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Fundamental Rules to Watch When Dealing Through and with Trusts

Using trusts correctly in business transactions.

Isaac Fenyane




Trusts are being used progressively more in concluding a variety of business transactions.  Trusts are often preferred as a means of “legacy protection”.  However, there are certain fundamental rules relating to trusts which, if not observed, could render the protection sought in the use of a trust useless and may even result in serious personal liabilities for trustees.  The following are the fundamental rules which trustees and parties that transact with trusts should be wary of.

Ensure the trust is properly established

The law requires that there should be separation between the control and ownership of the trust assets on the one hand and, on the other hand, the enjoyment of all benefits of the trust assets.  As such,  one of the basic yet crucial elements in the establishment of trusts is that one person (the founder / donor) transfers from himself property (the trust assets) and place such property in sole and exclusive control and ownership of the trustees (in their capacity as such) to be administered by them for the benefit of other persons (the beneficiaries).

Most often, trusts (especially family trusts) are structured in such a way that all trustees are the also beneficiaries.  In such instances, the trust concerned would not meet the basic legal element as noted above.  Therefore, the validity of such a trust may be open to challenges by third parties and, most certainly will not withstand close scrutiny by the courts.

In order to guard against breach of the rule noted above, which is a common oversight in many family trusts, the Supreme Court of Appeal has in previous cases recommended that trust deeds should always provide for the appointment of at least one independent trustee.

Ensure trustees who act have letters of authority

Section 6(1) of the Trust Property Control Act, 1988 requires that trustees appointed after 1 March 1989 act as trustees only if authorised by the Master of the High Court (i.e. after the Master issued that trustee with a letter of authority).  It follows that if a trustee acts without the letter of authority, such acts would be invalid.

Guard against the rule of subminimum number of trustees

Most often, trust deeds set out a rule of minimum number of trustees required to be in office at any given time.  This rule requires caution for trustees and third parties alike because if the trustees are fewer than required, then unless the trust deed provides otherwise, the trust will be deemed to be legally incapacitated and thus any transactions or agreements it purports to conclude will be invalid.  In this regard, the trustees may only act for purposes of appointing an additional trustee but they will be in breach of their duties if they continue to act in any other way while they are fewer than required.

Ensure correct decision-making process was followed

It is important to ensure that decisions of a trust are taken in accordance with due process required by law and the trust deed.  A trustee may not make decisions as an individual and without regard to the input of other trustees.  This is a serious breach of the rules of the trust law and if such decisions are later challenged in court, the trust might not be bound by such decisions and the errant trustee may be held personally liable to the beneficiaries and /or the third parties for losses suffered as a result of such individual decision.

In this regard, the following rules should always be borne in mind when trustees make decisions:

  • Meetings must be properly called and qourated

All trustees must be given due notice of all trust meetings.  If one of the trustees is deliberately excluded from a meeting, the decision taken at that meeting will be open to challenge.  It is a different case if a trustee who was given notice of a meeting fails to attend a meeting.  In this regard, the requirements regarding the minimum number of trustees that should be present before a meeting can take place (the quorum requirement), as set out in the trust deed, must always be observed.

  • Round robin resolutions

If decisions are taken by way of written resolutions without a need for attendance of meetings (the so-called round robin resolutions), care should be taken to ensure that the passing of such resolutions is permitted in the trust deed and that such resolutions are taken strictly in accordance with the provisions of that trust deed.

  • Decision by majority or all trustees

Trust deeds often provide a threshold for approval of various decisions.  Some decisions may require approval by a simple majority whereas some may require the unanimous approval of all trustees.  Accordingly, trustees (and third parties dealing with trusts) should always consider the nature of the decision and the level of approval required by the relevant trust deed in order for the decision to be valid.

  • Trustees act jointly

The law requires that whenever trustees act on behalf of a trust, they should do so jointly (except if a trust deed expressly provides otherwise).  This means that although the decisions of the trust must be approved by the majority of the trustees, when implementing those decisions the trustees must act as a collective.

Put simply, resolutions for the implementation of decisions of the trust must be signed by all trustees (including those who voted against the decision).  A resolution signed by only the majority of the trustees would not be consistent with the principle of acting “jointly”.  Of course the trustees may nominate one of them as an agent of the trust in implementing a particular decision, but again such nomination must be made jointly.

Isaac Fenyane is an attorney practicing as a senior associate at Edward Nathan Sonnenbergs Inc (ENS). He specialises in corporate law, mergers and acquisitions, corporate finance and general commercial law. He has extensive experience in project managing transactions and commercial projects, negotiating and drafting various commercial agreements and advising clients on a wide range of corporate and commercial law issues. For more information visit

Business Landscape

A Look At Youth Mentorship During Global Entrepreneurship Week (GEW)

Entrepreneur: A person who sets up a business or businesses, taking on financial risks in the hope of profit.

Kristly McCarthy




Global Entrepreneurship Week kicks off from 12 November – 16 November. Around the world, entrepreneurs are carving out their paths and are taking matters into their own hands.

Back home, Futureproof wants to instil a culture of curiosity, tenacity and risk taking in every South Africa – young or old, intrapreneur or entrepreneur.

In fact, we go as far as to teach young children from the age of 8-years-old about the art of entrepreneurship as part of our countrywide school program. Most recently, the company has seen success in the Orange Farm area and is teaching 110 Grade 3’s to master the art of entrepreneurship.

To celebrate this week, the team at Futureproof interviewed several well-known entrepreneurs and asked them the big question: ‘What do you wish someone had told you before you became an entrepreneur?’ Here’s what they had to say:

Clive Murray, the founder and CEO of World Water Exchange: “Making money is easier than keeping it. Don’t change the rules you make for yourself when times get tough.”

Marc Ashton, former MD of Moneyweb and CEO of Dynamic Body Technology:

  1. Don’t start a business…
  2. If you are feeling foolish and still wan to then do it with partners.
  3. If you are doing it with partners then lay out the terms of divorce upfront.

CEO and Co-Founder, Lisa Illingworth says that Futureproof has made it their life’s mission to aid children with the real-life, hands-on skills that they need to succeed as entrepreneurs.

“Text books just don’t teach the things that entrepreneurs really need to know. So much growth and economic activity can be realised out of entrepreneurial ventures, but we are all too scared to take the leap… why? Because we don’t feel supported and we would probably prefer to stay in our comfort zones”.

Related: The Mentorship Challenge – Behind Every Great Leader Is A Great Mentor

In fact, while entrepreneurship could literally catapult our country, an article in the Daily Maverick in 2017 described entrepreneurship in South Africa as ‘Sitting backwards on a donkey riding further away’.

Issues that entrepreneurs will come to face, even in their younger years is that of funding issues, lack of mentorship and opportunities, low skill levels, compliance and of course, poor standards of education and lack of access to education.

The current structure of the education system was initially designed in an entirely different age to achieve economic outcomes that are no longer viable due, in large, to the rapid innovation and adoption of technology.

“Gearing the country up for the forth industrial revolution is proving to be a challenge in both the public and private sectors. Are we really ready and how we use this particular week of the year to relook the problems and derive opportunities from them?” says Lisa.

Lisa provides context on the issues that entrepreneurs face. “Imagine this: you have a brilliant idea but no investment. You have no clue where to begin but you take it to the banks and a few potential investors. Without a solid plan and ‘street smarts’, the deals fall through, or you jump through hoops, give away more than half of your company and land up working tirelessly with no returns. This a reality for many who really don’t know how to launch an idea, understand its feasibility and raising the capital they need through mechanisms that won’t cannabalise the business at a later point.”

Lisa says that the country remains hopeful for President Ramaphosa to implement his vision for entrepreneurship as stated in the SONA 2018. “The President stated that ‘establishment through the CEOs Initiative of a small business fund – which currently stands at R1.5-billion – is an outstanding example of the role that the private sector can play. Government is finalising a small business and innovation fund targeted at start-ups’,” she continues.

“We need to change how and what schools are teaching for this to be realised on a large scale and providing the foundations so that these kinds of funding initiatives will have the best possible chance of growth and success”.

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Business Landscape

Make Your Travel Even More Rewarding

From engineers to businessmen, hairdressers, creatives and stay-at-home-partners, the British Airways Executive Club benefits all who join.

British Airways




The British Airways Executive Club is uncomplicated, free to join on and from the moment you join, you will benefit from exclusive privileges and rewards, such as upgrades, hotel stays and car rentals with British Airways and oneworld® airline partners.

Besides collecting Avios, which can be redeemed on flights, you will also collect Tier Points every time you travel, allowing you to progress through the different Tier levels within the Club, which are Blue, Bronze, Silver and Gold.

Your Tier status will open up a world of opportunities and added benefits, such as fast track check-in, free seat selection and saving your meal preference selection as part of your Executive Club profile for future flights.

When travelling within southern Africa or internationally on British Airways, Executive Club members from Silver Tier status and up will experience a valuable and enjoyable ‘moment in time’ between checking in and boarding with lounge access into all British Airways eligible lounges. Some of these features include on-site spas, wine tasting from a monthly selection of the finest South African and international wines, a Living Library, private meeting spaces and business facilities to mention but a few.

The more Tier points you earn the sooner you will reach your next Tier status in the Club, which will result in additional benefits, such as bonus Avios, priority check-in, extra luggage allowance, access to over 170 lounges worldwide and enhanced opportunities to afford the luxury of travelling in the British Airways Club (Business Class) cabin.

Related: How I Run An International Business From A Remote Beach Town In The Eastern Cape

british-airways-foodWhen travelling in Club, priority boarding is on offer giving passengers a minute or two to reflect as they settle into the comfort of the business class seats, meaning significantly more space, which can be utilised to work on your next business pitch, read a book on your digital device or stretch out and relax before touching down.

Be welcomed with pre-drinks and a hot towel as you get seated and wait for the rest of boarding to complete as the flight embarks to your chosen destination. On-board hospitality will include a variety of delicious meals, which gets your day off to the best start or ends your trip on a tasteful note. Being an Executive Club Member, your meal preferences can be stored and offered where possible.

As part of the Executive Club you will collect Avios every time you fly and you can even top up your Avios with ease and make use of a collective balance by pooling Avios together within a household account, to reach your dream destination sooner. By calculating earnable Avios and Tier points with the simple calculator available on, an estimation can be done before booking your next flight.

Take advantage of the opportunity to redeem exclusive awards with Avios by booking reward flights, upgrade flights or spoil friends and family by gifting your Avios.

Appreciate travel more than ever before with The British Airways Executive Club. It’s designed to recognise and reward all passengers, ensuring every journey is exceptional and enjoyable.

Fly with British Airways on its extensive route network within southern Africa and beyond which includes Johannesburg, Cape Town, Durban, Port Elizabeth, Livingstone, Harare, Victoria Falls, Windhoek, Mauritius and London.

For more information and to become an Executive Club Member visit

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Business Landscape

How Schindlers Attorneys Became Involved In The Landmark Cannabis Case

Everything you accomplish accumulates and eventually comes back to assist you further along in your career. This is how a final year LLB assignment became the basis for a Constitutional Court case.

Nicole Crampton




Schindlers Attorneys are the law firm that were involved in the landmark Constitutional Court judgement on cannabis use within a private space. Paul-Michael Keichel, Partner at Schindlers Attorneys shares how they came to be the foremost legal experts on cannabis and how they became involved in the Constitutional Court case:

How the journey began

“In 2005, my first year at Rhodes University, whilst studying for Intro to Law, it occurred to me that there were strong constitutional points that could be raised to objectively justify the decriminalisation of cannabis in South Africa,” explains Paul-Michael Keichel.

“In my final year LLB, 2009, I took Constitutional Litigation as an elective (largely motivated by the creation of a timetable clash, which meant that I’d not have to sit another semester of lectures for a module that I had failed the previous year). This provided me with the opportunity to write an assignment titled “A Critical Analysis of Prince and an Objective Justification for the Decriminalisation of Marijuana in South Africa”, in which I composed my argument (based on the right to equality in our Constitution).”

Related: 7 Top Lessons You Can Learn From The US Cannabis Market

The start of the partnership

“Fast forward to 2013 and the Dagga Couple find themselves at Schindlers (where I am a first-year associate) to register their NPC, “Fields of Green for All”. The attorney handling the registration (who I’d also bored with my argument) suggests to the Dagga Couple that they speak to me. It turns out that they already knew of me, because my assignment had (unbeknownst to me) done the rounds on the underground cannabis networks. We get chatting and I rope-in my brother, Maurice Crespi, the managing partner of Schindlers,” explains Keichel.

“We are the only firm out of many approached by the Couple who are willing to take on their trial action against 7 state departments and Doctors for Life to push for a declaration of constitutional invalidity of the laws prohibiting cannabis use/possession/dealing in South Africa. We decide to run the challenge for them pro bono.”

The Cape ruling that started it all

“Prince and Acton et al have their matter heard in the Cape, which resulted in the 2017 Judgment. We run a portion of our trial (including expert evidence from international scientists and doctors – the best in field), but it is rendered part-heard. We then heard that Prince and Acton et al’s matter will be heard by the Constitutional Court in November 2017 and we decide, with the Dagga Couple, to intervene in that matter, upon which it is confirmed that my 2009 assignment forms the on-record basis of a major chunk of Prince and Acton et al’s arguments in support of legalisation.”

“Our involvement in the Constitutional Court was such that we provided clear legal argument and authority to support and expand upon what Prince and Acton et al were trying to say to the Court. Ultimately, much of what we submitted has found its way into the judgment of the Constitutional Court.”

Related: 10 Cannabis Business Opportunities You Can Start From Home

How a final assignment became the foundation for a Constitutional Court case

“So, an idea (bolstered by wanting to create a timetable clash) resulted in an assignment, which provided certain credibility and impetus to cannabis activists. Two of these activists ended up being our clients, which, despite being handled pro bono, has brought Schindlers immeasurable positive publicity, and which, ultimately, contributed to the decriminalisation (and potential future legalisation and commercialisation) of cannabis in our country.”

“Schindlers now has a dedicated “Medicinal and Recreational Cannabis Law” department, through which we will continue to make submissions to parliament, apply for licenses on behalf of our clients, support those who have been arrested and charged.”

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