Are trading trusts getting an easy ride, Law Commission asks

The Law Commission is looking into whether the regulation of trading trusts gives enough protection to creditors and beneficiaries in circumstances of insolvency.

Submissions are due on the issues paper by 2 March 2012.

What is a trading trust?

For the purposes of the review, the Commission has defined a trading trust as a structure under which a company holds property on trust for nominated beneficiaries while holding few or no assets directly in its own right. But it is seeking feedback on what definition, if any, should be used in any new legislation.

Key themes explored in the review are:

• the risks to creditors in the current regime
• the risks to beneficiaries, and