The ten-day rolling settlement (T + 10) will be introduced on 18 July 1994 (see [1994] Gazette, 16 February, 29).

This is the first stage in the move to a new system of electronic book entry transfer for securities, known as Crest.

T+10 means that, in contrast to the present system where share deals are settled at the end of the two or three-week account period, in future all transactions have to be settled within ten working days after the transaction date.

From 18 July the new ten-day period will apply to all investors.

The settlement period is later to be further reduced to a five-day period (T+5).

The change to T+5 was timetabled to take place in January 1995 but now seems more likely to occur in July 1995.-- Practical difficulties.

Solicitors should now be considering the practical implications of the introduction of T+10 and the subsequent move to T+5.

Although we understand that it will be possible to deal for delayed settlement (ie where it is arranged in advance that the transaction will be settled more than ten days after the transaction date), failure to meet the settlement date where no delay has been agreed would mean costs penalties and even possible negligence claims against solicitors who cause their clients to settle late and incur extra costs.

Even where dealing takes place for delayed settlement, the price is likely to be adversely affected.Solicitors whose clients are selling shares will therefore need to have share certificates and stock transfer forms ready and signed, and when buying shares will need to have liquid funds available in good time for settlement to take place either by sending funds to the brokers well in advance (to allow for clearance) or by ensuring that adequate liquid funds are held on deposit by the brokers.

In practice, problems are more likely to occur on a sale where a stock transfer form needs to be signed and the share certificate located.-- Trusts.

Rolling settlement is unlikely to present insurmountable problems for individual clients.

They can, if necessary, give an appropriate power of attorney (usually an enduring power of attorney) to their solicitors.

Greater difficulties will arise in the case of trusts administered by solicitors, particularly where trustees are tardy in the performance of their duties, or are not available to sign the documentation within the time period.

If trustees have been consistently slow in the performance of trustee duties, this may be the time to suggest to them that they might step down.The trust deed should be examined to find out who has the power to appoint new trustees.

A trustee cannot normally be removed without his or her consent.

However, this can be done if there is an express power within the trust instrument, or in certain circumstances under the statutory powers contained in s.36 of the Trustee Act 1925.

These include cases where the trustee remains out of the UK for more than 12 months consecutively or refuses, or is unfit, to act or is incapable of acting.-- Trustee delegations.

Where there are several trustees who all need to sign the transfer forms, a simple change in trustees may not be enough.

A solution may be for the trustee to delegate his or her powers in relation to the shares, but this is not always possible.

It may be that in either general or specific instances the trust instrument itself authorises delegation.

Otherwise, if all the beneficiaries under a particular trust are ascertained, and are of full age and capacity, then they can authorise delegation.Trustees are authorised by s.23 of the Trustee Act to employ and pay an agent to transact business, or to do any act required to be transacted or done in the execution of the trust, without being responsible for the default of any such agent if employed in good faith.

However, this would not enable a trustee to delegate power to sign a stock transfer form.-- Powers of attorney.

S.25 of the Trustee Act 1925 (as amended by the Powers of Attorney Act 1971) provides that a trustee can delegate all his or her powers by means of a power of attorney.

under this provision, a trustee may delegate the exercise of his or her powers and duties for a period not exceeding 12 months so long as it is not to a sole co-trustee (unless the co-trustee is a trust corporation).The s.25 legislation provides certain safeguards for the beneficiaries.

Notice must be given of the grant of a power of attorney to any person who, under the trust instrument, has the power of appointing new trustees and also to the other trustees.

This means that trustees will be aware of repeated delegation.

The trustee remains liable for the acts and defaults of the attorney and powers of attorney granted under s.25 do not survive the mental incapacity of the donor.As an alternative to the s.25 legislation, an enduring power of attorney (EPA) can be granted under the Enduring Powers of Attorney Act 1985.

A donor of an EPA automatically delegates all the powers he or she has under any trust, except where he or she makes an express restriction excluding exercise of trusteeship powers.

There is no need for any notice to be given to the co-trustees or the person entitled to appoint new trustees.

Furthermore, an EPA does not lapse after 12 months.However, there is clearly a conflict between the EPA legislation and the s.25 legislation.

Although a power of attorney under s.25 of the Trustee Act cannot be an enduring power, a trustee who, before losing capacity, appoints an attorney under an EPA has created a situation where the continued exercise of trustee functions in his or her name after he or she has become incapable is possible.

Clearly, an incapable trustee cannot exercise supervision over an attorney whom he or she has appointed.

The Law Commission has therefore recommended that there should be a return to the position that individual trustees who wish to delegate their functions should be governed by s.25.

In view of this, it may currently be prudent for a trustee to grant a power of attorney under s.25 of the Trustee Act, rather than an EPA, even though it has to be renewed every 12 months.-- Pre-signed transfers.

There is, of course, always the possibility that the trustees will not want to delegate their powers to anyone else.

Another solution which has been suggested is the signing of blank stock transfers prior to a sale.

This may raise significant security problems as the pre-signed transfers coupled with the share certificate are the equivalent of bearer stock and the opportunity for fraud is obvious if the documents fall into the wrong hands.

This might be reduced by ensuring that signed stock transfer forms and certificates are never held by the same person.For example, the solicitor could hold the share certificate while circulating the stock transfer form for signature, instructing the last person to sign the form to forward it direct to the broker.

The solicitor would send the certificate to the broker only when the sale had been effected and the bargain reference entered on the transfer form.

Many trustees may, however, not be prepared to sign any transfer deed in blank.In addition, there may be some doubt as to whether a pre-signed transfer can be effective as the document is not complete in all material respects when signed by the transferors, although there is authority which suggests that such a transfer is valid as long as the instrument is not required to be a deed.-- Nominees.

An alternative which both individual clients and trustees should consider is the use of a nominee company to hold their investments.

Control is surrendered to a third party such as a bank, broker or solicitor who will be in a position to settle transactions within the required timescale.Nominee companies do have advantages for clients who are prepared to use them and brokers are likely to be more keen than ever for clients to have their investments held by a nominee.

Some brokers will now only accept new clients on this basis.

Against this, the client will generally lose direct contact with the company and will no longer receive annual accounts or voting papers and may also lose shareholders' perks such as discounts on goods or services.-- Trustees and nominees.

The use of nominees also poses further problems where shares are being held on trust.

The whole emphasis of trust law is on the trustee's essentially personal responsibility for the affairs of the trust, and the trustees cannot deposit any documents relating to the trust property with another person and cannot put trust securities in the name of another person unless authorised by statute or by the trust instrument to do so.

Whether or not s.23 of the Trustee Act allows trustees to transfer shares to a nominee company is still a matter of debate, though it is generally felt that it does not.

Modern trust deeds may contain a specific power to hold shares via nominees but if not, the terms of the trust may well need to be altered (if this is possible) to allow trustees to deposit share certificates with a nominee company.As a last resort, family trustees might also contemplate a judicious breach of trust coupled (where possible) with an indemnity from the principal beneficiaries.

This may well, for some trustees, be a better solution than having to pay costs for late settlement and may well be of more benefit to the beneficiaries.

Trustees could decide (possibly in breach of trust) to transfer the shares to a reputable nominee company in the hope that the courts would ultimately exercise their discretion under s.61 of the Trustee Act to relieve them from any personal liability for their breach of trust in the event of any loss occurring.The discretion can only be used where the trustee has acted honestly and reasonably and ought fairly to be excused for the breach of trust and for omitting to obtain the directions of the court in the matter in which he or she committed such breach.

The trustee would justify him or herself by pointing to the disadvantages that would have resulted from inability to settle bargains on time, and the remotenes s of risk.-- Charities and nominees.

Charity trustees should note that the charity commissioners can allow trustees to use nominees where the trustees are not given the appropriate powers by their governing instrument.

The trustees should apply to the commissioners for an order under s.26 of the Charities Act 1993.

This allows the commissioners to sanction an action which might otherwise not be within the powers exercisable by the charity trustees in the administration of the charity.

The order will be granted if the action proposed or contemplated in the administration of the charity is expedient in the interests of the charity, but it is not granted automatically.The charity portfolio in question should usually be over £100,000 and the number of transactions should be sufficient to justify delegation (although no number is given for this).

Also, trustees should ensure that any nominee arrangements do not go beyond the terms of the powers given to the trustees by their trust instrument or an s.26 order.A second, and possibly easier, solution for charity trustees is incorporation under s.50 of the Charities Act.

Here, the trustees would apply to the commissioners for a certificate of incorporation of the trustees as a body corporate.

The commissioners will grant such a certificate (subject to any conditions or directions they think fit to insert) so long as they consider that the incorporation of the trustees would be in the interests of the charity.

The advantage of this is that a body corporate can execute documents under seal which can thus be executed by just one person.A choice needs to be made between brokers' nominees and solicitors' nominees.

It may well be worth solicitors establishing their own nominee companies to hold their clients' investments although the Solicitors Incorporated Practice Rules will need to be complied with.

Solicitors' nominee companies which are 'recognised bodies' will be subject to the Solicitors Indemnity Rules and covered by the compensation fund but, in the case of a non-solicitor nominee company, consideration should be given to the implications of a nominee company acting fraudulently or negligently and the availability of compensation.

These issues will come under greater discussion in a later article.-- Looking ahead.

The question of nominee companies will be discussed in more detail in a later article, which will also touch on what the eventual movement to Crest will mean and how this will impact on any suggestions practitioners may make to their clients for dealing with rolling settlement.

For the moment we hope an indication has been given of the immediate problems and possible solutions for your clients following the implementation of T+10.