QS Study

Features of Trust Business Combination

Trust is the business Combination in which shareholders of the Constar tenet organizations transfer a continuing amount of their stock or shares to a board of trustees in exchange for trust certificates. The trust organization is something more than pooling of organization. A trust may be created by every person competent to contract subject to the law for the time being a force. There are certain features of trust which differentiate it from other business combination. These are:

Trust certificate: By trust certificate shareholders of a public limited company transfer their shares to the trust. It is an essential part of trust forming.

Distribution of profit: The profits achieved by the trust are distributed among the certificate holder of trust proportionately. Then the problems will be reduced to distribute profit among members.

Distribution of cost: A similar types of organizations are brought under the control of the trustee. This facilitates them to sell their products at less expense.

Vesting the voting power: In case of vesting, trust members of the public limited company have the right to vote the trustee commission as their own desire.

Separate Entity of the companies under trusty: The members of trust have the separate entity of the companies. Only the responsibility to conduct the business is given to trust.

Organization of trust: To avoid competitive in the market trust make a horizontal combination or to be self-independent in the election of industrial raw materials it form vertical business combination.

Management and administration: The function of trust management, conduction, administration, controlling activities are depending on the Board of trustee.

Liability of numbers: In this respect, trusts do not stiller from the point of view of the investors. It is a common practice to make such a provision in the contract as will ensure that neither the trustee nor the beneficiaries shall be liable for debts of the trust. In brief, none but trusts properly alone shall be looked to for satisfying debts of the organization.

 Removing intense competition: The trust is formed to remove the intense competition to each other of the related parties. Because the members are often involved in the harmful competition to each other and in this regard, the trust is formed.

Control over production: Trusts can exert much influence in the volume of production in view of its absolute control over the constituent units. As such trusts organizations are in a better position to direct product on in line with the demand. This adjustment of supply with the demand reduces abnormal ups and downs of the prices and thereby mitigates losses.

These are the main feature of trust. These features attract the shareholders of the public limited company to transfer the responsibility to conduct the business on Board of Trustee.strong