Which of the Following Is Not a Situation Where the Trustee

question 2

Multiple Choice

Which of the following is not a situation where the trustee is likely to have to account for any incidental profits?

• A) Bela received confidential information through his position as trustee that a company was about to make a substantial profit through a merger. He decided to purchase shares in the company in his personal capacity. The day before he bought the shares, the information about the merger was leaked in the national newspapers.
• B) Melanie is trustee of a trust, whose property includes a majority shareholding in Gadgets R Us Ltd. Melanie appointed herself a director of Gadgets R Us Ltd, and has been collecting a monthly fee for her services as director. There is no clause in the trust dealing with this situation.
• C) Lionel is trustee of the Morgan Property Trust, which included a lease of a market garden. The lease recently ended, and the landlord would not renew the lease for the trust. Instead, Lionel took the lease himself.
• D) Charlie is a trustee of a trust that included a pleasure boating business on the River Thames as part of its assets. Charlie won some money last year, and has set up a rival business offering pleasure boating in the same location at lower prices.

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Definitions:

Adjustable Rate

Interest rates that are variable and can change over the duration of a loan, typically in relation to an index or benchmark rate.

Contractual Obligations

Commitments that must be upheld as per the terms of a contract, ensuring all parties fulfill the agreed-upon requirements and conditions.

Liquidation

The process of winding up a company's operations, selling off its assets to pay off debts, and distributing any remaining assets to shareholders.

Treasury Stock

Shares that were once a part of the outstanding shares of a company's stock but were later repurchased by the company and are now held in the company’s treasury.