Changes to legislation to make investments attracting trustees more logical
12/3/97 The State Government will change legislation to make the type of investments that attract trustees more logical.
12/3/97
The State Government will change legislation to make the type of investments that attract trustees more logical.
Attorney General Peter Foss said amendments to the Trustees Act 1962 would lead to greater accountability and bring Western Australian legislation in line with South Australia, Victoria and the Northern Territory.
The legislation was reintroduced in the Legislative Council tonight after it lapsed when Parliament was prorogued last year.
Under changes to the Act, the 'designated list' will be replaced with a 'prudent person' rule for authorised trustee investments.
The 'prudent person' rule required a trustee to exercise the level of care, diligence and skill that a prudent person of business would exercise in managing the affairs of other people.
Mr Foss said the 'designated list' provisions were illogical.
"Under existing legislation, Rothwells Limited met the requirements of the list while, for example, shares in the Commonwealth Bank are not authorised trustee investments," he said.
"The amendments will allow for the investment of trust funds in bodies such as Commonwealth Bank shares if the trustee considers the investment to be prudent, having regard to all appropriate circumstances.
"The legislation will also list the matters to which trustees must have regard in exercising the power of investment."
Mr Foss said the change would result in a higher standard of care for professional trustees but not disadvantage inexperienced trustees.
The 'designated list' relieved trustees from responsibility for determining whether a particular category of investment was safe while still requiring trustees to act prudently when considering a potential investment.
The 'prudent person' approach required trustees to meet an objective standard of conduct, both in deciding whether a particular category of investment was suitable and then in considering actual proposals for investment.
Media contact: Peter Harris (09) 222 9211
