Corporations Act 2001

CHAPTER 2L - DEBENTURES  

PART 2L.4 - TRUSTEE  

SECTION 283DA  

283DA   TRUSTEE ' S DUTIES  
The trustee of a trust deed entered into under section 283AA must:

(a) exercise reasonable diligence to ascertain whether the property of the borrower and of each guarantor that is or should be available (whether by way of security or otherwise) will be sufficient to repay the amount deposited or lent when it becomes due; and

(b) exercise reasonable diligence to ascertain whether the borrower or any guarantor has committed any breach of:

(i) the terms of the debentures; or

(ii) the provisions of the trust deed or this Chapter; and

(c) do everything in its power to ensure that the borrower or a guarantor remedies any breach known to the trustee of:

(i) any term of the debentures; or

(ii) any provision of the trust deed or this Chapter;

unless the trustee is satisfied that the breach will not materially prejudice the debenture holders ' interests or any security for the debentures; and

(d) (Repealed)

(e) notify ASIC as soon as practicable if:

(i) the borrower has not complied with section 283BE , 283BF or subsection 318(1) or (4) ; or

(ii) a guarantor has not complied with section 283CC ; and

(f) notify ASIC and the borrower as soon as practicable if the trustee discovers that it cannot be a trustee under section 283AC ; and

(g) give the debenture holders a statement explaining the effect of any proposal that the borrower submits to the debenture holders before any meeting that:

(i) the Court calls in relation to a scheme under subsection 411(1) or (1A) ; or

(ii) the trustee calls under subsection 283EB(1) ; and

(h) comply with any directions given to it at a debenture holders ' meeting referred to in section 283EA , 283EB or 283EC unless:

(i) the trustee is of the opinion that the direction is inconsistent with the terms of the debentures or the provisions of the trust deed or this Act or is otherwise objectionable; and

(ii) has either obtained, or is in the process of obtaining, an order from the Court under section 283HA setting aside or varying the direction; and

(i) apply to the Court for an order under section 283HB if the borrower requests it to do so.

Note 1: Paragraph (g) - Section 411 relates to compromises and arrangements.

Note 2: Section 283DC deals with indemnification in respect of a trustee ' s liability to the debenture holders.

SECTION 283DB   EXEMPTIONS AND INDEMNIFICATIONS OF TRUSTEE FROM LIABILITY  

283DB(1)   [ Validity of exemptions and indemnifications]  

A term of a debenture, provision of a trust deed or a term of a contract with holders of debentures secured by a trust deed, is void in so far as the term or provision would have the effect of:

(a) exempting a trustee from liability for breach of section 283DA for failure to show the degree of care and diligence required of it as trustee; or

(b) indemnifying the trustee against that liability;

unless the term or provision:

(c) releases the trustee from liability for something done or omitted to be done before the release is given; or

(d) enables a meeting of debenture holders to approve the release of the trustee from liability for something done or omitted to be done before the release is given.

283DB(2)   [ When release of trustee approved]  

For the purposes of paragraph (1)(d):

(a) a release is approved if the debenture holders who vote for the resolution hold 75% of the nominal value of the debentures held by all the debenture holders who attend the meeting and vote on the resolution; and

(b) a debenture holder attends the meeting and votes on the resolution if:

(i) they attend the meeting in person and vote on the resolution; or

(ii) if proxies are permitted - they are represented at the meeting by a proxy and the proxy votes on the resolution.

SECTION 283DC  

283DC   INDEMNITY  
The trustee is not liable for anything done or omitted to be done in accordance with a direction given to it by the debenture holders at any meeting called under section 283EA, 283EB or 283EC.