Part 9: Trustees
3157.This Part is the last of eight that deal with the requirements that a SIP must meet before it is approved. This Part, which consists of paragraphs 70 to 80, deals with the requirements relating to the trustees. All SIPs must have trustees; but, in accordance with the general policy of placing the various Parts of Schedules 2 to 5 in an order displaying overall consistency, this Part is now the final Part that deals with the requirements to be met.
Paragraph 70: Requirements etc. relating to trustees: introduction
3158.This paragraph is introductory. It is new, being designed to fulfil the same purpose of introducing paragraphs in Part 9 of this Schedule as is played by other corresponding early paragraphs in each of Parts 2 to 8 of this Schedule.
3159.In Part 9 of this Schedule, there are two paragraphs that impose plan requirements that must be met, and these are listed in sub-paragraph (1). However, the majority of the paragraphs relate to the powers and duties of the trustees, and these are listed in sub-paragraph (2).
Paragraph 71: Establishment of trustees
3160.This paragraph sets out the requirements and duties that a SIP must contain regarding the establishment and duties of the trustees. The paragraph derives from paragraph 68 of Schedule 8.
3161.Sub-paragraph (1) has been reworded to make it clear that the body of trustees should consist of persons resident in the United Kingdom.
3162.Sub-paragraph (3) provides for the introduction of the term “the trust instrument”. Schedule 8 contains no formal introduction of this term, although the term is used extensively in the following paragraphs of this Part.
3163.Sub-paragraphs (5) and (6) incorporate provisions deriving from the Employee Share Schemes Act 2002.
Paragraph 72: Duty to act in accordance with participant’s directions
3164.This paragraph provides that the trust instrument must require the trustees to act in accordance with a participant’s directions.
3165.The paragraph is the first of three that derive from paragraph 71 of Schedule 8. That paragraph is lengthy; and its contents are divided up in the new legislation, to make its contents more accessible. This paragraph derives from sub-paragraphs (1) and (2) of paragraph 71.
Paragraph 73: Duty not to dispose of plan shares
3166.This paragraph provides that the trust instrument must require the trustees not to dispose of plan shares during the holding period (although this general rule is subject to certain exceptions). (The expression “the holding period” is defined in paragraph 36 of this Schedule.)
3167.The paragraph is the second of three that derive from paragraph 71 of Schedule 8. This paragraph derives from paragraph 71(3).
3168.In sub-paragraph (2), the reference to a participant ceasing to be in relevant employment is explained further in paragraph 95.
Paragraph 74: Duty to make payments to participants
3169.This paragraph provides that the trust instrument must require the trustees to make payments to participants in various specified circumstances.
3170.The paragraph is the third of three that derive from paragraph 71 of Schedule 8. This paragraph derives from paragraph 71(4).
3171.Sub-paragraph (1) reorganises the material in the first sentence of paragraph 71(4). In sub-paragraph (2)(c), the expression “PAYE obligations” is defined in paragraph 99(1) of this Schedule.
Paragraph 75: Duty to give notice of award of shares etc.
3172.This paragraph provides that the trust instrument must require the trustees to give various notices to employees. The paragraph derives from paragraph 70 of Schedule 8.
3173.Sub-paragraph (3) now has three paragraphs, as opposed to the corresponding provision in the source legislation, which had two paragraphs, one of which had two sub-paragraphs of its own. This enables sub-paragraphs (2), (3) and (4) to be brought into better alignment.
3174.Sub-paragraph (6) reproduces the definition of “foreign cash dividend” in paragraph 129(1) of Schedule 8. Although that definition is expressed to apply for the whole of Schedule 8, it is only needed for the purposes of this paragraph; and it has, accordingly, been moved.
Paragraph 76: Power of trustees to borrow
3175.This paragraph states that the trust instrument may provide the trustees with powers to borrow. The paragraph derives from paragraph 69 of Schedule 8.
Paragraph 77: Power of trustees to raise funds to subscribe for rights issue
3176.This paragraph gives the trustees powers to deal with rights arising under a rights issue. The paragraph derives from paragraph 72(1) of Schedule 8; and it gives a separate sub-paragraph to each sentence in that earlier provision.
3177.The expression “rights arising under a rights issue”, the subject of paragraph 72(2) of Schedule 8, occurs in more than one place; and, accordingly, has now been defined for the purposes of the SIP code generally (in paragraph 99(1) of this Schedule).
Paragraph 78: Acquisition by trustees of shares from employee share ownership trust
3178.This paragraph contains provisions that apply where the SIP acquires shares from an employee share ownership trust. The paragraph derives from paragraph 76 of Schedule 8.
3179.Sub-paragraph (2) is now organised slightly differently; and sub-paragraph (2)(a) contains additional words explaining the reference to “relevant shares”, a term left unexplained in the source legislation. See Note 65(C) in Annex 2.
Paragraph 79: Meeting by trustees of PAYE obligations
3180.This paragraph sets out the requirement that the SIP must make provision to ensure that trustees meet their PAYE obligations. The paragraph derives from paragraph 73 of Schedule 8.
3181.The title to this paragraph has been amended to include a reference to the trustees.
3182.Sub-paragraph (1) now has three paragraphs, as opposed to the corresponding provision in the source legislation, which had two paragraphs, one of which had two sub-paragraphs of its own.
3183.Sub-paragraph (4) is explanatory only; but is retained in order to assist the reader.
Paragraph 80: Other duties of trustees in relation to tax liabilities
3184.This paragraph provides that the trust instrument must set out other duties of trustees in relation to tax liabilities.
3185.The paragraph derives from paragraph 75 of Schedule 8 (in sub-paragraphs (1) to (3)) and paragraph 90 of Schedule 8 (in sub-paragraph (4)).
3186.The material in this paragraph has now been arranged rather differently and in particular the two duties placed on the trustees by the trust instrument have now been separated to become sub-paragraphs (1) and (3).
3187.Sub-paragraphs (4) and (5) deal with administrative matters and derive from provisions in paragraphs 90, 92 and 93 of Schedule 8.
