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principle and agency relationship

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBL Exams › principle and agency relationship

  • This topic has 2 replies, 2 voices, and was last updated 2 years ago by abokor.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • August 1, 2022 at 8:23 pm #662300
    abokor
    Participant
    • Topics: 82
    • Replies: 114
    • ☆☆

    Hello, hope u are well

    Are board of trustees always the principle in non for profit profit organization.

    if not, what to look to decide who is the principle.

    August 2, 2022 at 3:25 pm #662325
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10589
    • ☆☆☆☆☆

    There is no straightforward parallel between principals-agents and trusts–trustees-beneficiaries.

    In principal-agent relationships (like shareholders-directors) the principal is in control and has ownership of the property. Ultimately, the agent must take instructions from the principal and act in the principals best interests.

    In trusts, the trustees own the property and must act in accordance with the trust deed as set up by the original settlors. The beneficiaries do not act as agents; they owe no duties to the trustees and are not acting in the best interests of the trustees.

    If anything, the trustees are like the agents of the trust and can be personally liable for mistakes they make – like negligent management or disbursing sums not in accordance with the trust deed.

    August 12, 2022 at 8:34 pm #662977
    abokor
    Participant
    • Topics: 82
    • Replies: 114
    • ☆☆

    Thank u very much

  • Author
    Posts
Viewing 3 posts - 1 through 3 (of 3 total)
  • The topic ‘principle and agency relationship’ is closed to new replies.

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