Corporate trust is a smart way for businesses and organisations to ease the burden of managing their assets and other specialised aspects of their finances such as borrowing, by entrusting the management of financial resources to an independent trust company. If your business requires raising capital through the issuing of bonds or lacks the professional resources to complete sophisticated corporate transactions, then setting up a trust for your business can be a lifesaver. In this piece, we’ll highlight how corporate services work and how they can support your business.
How do Corporate Trust Services Work?
Corporate trust services are typically offered by banks or legal firms with the primary function of managing the assets and properties belonging to a business, or other entities. In a trust agreement, the business or entity in need of trusteeship is known as the beneficiary, while the trust company that acts on behalf of the entrusted business is referred to as the trustee.
Trust companies usually have financial planners, attorneys, investment managers, certified accountants, real estate experts, and administrative personnel as key members of their staff. These professionals perform a wide range of services for clients.
Available Corporate Trust Services in Nigeria
Trust companies in Nigeria offer a variety of financial services from portfolio management to financial planning and asset management. Here is a list of the major services executed by trust companies on behalf of beneficiaries:
- Securities Trusteeship
Security trustee services are useful in corporate lending transactions, where a trusted company acts as the point of contact between the borrower and the secured creditors. In this arrangement, the trustee is engaged to manage the security interests created in favour of the lenders.
- Corporate Bonds Trusteeship
Public financing services such as bond issuance are major solutions offered by trust companies. In this contractual agreement, the trustee is given the fiduciary capacity to implement a bond on behalf of the issuing entity, repaying investors’ interest and principal payments and ensuring that the Issuer fulfils all of its duties under the Trust Deed.
- Escrow Services
In an escrow arrangement, the trust company is entrusted with custody over cash or significant paperwork for an asset on behalf of two parties that are in the process of completing a transaction. The agreement outlines the obligations of each party in the transaction and upon fulfilment, the escrow agent also known as the trustee releases the assets or funds to the parties.
- Share Trusteeship
This trust agreement is created when an organisation wishes to establish a scheme to issue a portion of its authorized share capital for the benefit of qualified workers. The trust company is entrusted with the custody of the original certificate documents of ownership of shares for each qualified worker and is responsible for vesting this title on the beneficiaries by the agreed date.
- Syndicated Loan Arrangements
Corporate trust services include arranging syndicated loan agreements where a group of lenders (referred to as a syndicate) collaborate to give cash to a single borrower. Each lender is required to offer a specific percentage of the loan and expects an agreed interest at repayment. The trust company, in this arrangement, acts as the arranger and is in charge of structuring the loan arrangement, and optionally underwriting the loan.
How Your Business Can Benefit From Corporate Trust Services
Corporate trusts offer a pool of resources that businesses can leverage to reach their financial goals and protect assets. Here are some great benefits of establishing a corporate trusteeship for your business:
- Asset preservation from creditors
- Professional administration of assets
- Tax minimization
- Business succession planning
- Financial privacy
FBNQuest – Offering Best-in-class Corporate Trust Solutions
FBNQuest offers top-rated corporate trust services across a variety of aspects from escrow and collateral services to securing assets, loan syndications, security trusteeship, bond trusteeship and much more. Visit fbnquest.com/trustees/solutions/corporate-trust/ to learn more about our corporate trust services or to request a call from our team.