I received an odd letter from Network Services / ACP Magazines a couple of weeks ago requesting that I provide them with a copy of the trust deed to my family trust. The letter said that this was required because of proposed Personal Property Securities Register legislation set to come into effect later this year.
I sought financial and legal advice and have been told that there is no basis within the proposed Personal Property Securities Register legislation for Network / ACP to required that I provide the trust document. The Director of the trading entity, the trustee of the trust, is responsible. On the ACP contract and other documents this responsibility is well established. Further in the email stream, after I had put the advice I had received to Network / ACP, they responded that I had to provide it under the terms of my agreement with them, citing clause 8.3. Clause 8.3 says:
(a) On request, Agent must provide ACP with all financial and other information necessary for ACP to determine Agent’s creditworthiness.
I have been advised that providing the trust deed does not go to the creditworthiness of the trustee company which is the trading entity, the entity bearing responsibility for any trading debt to ACP / Network.
There has been no change to creditworthiness of the trading company, no reason for Network / ACP to now, following years of trading, seek a copy of the trust deed.
If I do not provide the original trust deed by May 20, 2011, the person with whom I am dealing at Network / ACP has made it clear that they will stop supply to the newsagency concerned. This business turns over around $450,000 a year in magazines. That they would kill magazine supply to this business because I do not provide a copy of a thirty year old and, I contend, irrelevant document astounds me.
I would be curious to find out if other newsagents with a trust structure have received this letter.
If Network / ACP can show me where the proposed legislation requires me to provide the requested information I would gladly, as I have explained.
Mark i have recieved no such letter or email
I HAVE NOT RECEIVED ANYTHING EITHER
In the Fed Budget just this week there was something regarding family trusts.
I sometimes wonder about reasons behind such harrassment. You put people’s noses out of joint for telling the truth. Good luck on whatever your decision you make on this matter.
I assume your structure is:
Individual/s as Director/s of a Company that is Trustee for a Family Trust?
Strictly speaking then the trust would be the trading entity (with the company trustee as the legal responsible entity), the only way to prove who the trustee of a trust is is the trust deed (and any subsequent amendments changing the trustee).
Not defending their actions in any way. Just mentioning that unlike companies, there is no register of trusts, you could have 3 trusts all with the same name – and each could have different trustees.
To further clarify, I assume that ACP has a floating charge over the magazine trading stock?
Pursuant to this credit is extended to the business (trust).
Presumably they want to add their floating charge onto the new PPS Registrar, but cannot do so if they don’t know the legal entity they are dealing with. As stated above the trust is not a legal entity, and the only way to prove who the trustee is – is the trust deed.
Finally they didn’t say (in the letter) they will stop supply of stock – only they would stop supplying “credit”. You would be welcome to buy stock but you would have to pay for it up front. (at least according to the letter you scanned)
Blake, The account is in the name of the trustee. I am the sole director of this company. This has not changed since the account was opened.
While I am no lawyer or accountant, I suspect that the ACP agreement implies a floating charge.
No other supplier has required the disclosure of trust structures.
My correspondent have made very clear that action they will take if I do not provide them a copy of the trust agreement.
My issue here is one of privacy. The provisions documented in my family trust are a matter for me and the beneficiaries. They are not a matter for ACP.
The PPS legislation supercedes retention of title clauses that are currently in place for most magazine & book companies. AS Blake has said companies will need to register interests against those that they deal with and have the signatures of those that they are registering against, in the case of anyone trading with an ABN number which pertains to a trust the only way to confirm who the trustees are is by viewing the trust deeds. The penalties for not registering correctly exceed $20,000 for each incorrect entry.
oh to be the only suppier of something …. you can call all the shots ..there way or no way … they would not last one day in the real world where there is competition anyother business you would have told them where to stick there account but with these magazine companys we have no choice but to do what they say .
just had a read of the letter it is amazing that NDC /ACP seem to not know any other day of the month other than the 20th
might send them a calender
We operate under a company/ trust structure, but as a unitary (sp.) trust, not a family trust. We haven’t recieved anything from ACP. Is it only family trusts being targeted?
Think I wrote the wrong type of trust. Think its called a discretionary trust.
At this stage it is only PROPOSED LEGISLATION, I dont think ACP has any right to ask until it is law.
Shane i suppose it is a matter of who has the better poker face – are they bluffing on closing the account or do you hold your cards tight and hope for the best . i would say in most cases you will fold and do what they want . Because if they are not bluffing then they close the account it takes another 10 days to get it going again .
Shane – the pps register is already open and data is can be uploaded now onto the register. As i understand priority is given to the first person to register then the 2nd and so on so it makes sense to register now. I supply goods on credit to several local business in my area and have obtained the necessary information (including trust deeds where applicable) and signatures to register an interest on pps on the advice of my accountant. Of the 7 businesses only one refused, i have elected to cease supplying them on credit as i need to protect myself as the changes under pps will give me some protection that I didn’t previously have. Having lost money previously when a business i supplied went under I didn’t want to deal with a company who wasn’t prepared to give me the comfort I desired.
I think in this situation, given the ownership of the product involved, the nature of the relationship, the exposure and what is already known, I see no value in such an invasion of privacy as to provide the supplier with access to such a personal document. Again, my legal and CPA advice is that the request has no basis.
Is it really such a big deal? ACP can be a pain in the arse at times, granted, but I think in this case they’re just trying to follow due diligence and cover themselves.
show them who’s boss Mark (paying their bills/wages)
THIS COULD BE A GOOD TIME FOR THE ACCC
I know what I’d tell ’em…………..%-(
And they haven’t even had the decency to ask me……:-(
Richard I am told it does not alter their position given what is in the contract. I see it as a breach of privacy to provide a copy of a Family Trust document after trading with them for so many years.
Maybe i am missing something but i don’t see what the issue is in providing a piece of paperwork, unless there is something to be hidden. There are many area to be critical of Network/ACP no doubt, especially since they took on the old NDD product, I have had problems with oversupply. My advice came from a Chartered accountant and also from a lawyer ( luckily a relative works for her as I couldn’t afford to pay her hourly rates) who specialises in the field of insolvency who has written and presented lectures on the subject of PPSR who said I must obtain trust documents where necessary to ensure i was registering correctly.
Nelson, if it was just a piece of paperwork maybe. This is the family trust document. I’d note that my legal and accounting advice differs. They say that the AP contract provides ACP with excellent coverage.
Thanks for your comments though.
Mark, My advice is that the acp contract and others will in part will be rendered obsolete under ppsr in particular the retention of title clause. Under ppsr no company will have retention of title rights, companies/businessesmust register an interest
Got something to hide Mark?
I hope they do stop your supply for being such a whinger.
There is no legal basis for acp demanding this. They have discretion. I am with you mark, I will not provide my family trust document if they come knocking. It’s none of their business.
@Nelson, got to agree with you on this one. Especially when 99% of trust deeds are boilerplate documents. I’m in an accounting office and most of the time we supply “trust deeds” to banks etc most places are happy with the front page, and the “schedule” page. There is very little “private” information in the trust deed at the end of the day.
What I think most people here don’t understand is that – while you have the right not to provide this information to your supplier. They have no obligation to provide you with credit facilities if you do not.
We get clients complaining “Why do I have to give my personal tax returns to the bank, when it’s the company borrowing the money. They’re my private returns and its not their business.” Same thing, when you are the one borrowing money, you get to bend over while your financier reaches around to see what they can find.
I am an accountant and newsagent and have researched this. While I have not been served the letter mark has I would note that had I been I would not provide the trust agreement. They do not need to see this. there are other ways to prove what they need other than seeing the trust agreement. I agree with mark it is an invasion of privacy by a supplier which controls the level of our indebtedness to them. They have a bond and cut you off when you are even a few days late. So their exposure is minimal.
Blake my trust deed is by no means boilerplate.
Dont do it Mark. We have recently had to walk away from our newsagency due to poor trade and overfinanced. New owners have taken on shop and network told them it would be easier if they would agree to pay some of our outstanding bill, rather than go thru the process of a new account. How is that moral to do that to an innocent party. The debt has nothing to do with them, yet network held them to ransome until they agreed. Would not trust the bastards
Chris, so Network should supply a newsagency with a poor track record to get stiffed again.
Newsagents face similar credit risks with sub-agents, supplying many where the return on investment is questionable.
I don’t believe Network are the evil empire portrayed by many on this blog.
They are a business just like any other trying to deal with the enormous change happening in the publishing space.
darth it all depends on whether a supplier is asking an in coming newsagent to clear the debts of the previous operator. I that was happening I think there are government agencies which would be interested.
Yes mark that is what was asked in order to speed up the process of starting supply.
Chris I’d suggest that the new owners ask network for clarification and get legal advice if what you have written is as it is.
Even though a supplier may say it is easier to ‘maintain’ and account than open a new one, requesting, suggesting or requiring a new owner to settle debts of a previous owner could be problematic for the supplier.
Further to this Mark, as of today network have rung the new owner and retracted the verbal agreement, and will be credited their account. A win for the innocent party. Networks bullying tactics didnt pay off and they realised what they were asking was immoral
And illegal
Mark so what was the out come ? who folded
No outcome yet Shaun. I am still getting magazines. Network are considering my concerns regarding privacy and their need to see a 30 year old document.