There is lots to consider when investing in whisky, but nothing is more important than understanding the ownership structures in place when it comes to investing in whisky casks. You need to be sure that you, the investor, are the legal owner of the whisky cask(s) that you buy.
Whisky cask ownership is detailed in a Delivery Order. This is the documentation that is issued by a bonded warehouse or distillery to confirm who legally owns the cask.
Bonded warehouses and distilleries only issue Delivery Orders to account holders. In the main, they will only give accounts to companies or individuals with significant whisky cask holdings, who have a WOWGR licence – Warehousekeepers and Owners of Warehoused Goods Regulations.
The WOWGR licence ensures that they are dealing with accredited entities, and giving accounts to those with large holdings makes it easier to manage the administration.
So, how does an individual whisky investor get a Delivery Order from a bonded warehouse or distillery, if accounts are generally only? It is rare for an individual to get a Delivery Order, but that doesn’t mean they can’t secure legal ownership of a cask.
Whisky 1901 has a WOWGR licence and holds an account at bonded facilities. We have worked with our legal partners to create a bespoke bailment contract for our investors. The contract certifies that Whisky 1901 is managing the whisky cask on behalf of the investor, who is the legal owner. It creates a transparent and legally documented trail of ownership.
This is vital because it means that if anything ever happened to Whisky 1901, your cask would not fall into the company’s assets – it belongs to you, the investor.
It is not unusual for some brokers to provide their investors with a receipt and/or certificate of investment, but it is important to note that this doesn’t transfer ownership to the investor. In this situation, the broker is still the legal owner of the cask. If the firm were to encounter problems, you may struggle to retrieve your asset.
In contrast, Whisky 1901’s bailment contract is a common law agreement that protects investors. There are no costs to the investor and the contract carries the number of their cask and the signatures of both parties.
Investors should safeguard their contract in the same way they would look after a share certificate or property deed. In the event of it being lost or damaged, we keep a copy and another is lodged with our law firm.
Because Whisky 1901 holds the Delivery Order issued by the bonded warehouse or distillery, we are responsible for the storage fees and insurance costs attached to the cask. If investors have their own account and hold the Delivery Order in their own name, as is occasionally possible, these costs pass to the investor.
If you are thinking of investing in whisky casks, the first thing to determine is how your broker will ensure you have legally-binding ownership of the asset. The Whisky 1901 bailment contract sets out your ownership in black and white, in a legally recognised agreement.
We believe this approach is the gold standard in the market and creates clarity, certainty and security for investors.
For more information about investing in whisky safely, download our investment guide or get in touch below.
Edward Murray is a freelance financial journalist and business copywriter. Based in Edinburgh, he writes for publications and clients all over the UK.
