13.1-1224 - Beneficial owners. - Virginia Statutes

§ 13.1-1224. Beneficial owners.

A. 1. A contribution of a beneficial owner to the business trust may be incash, property, or services rendered, or a promissory note or other bindingobligation to contribute cash or property or to perform services.

2. A person may become a beneficial owner of a business trust and may receivea beneficial interest in a business trust without making a contribution orbeing obligated to make a contribution to the business trust.

B. 1. Except as provided in the articles of trust or the governing instrumentof the business trust, a beneficial owner is obligated to the business trustto 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 abeneficial owner does not make the required contribution of property orservices, the beneficial owner is obligated at the option of the businesstrust to contribute cash equal to that portion of the agreed value, as statedin the records of the business trust, of the contribution that has not beenmade.

3. The option provided in subdivision 2 shall be in addition to, and not inlieu of, any other rights, including the right to specific performance, thatthe business trust may have against the beneficial owner under the governinginstrument or applicable law.

C. 1. A governing instrument may provide that the interest of any beneficialowner who fails to make any contribution that the beneficial owner isobligated to make shall be subject to specific penalties for, or specifiedconsequences of, the failure.

2. The penalty or consequence may take the form of:

a. Reducing or eliminating the defaulting beneficial owner's proportionateinterest in the business trust or subordinating the beneficial owner'sinterest 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 thedefaulting beneficial owner's commitment;

e. A fixing of the value of the defaulting beneficial owner's interest byappraisal or by formula, and a redemption or sale of the defaultingbeneficial 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 isenforceable unless set out in a writing signed by the beneficial owner.

(2002, c. 621.)