Companies Act 2014 section 422

Liability of trustees for debenture holders

Section 422 deals with the liability of trustees appointed under trust deeds securing debentures, and prevents them from using contractual clauses to escape responsibility for failing to carry out their duties properly.

• Any clause in a debenture trust deed or related contract that tries to exempt a trustee from liability, or indemnify them against liability, for breach of trust due to lack of care and diligence is void
• Valid releases for past acts or omissions by a trustee are still permitted, provided they are approved by at least three-quarters in value of debenture holders voting at a properly convened meeting
• Exemption clauses that were already in force on 1 April 1964 are preserved for as long as a trustee who was entitled to their benefit at that date remains in office
• The benefit of a preserved pre-1964 exemption clause may be extended to current and future trustees by a resolution passed by at least three-quarters in value of debenture holders at a meeting called for that purpose

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