A trust unit redemption is when the par value is paid back to the purchaser of the units.
Par Value is the apparent worth or face value of the unit.
The total value and amount of units will be reduced.
Redemption vs Unit Buybacks
When a trust issues units and later decides to buy some of those units back, this is considered a unit buyback rather than a redemption.
When a trust specifies that it will redeem or buy back units when the units are issued, this is considered a Redemption. Generally, a date is specified as to when the units will be redeemed at the issuance of units.
The major difference between the two is that the units bought back in a redemption are considered a security that is expected to be bought back by the issuer.
This article will demonstrate how to process the transaction when units are redeemed from a unitholder. The forms for the redemption will also need to be prepared.
|From the Main Toolbar, go to Trust.
|Select the Trust from the list.
CAS 360 will display the Redemptions screen.
|Input the date of the redemption
In the unitholder field, CAS 360 will display a list of the trust's current unitholders
|CAS 360 will automatically prefill this field if there is a beneficial owner.
In the unit type field, CAS 360 will display a list of the unit types the unitholder holds
Number of units
|Input the relevant number of units affected
Redemption Amount Per Unit
Input the amount the person will receive from the Trust for each unit redeemed
|Select the type of Redemption. Either Redeemed from company profits or Redeemed from units issue proceeds
Leave as is
Note: CAS will determine the most appropriate type of certificate for the current unit transaction. If a person is transferring or redeeming their full units, CAS will determine that NO unit certificate is required. While Balance will be selected under Certificate type by the system for a partial transfer or redemption.
|Select the meeting status of the member which will appear on the Resolutions.
CAS 360 will display the Document Production screen and automatically select the documents required:
- Trustee Minutes or Resolution
- Unitholders Minutes or Resolution
- Register of Unitholders
- Unit Certificate (depending on if there is one)