Corporate Trusteeship

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Common reasons for raising finance via a bond, is for a company to acquire funds for a particular project such as a large capital investment, an acquisition or general debt re-structuring.

A company that wishes to issue debt financing instruments will often do so by setting up a corporate trust which allows the governance of the bond to be carried out by an independent third party i.e. the Trustee
Once this type of financing is raised by a public company, it is a legal requirement that such company appoint a corporate trustee under the borrowing instruments.

In RBC Trust (Trinidad & Tobago) Limited’s role as a corporate trustee, we act as a funnel for communication between the company issuing the bond (the Borrower) and the investors who purchase the bonds (the Lenders). The Trustee therefore ensures that the terms and conditions that govern the bond are upheld or at least varied by the requisite majority where necessary, and particularly on contentious issues such as late interest payments, refinancing of the structure, release of security, early maturity dates etc.

The role of the corporate trustee therefore allows the Borrower to focus on their core day to day business, in the knowledge that the trust is being managed and administered by an experienced and neutral third party. The advantage to the Lenders and to the Borrower is that they do not have to deal with each other directly, but can contact the Trustee for information governing the bond or for impartial guidance.

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As a licensed financial institution, RBC Trust (Trinidad & Tobago) Limited can hold the collateral on behalf of investors of a bond, as security for performance of the borrower's obligations under the trust deed governing that bond.

The borrower grants a security interest in the collateral to the collateral agent, who takes all necessary administrative and enforcement actions with respect to the collateral on behalf of the investors. The structure avoids granting security separately to all lenders, which would be costly and impractical.

This service may be required for instance in private placements which are not required to have a Trustee, or sometimes in cross-jurisdictional transactions where independence between the Trustee and Collateral Agent is required.

At RBC Trust (Trinidad & Tobago) Limited the services we provide as collateral agent include:

Drafting/Vetting necessary security documentation,
Creation of security and registration of charges and necessary filings with the appropriate regulatory authorities,
Safekeeping of all the original title documents of properties/assets in accordance with the financial structure,
Acting impartially on the instructions of the Issuer, Investors, and Trustee (where applicable),
Enforcing security in the event of default.

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A Paying Agent is an agent who accepts payments from the issuer of a security/loan/debt/bond and then distributes the payments to the holders of the security/loan/debt/bond.

The Paying Agent acts on behalf of the borrower by collecting dividend, interest and principal payments in accordance with the amortization schedule. The payments are then credited to the holders of the security. The Paying Agent also maintains responsibility for the register of holders.

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An Escrow Agent holds property in trust for third parties while a transaction is finalized or a disagreement is resolved between the third parties. The Escrow Agent has a fiduciary responsibility to both parties of the escrow agreement. The funds or assets are held by the Escrow Agent until it receives the appropriate instructions or until predetermined contractual obligations have been fulfilled.

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For collective investment schemes organized as trusts, the Collective Investment Scheme Trustee is under a fiduciary duty to the holders of securities of the collective investment scheme to effectively manage the trust, and are required to exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances and at least the same degree of care as it exercises with respect to its own property of a similar kind. In addition, the Collective Investment Scheme Trustee is responsible for the supervision of the activities of all parties involved in the management and administration of the scheme.