Practice question
A trust entity proposes investing trust funds in a debt instrument of one of its directors without specific trustor authorization or prior disclosure of the relationship. It argues the transaction is exempt merely because it is not a deposit. Which is correct under section 80?
- Every nondeposit transaction is exempt
- Trust entities owe no conflict duties
- The proposed insider transaction encounters the section’s prohibition; specific authorization and prior relationship disclosure are required for its stated exception
- The director may authorize it for every trustor
- Only the amount of cash matters
Legal references
- https://lawphil.net/statutes/repacts/ra2000/ra_8791_2000.html — RA 8791, sections 3, 4, 6 and 79–83
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