Q&As

A company holds property on behalf of a club. The shares in this company have gone astray and are held by a vast number of different people and the directors wish to recoup the shares. They wish to establish a trust to purchase and hold the shares. The directors also wish to prevent the sale of the property except to another similar club with similar aims as it is for the club's use. Is it possible to legally establish such a trust and what are the potential issues? If so, what type of trust would be most appropriate for this purpose?

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Published by a LexisNexis Private Client expert
Published on: 17 August 2021
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This Q&A has assumed that:

  1. •

    the club is a member-only unincorporated association

  2. •

    the club is not a charity

In summary, it is possible to use a trust for the purposes described in the query. The main issues will be drafting the terms of the trust in order to ensure that the trust complies with the ‘certainty of object’ principle, and reflects the wishes of club members as to a future sale of the underlying property.

With respect

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Jurisdiction(s):
United Kingdom
Key definition:
Shares definition
What does Shares mean?

The CA 2006 merely provides that a share is a share in the company's share capital. A company's share capital comprises the number of shares issued by it to investors either on or after incorporation. Those investors then become the shareholders in the company. A shareholder’s shares are their personal property. By contrast, the assets of a company are owned by the company itself. Owning shares does not entitle a shareholder to any property rights in the company's assets.

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