Legal Dictionary of Pakistan

trust-fund doctrine

The principle that the assets of an insolvent company, including paid and unpaid subscriptions to the capital stock, are held as a trust fund to which the company's creditors may look for payment of their claims. The creditors may follow the property constituting this fund, and may use it to reduce the debts, unless it has passed into the hands of a bona fide purchaser without notice. - Also termed trust-fund theory. trust indenture See INDENTURE.