Virginia Code 13.1-1224: Beneficial owners.
A. 1. A contribution of a beneficial owner to the business trust may be in cash, property, or services rendered, or a promissory note or other binding obligation to contribute cash or property or to perform services.
Terms Used In Virginia Code 13.1-1224
- Appraisal: A determination of property value.
- Articles of trust: includes the original articles of trust, the original certificate of trust issued by the Commission, and all amendments to the articles of trust. See Virginia Code 13.1-1201
- Beneficial owner: means any owner of a beneficial interest in a business trust, the fact of ownership to be determined and evidenced, whether by means of registration, the issuance of certificates or otherwise, in conformity to the applicable provisions of the governing instrument of the business trust. See Virginia Code 13.1-1201
- Business trust: includes , without limitation, any of the following entities that conform with subdivisions 1 and 2 of this definition:
(1) A trust of the type known at common law as a "business trust" or "Massachusetts trust";
(2) A trust qualifying as a real estate mortgage investment conduit under § 860 D of the United States Internal Revenue Code of 1986, as amended, or under any successor provision;
(3) A trust qualifying as a real estate investment trust under §§ 856 through 859 of the United States Internal Revenue Code of 1986, as amended, or under any successor provision; or
(4) A "real estate investment trust" or "trust" created under former Chapter 9 of Title 6 or former Chapter 9 of Title 6. See Virginia Code 13.1-1201
- Governing instrument: means a trust instrument that creates a business trust and provides for the governance of the affairs of the business trust and the conduct of its business, including, without limitation, a declaration of trust. See Virginia Code 13.1-1201
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: includes any individual, corporation, partnership, association, cooperative, limited liability company, trust, joint venture, government, political subdivision, or any other legal or commercial entity and any successor, representative, agent, agency, or instrumentality thereof. See Virginia Code 1-230
- Trust: includes a common law trust, business trust, and foreign business trust. See Virginia Code 13.1-1201
2. A person may become a beneficial owner of a business trust and may receive a beneficial interest in a business trust without making a contribution or being obligated to make a contribution to the business trust.
B. 1. Except as provided in the articles of trust or the governing instrument of the business trust, a beneficial owner is obligated to the business trust to perform any promise to contribute cash or property or to perform services, even if the beneficial owner is unable to perform because of death, disability, or any other reason.
2. Subject to the provisions of subdivision 3 of this subsection, if a beneficial owner does not make the required contribution of property or services, the beneficial owner is obligated at the option of the business trust to contribute cash equal to that portion of the agreed value, as stated in the records of the business trust, of the contribution that has not been made.
3. The option provided in subdivision 2 shall be in addition to, and not in lieu of, any other rights, including the right to specific performance, that the business trust may have against the beneficial owner under the governing instrument or applicable law.
C. 1. A governing instrument may provide that the interest of any beneficial owner who fails to make any contribution that the beneficial owner is obligated to make shall be subject to specific penalties for, or specified consequences of, the failure.
2. The penalty or consequence may take the form of:
a. Reducing or eliminating the defaulting beneficial owner’s proportionate interest in the business trust or subordinating the beneficial owner’s interest to that of the nondefaulting beneficial owners;
b. A forced sale of the beneficial owner’s interest;
c. A forfeiture of the beneficial owner’s interest;
d. A lending by other beneficial owners of the amount necessary to meet the defaulting beneficial owner’s commitment;
e. A fixing of the value of the defaulting beneficial owner’s interest by appraisal or by formula, and a redemption or sale of the defaulting beneficial owner’s interest at that value; or
f. Any other penalty or consequence.
D. No promise of a beneficial owner to contribute to a business trust is enforceable unless set out in a writing signed by the beneficial owner.
2002, c. 621.