I.   Introductory Provisions

A Derivation is the thirty-second of thirty-three (33) Administrative Elements of Trust being a form derived from another and possessing a value depending upon the underlying asset from which it was derived.

The price or value of measure or account assigned to an asset or liability within the accounts of a Trust or Estate is an example of a valid Derivation – being a form derived from the underlying value of the asset or liability.

Where a Trust or Estate has adopted an internal, indivisible and consistent unit of measure for the valuation of its assets and such a system has been applied to the Inventory of the Trust or Estate, the sum total of units of account may be defined as the Capital Stock of the Trust or Estate and an accumulated Derivation. When a monetary value per unit of Stock is applied, such a Derivation may also be classed as a Fund.

A Derivation of a series of underlying assets through a customary system such as an Inventory to produce a Capital Stock and then apply a monetary value per unit of Stock then enables the Trustees of a Trust or the Executor of an Estate to manage the obligations and debits of the Trust or Estate by offering to negotiate the settlement of such obligations or debits through money or stock, without having to surrender a complete asset disproportionate to the obligation.

In relation to the Capital Stock of a Trust or Estate as a Derivation of the underlying value of the Inventory of assets of the Trust or Estate:

(i) Authorized Capital Stock is the total number of units of measure and account calculated against the Inventory of assets of the Trust or Estate; and

(ii) Issued Capital Stock are those units of measure and account as Stock that have been allotted and subsequently held by Stockholders; and

(iii) Paid Capital Stock, also known as Outstanding Capital Stock are those units of measure and account as Stock that have been allotted and subsequently held by Stockholders in direct result of purchase by money or in lieu of specific payment in money for some good or service; and

(iv) Treasury Stock are those units of measure and account that have been returned to the Trust and Estate by Stockholders by repurchase by the Trust or Estate.