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District of Columbia Code Division V. Local Business Affairs § 29-1206.03. Contribution by beneficial owner.

Current as of January 01, 2024 | Updated by Findlaw Staff

(a) A contribution of a beneficial owner to a statutory trust may consist of property transferred, services performed, or another benefit provided to the statutory trust, or an agreement to transfer property, perform services, or provide another benefit. A person may become a beneficial owner of a statutory trust and may receive a beneficial interest in a statutory trust without making a contribution or being obligated to make a contribution to the trust.

(b) A person's obligation to contribute money or other property or other benefit to, or to perform services for, a statutory trust is not excused by the person's death, disability, or other inability to perform the person's obligations personally. If a person does not fulfill an obligation to make a contribution, other than a monetary contribution, the person is obligated at the option of the trustee to contribute money equal to the value of the part of the contribution which has not been made.

(c) The governing instrument may provide that a beneficial owner that fails to make a required contribution, or comply with the terms and conditions of the governing instrument, shall be subject to specified penalties for or consequences of the failure, including:

(1) Reduction or elimination of the defaulting beneficial owner's proportionate interest in the statutory trust or series thereof;

(2) Subordination of the defaulting beneficial owner's beneficial interest to that of nondefaulting beneficial owners;

(3) Forced sale or forfeiture of the defaulting beneficial owner's beneficial interest;

(4) Imposition of an obligation to repay a loan to the statutory trust by another beneficial owner of the amount necessary to meet the defaulting beneficial owner's commitment;

(5) Redemption or sale of the defaulting beneficial owner's beneficial interest at a value fixed by appraisal or by formula; and

(6) Specific performance of an obligation under the governing instrument.

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Cite this article: FindLaw.com - District of Columbia Code Division V. Local Business Affairs § 29-1206.03. Contribution by beneficial owner. - last updated January 01, 2024 | https://codes.findlaw.com/dc/division-v-local-business-affairs/dc-code-sect-29-1206-03/

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