Legal Articles

Ensuring that a person acting on behalf of a juristic entity is authorised to do so, is important in so many ways as it makes things less complicated.

It can be a private company, a religious organisation, or a non-profit organisation. Although the Companies Act (both 1973 and 2008) made some changes to protect the interests of innocent third parties when contracting with a company, it is rewarding and convenient to ensure that functionaries acting on behalf of such entities are authorised in their actions.

Trust Property Control Act of South Africa

In terms of the Trust Property Control Act 57 of 1988 (the Act) the definition of a Trust can be paraphrased as, a design whereby a person’s ownership interest in assets is, by way of a trust instrument, put under the care, control and trust of other persons referred to as Trustees and/or beneficiaries, for the benefit of nominated beneficiaries.

Letter of Authority Trust South Africa

The Trustees will then act on behalf of the Trust and must be authorised to do so first by the Master of the High Court through issuing of the Letter of Authority as Trustee, the Trust Deed and in terms of the Trust Property Control Act 57 of 1988.

Trustees are authorised to act on behalf of the Trust and to exercise such discretion as is necessary under the circumstances, in the best interest of the Trust (and its beneficiaries). In terms of section 9 (1) of the Act, the Trustees, in the execution of their duties must act with care, skill and diligence which can reasonably be expected of someone managing the affairs of another.

The discretion mentioned above cannot be delegated to any other person except another Trustee. Therefore, an agent acting on behalf of the Trustees ought not to be exercising any discretionary authority, but rather only executing instructions on resolutions already taken by the Trustees.

On the other hand, however, Trustees may delegate discretionary authority for certain transactions or aspects on another Trustee who has equal authority. This however needs to be in writing and any such third party dealing with such delegated Trustee must request for a resolution on this. This stems from the requirement that Trustees, in administering the Trust, must act jointly.  

The Court buttressed that the decisions of the Trustees must be joint decisions, as they are in joint control of the Trust (Niewoudt And Another NNO v Vrystaat Mielies (Edms) Bpk 2004 (3) SA 486 (SCA). In this case also, the Court held that in the event that other Trustees delegate authority to act to one Trustee, such resolution must be reduced to writing and signed by all the Trustees.

Therefore, it means any such delegation of discretion and authority by the Trustees to any third party or agent, pursuant actions thereof are invalid. Agents and third parties may only execute resolutions which have already been made by the Trustees and may not act in usurpation of the Trustees authority.  

Van Deventer & Van Deventer Incorporated – Attorneys in Johannesburg and Cape Town

At Van Deventer and Van Deventer Attorneys we assist with various matters relating to Trusts. In the event that you need to register a Trust, enforce rights as a beneficiary or Trustee, kindly contact us for comprehensive assistance. We also assist in various other areas of law as provided for on our website.

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