I'm Jane, Company Minuting Is So Exciting (2)

The second in a series [1st: http://trustprofessioninasia.blogspot.com/2010/05/im-steve-i-love-my-job1.html] on careers in the trust business.

This installment I focus on your Company Secretarial team. And you thought this was a trust blog. Well it is and trustees and CoSec's have a inter-related even incestuous relationship. So much so, that many CoSec's work as trustees or for trustees or work hand-in-hand.

It used to be that trusts, more correctly, the trustees, used to legally own the trust assets. The trustee would open bank accounts in their own name, register property under their own name, etc.. But a variety of factors from liability, privacy, tax, regulations and commercial practicality makes that proposition almost an alien concept these days. Instead, many if not most trust assets are legally owned by one or more limited liability vehicles which is are turn owned the trust. This means your typical trustee now must have someone on the team that understands company or LLP incorporation and administration. So do you train trust people to be CoSec or do you take CoSec people and train them in trusts? Depending on your organisation, it could be a little of both, or the departments work independently or perhaps some of the work is sub-contracted out.

Asia has one of biggest pool of Caribbean corporate knowledge outside of the Caribbean. Many of the CoSec people here are as intimate with BVI BCs (formerly IBCs) and Cayman non-resident companies as anybody. I believe Harney's has calculated that close to 50% of BVI BC/IBCs are owned by Asians. Whereas, most local CoSec are trained in local Company Law and administration, your team needs to have international CoSec expertise. They may need to know about Jersey/Guernsey companies, various US LLCs, and any of the 20-30 popular jurisdictions people dream up uses for. So if you're a locally trained CoSec and you want to learn about the rest of the world, find a trust company or "offshore incorporations" firm.

In some organisations, the CoSec people actually do more the trust administration documentation work then the so-called trust team. The CoSec team incorporates the holding company, does all the statutory filings, pays all the annual licensing/registration fees, appoints all the officers, prepares the minutes to open bank accounts, acquire/transfer assets, fill out the bank account opening documentation, certify this, certify that, etc. All the trust team may do is prepare the Trustee's resolutions.

Unfortunately, CoSec people are usually treated as transactional animals. Do the paper concerning the required transaction and no more, no less. Do not expect anyone to explain to you why you need a Delaware LLC in this case, or why we have a Mauritius GBL 1 company in another instance. Unless they also prepare Trustee's minutes, they can have a long career without even touching the trust deed. Some places even put up Chinese walls so the CoSec team knows as little about the trust they are working on.

Why I said unfortunately, is that many CoSec have the tools and technical skills to become good trustees. Professional CoSec staff are licensed/accredited professionals, trained in Company Law, which is a lot closer to Trust Law than say Tax Law. They have (or should have) an understanding of fiduciary duties and operating intra vires. Their gospel is the Company's By-Laws/M&A, ours is the Trust Deed. The operate within the Companies Ordinance, we operate within the Trustee's Ordinance, or opt out when desirable. So if you're looking for your next trust officer, instead of hiring some half-wit from a rival, consider training up your CoSec team.

Of course some trust operations are run by former CoSecs. If they have been trained in trusts then they are probably pretty good. It's the ones that have been thrust into or Shanghai'd into trusts, without proper training or supervision that worry me.

At junior levels, the work is pretty mundane and essentially preparing and filing documentation. At senior levels, the work can be pretty important and even vital as there could be much at stake if you don't get the corporate under-belly of the trust structure right.