Many trust deeds provide for ‘majority rule’ that if a decision is made by the majority of trustees and a resolution authorising the same is signed by the majority of trustees, the decision and accompanying resolution are valid.
In May 2023 this was changed when the Supreme Court of Appeal (‘SCA’) handed down a judgement stating that “a majority of the trustees may take a valid internal decision, but a valid resolution that binds a trust externally must be signed by all trustees, including the absent or the dissenting trustee.” The Court also stated that “… even if the Trust instrument stipulates that the decision can be made by the majority of trustees, all trustees are required to participate in the decision making and each has to sign the resolution”.
This will cause an administrative burden for trustees because, it means that where decisions are to be made regarding the trust and a resolution needs to be signed, this can now only be done at a meeting of all the trustees.
In summary:
a) A majority of the trustees are no longer able to make decisions without consulting the minority;
b) All trustees are to attend meetings where decisions are to be made;
c) Accurate minutes of meetings must be maintained to record the decision of each trustee;
d) Trust resolutions must be properly drafted and signed by all trustees, failing which the resolution is invalid; and
e) The trust can no longer be run by the majority of the trustees regardless of the trust deed.
Our Trust administration department is able to assist you to meet the ongoing changes and stricter measures being introduced for all trusts.
Please contact your partner or Stephanie Phillips to assist you with these changes.
