The primary purpose of this Bill is to redefine the investments in which trustees may invest trust moneys, unless expressly forbidden by the instrument (if any) creating the trust. It does not amend the general law relating to trusts, but merely that section of the law which affords guidance to trustees who, in the instrument of trust, are given no specific direction or authority regarding the investment of trust funds.
The basic statute relating to trustee investments is the Trustee Act, 1893, as amended and extended by subsequent British and Irish statutes and by the rules of the High Court and the Supreme Court. At present a wide range of statutes, and the rules of court, have to be consulted to ascertain what are trustee investments, and there is doubt about the trustee qualifications of some of the securities mentioned in the earlier British Acts. Furthermore, some investments included in the authorised trustee list are not appropriate to the circumstances of this country.
The Bill, therefore, consolidates the list of authorised trustee securities and, at the same time, amends it so as to make it more appropriate to current Irish conditions. It takes into account, where appropriate, various points raised by interested bodies, including the Central Bank, the Irish Banks Standing Committee, the Dublin and Cork Stock Exchanges, the Federation of Irish Industries, the Incorporated Law Society of Ireland, the Chief Justice, the President of the High Court and the Superior Courts Rule-making Committee.
Section 1 of the Bill contains the amended and consolidated list of authorised trustee investments. This list is, broadly, the 1893 list, as extended and varied by subsequent enactments, with the exclusion of foreign securities, other than British Government securities inscribed or registered in the State, and with the addition of certain Irish investments such as deposits in the Post Office Savings Bank and Trustee Savings Banks, certain local authority stocks and debentures or debenture stocks of certain Irish industrial and commercial companies.
Foreign securities have, in general, been excluded from the authorised list because they are outside the jurisdiction and because it is inappropriate that trustees should have statutory authority for investing trust funds outside the State, particularly when capital for domestic needs is scarce and there is an adequate range of Irish investments suitable for trust moneys. British Government securities registered or inscribed in the State have, however, been retained in the list in deference to the view expressed that their inclusion would provide a more gradual approach to the intention of the Bill and would enable trustees to avail of the convenience of a local register.
Since 1922, the nominal value of British Government securities on the Irish Register has diminished from £100,000,000 to its present figure of £40,000,000 and, as no new securities are being added, the existing securities will eventually disappear from the register. The retention of these securities in the list does not therefore involve a departure from the principle that, ultimately, foreign securities should not have trustee status.
The total nominal value of the quoted securities included in the new authorised list is about £314,000,000; this total does not cover items which are not quoted on a Stock Exchange, such as bank deposits, savings certificates and real securities. In recent years arrangements have been made to improve the marketability of governmental and certain other securities in the revised list, and I am satisfied that it will provide trustees with adequate investment outlets. If, however, this expectation is not realised, the Bill provides machinery in Section 2 whereby the list can be varied, as considered necessary from time to time. Variations will be effected by Orders which will be made after consultation with outside bodies and which will not come into effect until they have been approved by each House of the Oireachtas.
Section 3 of the Bill relates to the investment of moneys under the control of the courts. The power of the courts to add to the trustee list was provided in the 1893 Act, and, while this power was restricted by Section 13 of the Approved Investments Act, 1933, the courts were left authority to invest court moneys as they saw fit to prescribe. Given an adequate range of trustee investments specifically authorised by an Act of the Oireachtas, there is no case for a separate court list, and Section 3 of the Bill accordingly prescribes the same investment list for court moneys as for trustee funds. The section preserves, however, the existing jurisdiction of the courts to apply court moneys to the running of a family farm or business or in the purchase of securities issued on favourable terms to existing security-holders.
Section 4 enables trustees to effect redeemable bond insurance policies, and to charge the premiums against income or capital, or partly against income or partly against capital.
Section 5 contains a saver for existing trustee and court investments. Provided they comply with the present authorised list, they need not be disturbed merely because they may happen to be excluded from the new list. Previous enactments which conferred trustee status on certain investments are repealed by Section 6. Section 7 provides that the Bill will not come into operation until three months after it has been passed. This waiting period will give adequate notice to trustees with money in course of investment.