ARRANGEMENT OF SECTIONS
1. Short title
2. Interpretation and trust corporation
3. Application of Act
4. Powers of investment of trustees
5. Restrictions on wider range investment
6. How proper advice to be obtained and given and responsibility of trust corporation for advice
7. Relationship between Act and other powers of investment
8. Duty of trustees in choosing and retaining investments
9. Purchase at a premium of redeemable stocks; change of character of investment
10. Discretion of trustees
11. Power to retain investment which has ceased to be authorized
12. Enlargement of powers of investment
13. Investment in bearer securities
14. Loans and investments by trustees not chargeable as breaches of trust
15. Liability for loss by reason of improper investment
16. Powers supplementary to powers of trustees
17. Power to deposit money at bank and to pay calls
18. Trust property and trust funds
19. Saving for powers of Court
20. Powers of Minister to amend Schedule
GENERAL POWERS OF TRUSTEES AND PERSONAL REPRESENTATIVES
21. Power of trustees for sale to sell by auction, etc.
22. Power to sell subject to depreciatory conditions
23. Power of trustees to give receipts
24. Power to compound liabilities
25. Power to raise money by sale, mortgage, etc.
26. Protection to purchaser and morgagees dealing with trustees
27. Devolution of powers or trusts
28. Power to insure
29. Application of insurance money where policy kept up under any trust, power or obligation
30. Deposit of documents for safe custody
31. Reversionary interests, valuations and audit
32. Power to employ agents
33. Power to concur with others
34. Power to delegate trusts during absence abroad
35. Power for trust corporations to act jointly as trustees and hold property as joint tenants
36. Protection against liability in respect of rents and convenants
37. Protection by means of advertisements
38. Protection in regard to notice
39. Exoneration of trustees in respect of certain powers of attorney
40. Implied indemnity of trustees
Maintenance, Advancement and Protective Trusts
41. Power to apply income for maintenance and to accumulate surplus income during a minority
42. Power of advancement
43. Protective trusts
APPOINTMENT AND DISCHARGE OF TRUSTEES
44. Limitation of the number of trustees
45. Appointments of trustees of settlements and dispositions on trust for sale of land
46. Power of appointing new or additional trustees
47. Supplemental provisions as to appointment of trustees
48. Evidence as to a vacancy in a trust
49. Retirement of trustee without a new appointment
50. Vesting of trust property in new or continuing trustees
POWERS OF THE COURT
Appointment of new Trustees
51. Power of Court to appoint new trustees
52. Power to authorize remuneration
53. Powers of new trustee appointed by the Court
54. Vesting orders of land
55. Orders as to contingent rights of unborn persons
56. Vesting order in place of conveyance by minor mortgagee
57. Vesting order consequential on order for sale or mortgage of land
58. Vesting order consequential on judgment for specific performance, etc.
59. Effect of vesting order
60. Power to appoint person to convey
61. Vesting orders as to stock and things in action
62. Vesting orders of charity property
63. Vesting orders in relation to minor’s beneficial interests
64. Orders made upon certain allegations to be conclusive evidence
Jurisdiction to make other Orders
65. Power of Court to authorize dealings with trust property
66. Persons entitled to apply for orders
67. Power to give judgment in absence of a trustee
68. Power to charge costs on trust estate
69. Power to relieve trustee from personal liability
70. Power to make beneficiary indemnify for breach of trust
71. Power to vary trusts
Payment into Court
72. Payment into Court by trustees
73. Application of Act to Settled Land Act trustees
74. Trust estates not affected by trustee becoming subject to forfeiture
75. Indemnity to banks, etc.
76. Rules of court
77. Act binding on Government
78. Saving and consequential provision
24 of 1967
An Act relating to Trusts and Trustees
[10TH NOVEMBER 1967]
This Act may be cited as the Trustee Act.
(1) In this Act except where the context otherwise requires—
“authorized investments” means investments authorized by the instrument, if any, creating the trust for the investment of money subject to the trust, or by law;
“bank” means a commercial bank registered under the Banking Act;
“capital money” has the meaning assigned to that expression in the Settled Land Acts, 1882 to 1890, of the United Kingdom;
“contingent right” as applied to land includes a contingent or executory interest, a possibility coupled with an interest, whether the object of the gift or limitation of the interest or possibility is or is not ascertained also a right of entry, whether immediate or future, and whether vested or contingent;
“convey” and “conveyance” as applied to any person include the execution by that person of every necessary or suitable assurance (including an assent) for conveying, assigning, appointing, surrendering, or otherwise transferring or disposing of land whereof he is seized or possessed, or wherein he is entitled to a contingent right, either for his whole estate or for any less estate, together with the performance of all formalities required by law for the validity of the conveyance;
“Court” means the High Court or a judge thereof;
“land” includes land of any tenure, and mines and minerals, whether or not severed from the surface, buildings or parts of buildings, and other corporeal hereditaments; also a rent and other incorporeal hereditaments, and an easement, right, privilege, or benefit in, over, or derived from land, but not an undivided share in land; and in this definition “mines” and “minerals” include any strata or seam of minerals or substances in or under any land, and powers of working and getting the same, but not an undivided share thereof;
“mortgage” includes a charge registered under the Registered Land Act;
“pay” and “payment” as applied in relation to stocks and securities and in connexion with the expression “into Court” include the deposit or transfer of the same in or into Court;
“personal representative” means the executor, original or by representation, or administrator for the time being of a deceased person;
“possession” includes receipt of rents and profits or the right to receive the same, if any; and “possessed” applies to receipt of income of and to any vested estate less than a life interest in possession or in expectancy in any land;
“property” includes real, chattel-real and personal property, and any estate, share or interest in any property, real, chattel-real or personal, and any debt, money, chose in action or any other legal or equitable right or interest:
Provided that it does not include a future interest, whether vested or contingent, but the falling into possession of such an interest, or the receipt of the proceeds of the sale thereof, shall be treated for the purposes of this Act as an accrual of property to the trust fund;
“tenant for life” means a tenant for life under a will, settlement or other instrument,
“transfer” in relation to stock or securities includes the performance and execution of every deed, power of attorney, act and thing on the part of the transferor to effect and complete the title in the transferee;
“trust” does not include the duties incident to an estate conveyed by way of mortgage, but, with this exception, the expressions “trust” and “trustee” extend to implied and constructive trusts, and to cases where the trustee has a beneficial interest in the trust property, and to the duties incident to the office of a personal representative, and “trustee” where the context admits, includes a personal representative, and “new trust” includes an additional trustee;
“trust corporation” means a corporation or company
(a) carrying on business in Malawi as a commercial bank registered as such under the Banking Act; or
(b) approved for the time being under subsection (2), and includes the Administrator General;
“trust for sale” in relation to land means an immediate binding trust for sale, whether or not exercisable at the request or with the consent of any person, and with or without power at discretion to postpone the sale; “trustees for sale” means the persons (including a personal representative) holding land on trust for sale.
(2) The Minister responsible for Finance may approve as a trust corporation any corporation or company, empowered by its memorandum of association or other instrument constituting it to undertake trusts, if he is satisfied that it has financial resources sufficient to ensure the probability that all claims against it arising out of its trust business will be met. As a condition of such approval such Minister may require the deposit of security with the Secretary to the Treasury, and may, as a condition of continuing approval, require such security to be increased from time to time.
(1) This Act, except where otherwise expressly provided, shall apply to trusts including, so far as this Act applies thereto, executorships and administratorships constituted or created either before or after the commencement of this Act.
(2) The powers conferred by this Act on trustees shall be in addition to the powers conferred by the instrument, if any, creating the trust, but those powers, unless otherwise stated, shall apply if and so far only as a contrary intention is not expressed in the instrument, if any, creating the trust, and shall have effect subject to the terms of that instrument.
(3) This Act shall not affect the legality or validity of anything done before the commencement of this Act, except as otherwise hereinafter expressly provided.
(1) Subject to section 5 (2), a trustee may invest any property in his hands, whether at the time in a state of investment or not, in any manner specified in Part I or II of the Schedule and may also from time to time vary any such investments.
(2) No provision relating to the powers of the trustee contained in any instrument (not being a written law or an instrument made under a written law) made before the coming into operation of this Act shall limit the powers conferred by this section but those powers are exercisable only in so far as a contrary intention is not expressed in any written law or instrument made under a written law and so relating or in any other instrument so relating which is made after the coming into operation of this Act.
(1) In this Act “narrower range investment” means an investment falling within Part I of the Schedule and “wider range investment” means an investment falling within Part II of the Schedule.
(2) A trustee not being a trust corporation shall not have power by virtue of section 4 to make a wider range investment unless before so doing he has obtained and considered proper advice on the question whether the investment is satisfactory having regard to the matters mentioned in section 8.
(1) A trustee who desires to make or retain a wider range investment may request a trust corporation to provide proper advice. Such request shall be accompanied by adequate particulars of the trusts on which the trust property is held and of the existing state of investment of such trust property.
(2) A trust corporation which receives a request for proper advice under this section may itself give such advice or may seek the advice of a suitable expert in or outside Malawi.
(3) The advice of the trust corporation and the advice of the expert selected by the trust corporation obtained in response to a request made in accordance with subsection (1) shall be deemed to be proper advice for the purposes of this section, if given or confirmed in writing.
(4) A trust corporation shall not be responsible for any loss which may result to the trust property by reason of the advice furnished under subsection (3)—
(a) if the advice was given in good faith; and
(b) where advice is furnished by an expert, if the person furnishing such advice was an expert of good repute at the time when the trust corporation applied to him for advice.
(1) The powers conferred by section 4 are in addition to and not in derogation from any other power of investment or postponing conversion exercisable by a trustee (hereinafter referred to as a “special power”).
(2) Any special power (however expressed) to invest property in any investment for the time being authorized by law for the investment of trust property, being a power conferred on a trustee before the passing of this Act or conferred on him under any written law passed or made before the commencement of this Act, shall have effect as a power to invest property in like manner and subject to the like provisions as under sections 4 and 5.
(1) In the exercise of his powers of investment a trustee shall have regard—
(a) to the need for diversification of investments of the trust, in so far as is appropriate to the circumstances of the trust;
(b) to the suitability to the trust of investments of the description of investment proposed and of the investment proposed as an investment of that description.
(2) A trustee retaining any wider range investment made in the exercise of a power of investment conferred by this Act shall determine at what intervals the circumstances, and in particular the nature of the investment, make it desirable to obtain advice under section 6, and shall obtain and consider such advice accordingly.
(1) A trustee may, under the powers of this Act, invest in any of the securities mentioned or referred to in section 4 (1), notwithstanding that the same may be redeemable, and that the price exceeds the redemption value.
(2) A trustee may retain until redemption any redeemable stock, fund or security which may have been purchased in accordance with the powers conferred by this Act, or any written law replaced by this Act.
Every power conferred by section 4 and section 9 shall be exercised according to the discretion of the trustee, but subject to any consent or direction required by the instrument, if any, creating the trust or by law with respect to the investment of the trust funds. A trustee may consider advice other than advice received from a trust company.
A trustee shall not be liable for breach of trust by reason only of his continuing to hold an investment which has ceased to be an investment authorized by the trust instrument or by the general law.
(1) A trustee having power to invest in freehold securities may invest and shall be deemed always to have had power to invest on mortgage of property held for an unexpired term of not less than forty years, and not subject to a reservation of rent greater than four per centum of the unimproved value thereof, or to any right of redemption or to any condition for re-entry, except for non-payment of rent.
(2) A trustee having power to invest in freehold securities may accept the security in the form of a registered charge under the Registered Land Act.
(3) Land purchased in exercise of the power of investment conferred by section 4 shall be held upon trust for sale. Land may be so purchased whether or not other land remains in the trust and notwithstanding that the property invested in the purchase comprises wholly or in part the proceeds of the sale of a similar investment or of other land held upon trust for sale.
(4) Trust funds shall not be employed in executing any improvement authorized by law on, or in connection with, or for the benefit of, any land held upon trust for sale unless the trustee has obtained and considered proper advice obtained in accordance with section 6.
(1) A trustee may, unless expressly prohibited by the instrument creating the trust, retain or invest in securities payable to bearer which, if not so payable, would have been authorized investments:
Provided that securities to bearer retained or taken as an investment by a trustee (not being a trust corporation) shall, until sold, be deposited by him for safe custody and collection of income with a bank.
(2) A direction that investments shall be retained or made in the name of a trustee shall not, for the purposes of subsection (1), be deemed to be such an express prohibition as aforesaid.
(3) A trustee shall not be responsible for any loss incurred by reason of such deposit, and any sum payable in respect of such deposit and collecting shall be paid out of the income of the trust property.
(1) A trustee lending money on the security of any property on which he can properly lend shall not be chargeable with breach of trust by reason only of the proportion borne by the amount of the loan to the value of the property at the time when the loan was made, if it appears to the court—
(a) that in making the loan the trustee was acting upon a report as to the value of the property made by a person whom he reasonably believed to be an able practical surveyor or valuer instructed and employed independently of any owner of the property, whether such surveyor or valuer carried on business in the locality where the property is situate or elsewhere; and
(b) that the amount of the loan does not exceed two third parts of the value of the property as stated in the report; and
(c) that the loan was made under the advice of the surveyor or valuer expressed in the report.
(2) A trustee lending money on the security of any leasehold property shall not be chargeable with breach of trust only upon the ground that in making such loan he dispensed either wholly or partly with the production or investigation of the lessor’s title.
(3) A trustee shall not be chargeable with breach of trust only upon the ground that in effecting the purchase, or in lending money upon the security, of any property he has accepted a shorter title than the title which a purchaser is, in the absence of a special contract, entitled to require, if in the opinion of the court the title accepted be such as a person acting with prudence and caution would have accepted.
(4) This section shall apply to transfers of existing securities as well as to new securities and to investments made before as well as after the commencement of this Act.
(1) Where a trustee improperly advances trust money on a mortgage security which would at the time of the investment be a proper investment in all respects for a smaller sum than is actually advanced thereon, the security shall be deemed an authorized investment for the smaller sum, and the trustee shall only be liable to make good the sum advanced in excess thereof with interest
(2) This section applies to investments made before as well as after the commencement of this Act.
(1) Trustees lending money on the security of any property on which they can lawfully lend may contract that such money shall not be called in during any period not exceeding seven years from the time when the loan was made, provided that interest be paid within a specified time not exceeding thirty days after every half-yearly or other day on which it becomes due, and that there be no breach of any covenant by the mortgagor contained in the instrument of mortgage for the maintenance and protection of the property.
(2) On a sale of land held on a freehold or registered title, or for a term having at least forty years to run, by trustees or by a tenant for life, the trustees, or, as the case may be, the tenant for life on behalf of the trustees of the settlement, may, where the proceeds are liable to be invested, contract that the payment of any part, not exceeding two-thirds, of the purchase money shall be secured by a mortgage of the land sold, with or without the security of any other property, such mortgage, if any buildings are comprised in the mortgage, to contain a covenant by the mortgagor to keep them insured against loss or damage by fire to the full value thereof.
(3) The trustees shall not be bound to obtain any report as to the value of the land or other property to be comprised in such mortgage, or any advice as to the making of the loan, and shall not be liable for any loss which may be incurred by reason only of the security being insufficient at the date of the mortgage; and the trustees of the settlement shall be bound to give effect to any such contract made by the tenant for life.
(4) Where any securities of a company are subject to a trust, the trustees may concur in any scheme or arrangement—
(a) for the reconstruction of the company; or
(b) for the sale of all or any part of the property and undertaking of the company to another company; or
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