investment Funds (CIFs)
As part of our review of trust law, which is nearing completion, it has come to our attention that certain reforms aimed specifically at trustees of public trusts and at those who manage charities may be beneficial. We therefore seek views in a short consultation paper, published today in electronic form only. A downloadable response form is also available. We would encourage early responses, if possible.
Outline of proposals
We have two broad areas for reform in mind.
The first concerns public trusts, including charitable ones. There are a good number of administrative functions, including those relating to the keeping and submitting of accounts, which absorb trustees' time and, in many cases, trust funds. In some cases, we consider that efficiency savings could be made.
What we propose is that the trustees of two or more public trusts might enter into an agreement with each other that specified administrative functions be carried out jointly, either by the trustees of one of the trusts on behalf of all the trusts, or by jointly instructing outside specialists such as accountants, or in other ways. This would be without prejudice to the continued separate existence of each of the trusts involved and the continued obligation of each of the individual bodies of trustees to respect their fiduciary duties.
The second topic relates to the way in which charitable funds can be invested. Our proposal would affect all charities, whether in the form of a trust or a company, unincorporated association, Scottish Charitable Incorporated Organisation (SCIO), etc. At present, Scottish charities can invest funds in Common Investment Funds (CIFs) or Common Deposit Funds (CDFs), which bring certain advantages, but such funds cannot be set up under Scots law. They are, though, available under English and Welsh law and Northern Irish law. We propose that this gap be filled by permitting CIFs and CDFs, whether run by Scottish fund managers or by others, to be set up under Scots law.
We seek views from all interested parties on the various proposals and questions outlined in our brief consultation paper. In view of the fact that our work on a draft report and bill is currently underway, we would welcome responses as soon as possible but we set a consultation deadline of Friday 7 September.
For more information about this and the SLC's other work in the field of trust law please see the project page.