Australian Capital Territory Numbered Acts Australian Capital Territory Numbered ActsSections 14, 15 and 16 of the Principal Act are repealed and the following sections substituted:
“14. Powers of investment
A trustee may, unless expressly forbidden by the instrument (if any) creating the trust—
(a) invest trust funds in any form of investment; and
(b) vary an investment at any time.
“14A. Duties of trustee in relation to powers of investment
“(1) This section has effect subject to the instrument (if any) creating the trust.
“(2) A trustee shall, in exercising a power of investment—
(a) if the trustee's profession, business or employment is or includes acting as a trustee or investing money on behalf of other persons—exercise the care, diligence and skill that a prudent person engaged in that profession, business or employment would exercise in managing the affairs of other persons; or
(b) if the trustee is not engaged in such a profession, business or employment—exercise the care, diligence and skill that a prudent person would exercise in managing the affairs of other persons.
“(3) A trustee shall exercise a power of investment in accordance with any provision of the instrument (if any) creating the trust that is binding on the trustee and requires the trustee to obtain a consent or approval in relation to trust investments.
“(4) A trustee shall, at least once a year, review the performance (individually and as a whole) of trust investments.
“14B. Law and equity preserved
“(1) Any rule or principle of law or equity that imposes a duty on a trustee exercising a power of investment continues to apply except to the extent that it is inconsistent with this or any other Act or with the instrument (if any) creating the trust.
“(2) A duty mentioned in subsection (1) includes the following:
(a) a duty to exercise the powers of a trustee in the best interests of all present and future beneficiaries of the trust;
(b) a duty to invest trust funds in investments that are not speculative or hazardous;
(c) a duty to act impartially towards beneficiaries and different classes of beneficiaries;
(d) a duty to take advice.
“(3) If a provision in an instrument creating a trust purports to exempt, indemnify or limit the liability of a trustee in relation to a breach of trust, any rule or principle of law or equity that relates to the provision continues to apply.
“(4) If a trustee is under a duty to take advice, the reasonable costs of obtaining the advice are payable out of trust funds.
“14C. Exercise of power of investment
“(1) Without limiting the matters that a trustee may take into account when exercising a power of investment, a trustee shall, so far as they are appropriate to the circumstances of the trust (if any), have regard to the following matters:
(a) the purposes of the trust and the needs and circumstances of the beneficiaries;
(b) the desirability of diversifying trust investments;
(c) the nature of, and the risk associated with, existing trust investments and other trust property;
(d) the need to maintain the real value of the capital or income of the trust;
(e) the risk of capital or income loss or depreciation;
(f) the potential for capital appreciation;
(g) the likely income return and the timing of income return;
(h) the length of the term of the proposed investment;
(i) the probable duration of the trust;
(j) the liquidity and marketability of the proposed investment during, and at the end of, the term of the proposed investment;
(k) the aggregate value of the trust estate;
(l) the effect of the proposed investment in relation to the tax liability of the trust;
(m) the likelihood of inflation affecting the value of the proposed investment or other trust property;
(n) the costs (including commissions, fees, charges and duties payable) of making the proposed investment;
(o) the results of a review of existing trust investments.
“(2) A trustee may, having regard to the size and nature of the trust—
(a) obtain and consider independent and impartial advice reasonably required for the investment of trust funds or the management of the investment from a person whom the trustee reasonably believes to be competent to give the advice; and
(b) pay out of trust funds the reasonable costs of obtaining the advice.
“(3) A trustee shall comply with this section unless expressly forbidden by the instrument (if any) creating the trust.
“14D. Powers of trustee in relation to securities
“(1) If securities of a body corporate are subject to a trust, the trustee may concur, in the same way as if the trustee were beneficially entitled to the securities, in any scheme or arrangement—
(a) for or arising out of the reconstruction, reduction of capital or liquidation of, or the issue of shares by, the body corporate;
(b) for the sale of all or part of the property and undertaking of the body corporate to another body corporate;
(c) for the acquisition of securities of the body corporate, or of control of the body corporate, by another body corporate;
(d) for the amalgamation of the body corporate with another body corporate; or
(e) for the release, modification or variation of rights, privileges or liabilities attached to all or any of the securities.
“(2) The trustee may accept instead of, or in exchange for, the securities subject to the trust securities of any denomination or description of another body corporate party to the scheme or arrangement.
“(3) If a conditional or preferential right to subscribe for securities in a body corporate is offered to a trustee in relation to a holding in the body corporate or another body corporate, the trustee may, for all or any of the securities—
(a) exercise the right and apply capital money subject to the trust in payment of the consideration;
(b) assign to any person, including a beneficiary under the trust, the benefit of the right, or the title to the right, for the best consideration that can be reasonably obtained; or
(c) renounce the right.
“(4) A trustee accepting or subscribing for securities under this section is, for the purposes of any provision of this Division, exercising a power of investment.
“(5) A trustee may keep securities accepted or subscribed for under this section for any period for which the trustee could properly have kept the original securities.
“(6) The consideration for an assignment made under paragraph (3) (b) is to be held as capital of the trust.
“(7) This section applies in relation to securities subject to the instrument (if any) creating the trust.
“14E. Power to buy house as residence for beneficiary
“(1) Without limiting section 14C and subject to the instrument (if any) creating the trust, a trustee may—
(a) buy a house for a beneficiary to use as a residence; or
(b) enter into any other agreement or arrangement to secure for a beneficiary a right to use a house as a residence.
“(2) Despite the terms of the instrument (if any) creating the trust, a trustee may keep, as part of the trust property, a house for a beneficiary to use as a residence if to do so would not unfairly prejudice the interests of other beneficiaries.
“(3) If a house is bought, kept or otherwise secured for use by a beneficiary as a residence, the house may be made available to the beneficiary on the terms, consistent with the trust and the beneficiary's interest in the trust, that the trustee considers appropriate.
“(4) The trustee may keep a house, or any interest or rights in relation to a house, secured for use by a beneficiary under this section after the beneficiary's use of the house as a residence has finished.
“(5) In this section—
(a) any building or part of a building designed, or converted or capable of being converted, for use as a residence; and
(b) any amenities or facilities for use in association with the use of a house.
“14F. Investment in securities under RITS system
“(1) A chose in action arising under the RITS system that entitles its holder to a security of a particular description (the ‘underlying security') is, for this Act and the instrument creating a trust, taken to be the same in all respects as the underlying security.
Note A chose in action is an intangible personal property right recognised and protected by the law. Examples include debts, money held at a bank, shares, rights under a trust, copyright, and the right to sue for breach of contract.
“(2) Accordingly, the holding or acquisition by a trustee of such a chose in action is to be regarded as an investment by the trustee in the underlying security.
“(3) It does not matter that the right conferred by the chose in action is a right in relation to securities of a particular description and not in relation to particular securities.
“(4) This section applies only to the extent that the instrument creating the trust does not expressly forbid its application.
“(5) In this section—